Interim Results
September 04 2003 - 3:01AM
UK Regulatory
RNS Number:3665P
NMBZ Holdings Ld
04 September 2003
NMBZ HOLDINGS LIMITED
Holding company of
NMB Bank Limited
(registered Commercial Bank)
and
Continental Securities Trading (Private) Limited
(Registered Stockbrokers)
INFLATION ADJUSTED AND HISTORICAL
RESULTS FOR THE HALF-YEAR ENDED 30 JUNE 2003
HIGHLIGHTS
* Historical attributable profit up 587% to Z$9 239 million (2002 - Z$1 344
million)
* Historical basic earnings per share up 541% to 2 371 cents (2002 - 370 cents)
* Total historical asset base up 187% to Z$137 373 million (2002 - Z$47 828
million)
* Historical non-interest income up 538% to Z$8 791 million (2002 - Z$ 1 378
million)
* Historical deposit base up 44% to Z$27 477 million (2002 - Z$19 097 million)
* Banking subsidiary's Capital adequacy ratio up 24% to 22.13% (2002 - 17.89%)
* Historical dividend per share up 487% to 433 cents (2002 - 73.8 cents)
* Inflation adjusted net operating income up 34% to Z$24 807 million (2002 -
Z$18 492 million)
Mr Paddy Zhanda, Chairman, said:
"The Group once again achieved good results in the period under review. The
unfavourable macro-economic environment affected the profitability of the Group
after adjusting the historical results for inflation. The Group anticipates a
satisfactory outturn in the second half".
Enquiries:
NMBZ HOLDINGS LIMITED Tel: +263-4-759 651/9
Dr Julius Makoni, Managing Director Fax: +263-4-759648
James Mushore, Deputy Managing Director
Otto Chekeche, Finance Director
COLLEGE HILL - LONDON Tel: +44-207-457 2020
Corinna Dorward
Chairman's Statement
The half year to 30 June 2003 was an extremely challenging period for the
country. The main macro-economic challenges during the period were:
* Decline in Gross Domestic Product (GDP)
* Hyperinflationary environment and high money supply growth
* High domestic debt
* Monetary policy and interest rates
* Weak Balance of Payments (BOP) position
* Foreign currency shortages
ECONOMIC REVIEW
Decline in Gross Domestic Product (GDP)
Real GDP declined by 5% in 2000, 7.5% in 2001, 11.9% in 2002 and is forecast to
decline by a further 11.5% in 2003. Major reductions are expected in
agriculture (17%), distribution (8.5%), manufacturing (10%), mining and
quarrying (7.4%) and construction (5.5%).
Hyperinflationary environment and high money supply growth
Year-on-year inflation accelerated to 364.5% in June 2003 from 208.1% recorded
in January 2003. The hyper inflationary trend is driven mainly by the partial
relaxation of price controls, excessive credit expansion, shortage of foreign
currency and consequent effect and widespread indexation in the economy. In
January 2003, representatives of the Government, business community and labour
signed a Prices and Income Stabilisation Protocol. The Protocol's objective was
to manage prices of basic commodities, salaries and wages, through a tripartite
price monitoring and surveillance sub-committee, which would negotiate with
producers on viable prices for all basic commodities. The spiraling inflation
is evidence of the Protocol's failure to arrest the pace of price increases in
the economy.
The upward trend in annual broad money supply (M3) growth that was witnessed in
2002, spilled into the first half of 2003. Annual growth in M3 to March 2003
was 206.7%, up from 161.6% as at 31 December 2002 and this reflected a 210%
increase in private sector credit. Unless monetary policy is tightened during
the second half of 2003, money supply growth is expected to accelerate.
High domestic debt
Domestic debt, which stood at Z$346 billion in December 2002, rose dramatically
to Z$546 billion as at 30 June 2003. With Treasury Bills accounting for 96%
(Z$491 billion) of the debt, interest costs will continue to be a burden on the
fiscus. The increased borrowing has tied up a high percentage of the nations'
savings. The domestic debt is expected to rise further in the second half of
2003 due to the necessity to fund grain imports and to provide financial support
for the newly resettled farmers.
Monetary policy and interest rates
In line with the Reserve Bank of Zimbabwe (RBZ) Monetary Policy Statement issued
in November 2002 and the National Economic Revival Programme launched in March
2003, interest rates were increased to deter borrowing for consumptive purposes
and to promote savings. Despite the increase in interest rates, the margin
between these rates and the inflation rate remains high thus retaining arbitrage
opportunities and as a result not stimulating savings. The negative real
interest rates have seen pension funds and savings institutions losing almost
75% of the value of funds advanced to Government over the previous two financial
years. Given the need to fund the budget deficit and the current agrarian
reforms, it is unlikely that interest rates will be increased to match the
inflation rate. Real rates of interest are therefore expected to remain
substantially negative.
Weak Balance of Payments (BOP) position
The country's BOP position remained under severe pressure in the first half of
the year against a background of continued deterioration in export performance
across all the major sectors of the economy, coupled with a cessation of
offshore lines of credit and multilateral and bilateral support.
The current account deficit for 2003 is forecast to remain at around US$1
billion with merchandise exports expected to remain weak. Merchandise imports
are expected to end 2003 at US$2 billion, against a background of declining
foreign direct investment inflows and the absence of much needed BOP support. A
capital account deficit of about US$300 million is forecast for 2003, up from
about US$200 million in 2002. As a result of the weak BOP position, gross
foreign exchange reserves are expected to average about one month of imports
while usable reserves are expected to cover only a few days of imports.
The country's total external payment arrears were estimated at US$1.6 billion as
at 30 June 2003 from a position of US$1.3 billion at 31 December 2002.
Government arrears account for 67% (US$1.07 billion), while parastatals and
private sector arrears represent 31% (US$0.5 billion) and 2% (US$0.03 billion)
respectively.
Given the country's weakening export performance, donor support will be required
for grain imports. External financiers and partners will be needed to alleviate
the external debt crisis and provide support for the country's BOP deficit.
Foreign exchange market and exchange rate policy
The Zimbabwe dollar was officially devalued in March 2003 to Z$824 from Z$55 to
the US$1 in order to provide an incentive to exporters. While the initiative
was commendable, it was insufficient and has not resulted in an increase in
foreign currency inflows. More export incentives and removal of disincentives
are required to stimulate export growth which should go hand in hand with the
promised quarterly reviews of the exchange rate.
Agrarian reforms
The first half of the year saw the continued designation of farms and the
establishment of a land audit committee to review the allocation of land
distribution under the fast track phase.
Agrarian reforms are unlikely to succeed without a clearly defined tenure
system, adequate technical and financial support to the new farmers and
systematic development of support infrastructures.
National Economic Revival Plan
The National Economic Revival Plan (NERP) launched by the Government on 4 March
2003 encompasses amongst other measures, an export support scheme, a Z$50
billion revolving fund for the productive sectors, an anticipated increase in
interest rates for consumption and speculative activities and a new goods
pricing policy. The plan also enunciates various measures aimed at boosting
agriculture, manufacturing, mining and tourism. Although the implementation of
the plan is still in its infancy, there appears to be less commitment to the
programme and decision-making appears to be half-hearted.
Cash shortages
The first half of the year saw the emergence of cash shortages in the country
due to a combination of the ever-rising inflation, a rise in alternative market
activities and the shortage of foreign currency to import paper to print bank
notes. The endemic cash shortages have severely damaged the service delivery
standards of the banking sector and significantly eroded the confidence of the
general public in the country's banking system. While the authorities appear to
be making an effort with regard to the cash shortages, the long term solution
lies in printing more notes, introduction of higher denomination notes and the
vigorous promotion of the use of plastic and electronic money.
GROUP RESULTS
Introduction
In accordance with International Accounting Standards, the Group continues to
prepare its results using hyperinflationary accounting with the historical
results being provided as a supplement. Unless otherwise stated, all figures in
the Chairman's statement are inflation adjusted.
The runaway hyperinflationary conditions affected earnings resulting in the
Group posting an inflation adjusted loss of Z$165 million. Because of the
harsh economic environment, the banking subsidiary increased its provisions for
bad and doubtful debts.
Net Operating Income
The historical net operating income increased by 436% from Z$3 666 million in
2002 to Z$19 660 million as at 30 June 2003. This increase was a result of a
375% growth in net interest income and a 538% increase in non-interest income.
Profit Attributable to Ordinary Shareholders
The historical attributable profit increased by 587% from Z$1 344 million in
2002 to Z$9 239 million as at 30 June 2003.
Historical Balance Sheet
The asset base as at 30 June 2003 increased by 187% to Z$137 373 million form
Z$47 828 million as at 30 June 2002. The increase is mainly due to balances
with banks and cash and financial assets held for trading.
(Loss)/Profit After Taxation
The inflation adjusted loss after taxation of Z$165 million is reflective of the
hyperinflationary conditions in the country and a low return on investment
assets. The high levels of monetary assets as at 30 June 2003 of Z$129.3 billion
(30 June 2002 - Z$214.6 billion) contributed to the loss on net monetary
position of Z$9 731 million. The net operating income of Z$15 290 million after
operating expenditure and bad and doubtful debts expense was partly eroded by
the large loss on net monetary position of Z$9 731 million.
Net Interest Income
Net interest income of Z$11 248 million contributed 45.3% (2002 - 59.4%) to net
operating income as the Group continues to shift earnings to non-interest
income.
Non-Interest Income
Non-interest income increased by 80.5% to Z$13 559 million and contributed 52.5%
(2002 - 40.6%) of net operating income. The increase is in line with the Group's
strategy of focusing on fees and other non-lending income.
The stockbroking subsidiary, Continental Securities Trading (Private) Limited,
contributed negatively to net income as it continues to recover from loss of
business resulting from its suspension. The subsidiary contributed a loss of
Z$464 million to the net loss after tax.
Operating Expenses
Operating expenditure increased by 58.5% over the same period last year. The
cost to income ratio increased to 31.1% (2002 - 26.4%) reflecting the expanding
commercial banking services.
Charge for doubtful debts
The charge for the six month period increased by 520.8% to Z$1 794 million (2002
- Z$289 million). This is reflective of the harsh economic environment. The
Board continues to adopt a conservative approach on provisions in view of the
unstable macro-economic environment.
Dividend
An interim dividend of 433 cents per share has been declared. This represents a
dividend cover of 5 times on historical profit attributable to ordinary
shareholders.
BALANCE SHEET
The inflation adjusted asset base at 30 June 2003 fell by 35.1% to Z$146 021
million from Z$224 916 million at 30 June 2002. The decrease is mainly due to
financial assets held for trading, which decreased from Z$80 179 million to Z$58
864 million, customers indebtedness for acceptances which decreased from Z$37
783 million to Z$14 248 million and advances and other accounts which decreased
from Z$76 197 million to Z$16 123 million.
CAPITAL ADEQUACY
The banking subsidiary's capital adequacy ratio as at 30 June 2003 calculated on
the historical cost basis in accordance with the guidelines of the RBZ was
22.13% (30 June 2002 - 17.89%, 31 December 2002 - 14.14%). This compares
favourably with the Reserve Bank's requirement for a minimum ratio of 10%.
OWN EQUITY INSTRUMENTS
Own equity instruments previously reflected in the financial statements were
sold to offshore investors unrelated to the Group in the period under review.
Further information is set forth at note 11.3.
THE ZIMBABWE STOCK EXCHANGE (ZSE)
Trading in the company's shares was suspended from 7 July 2003 to 9 July 2003.
The suspension was lifted after the ZSE was provided with certain assurances
regarding the transaction referred to above and possible breaches of the ZSE's
listing requirements.
OUTLOOK
Economy
The second half of 2003 is expected to remain difficult for the country.
Continued isolation of the country from the international community remains a
cause for concern. Turbulence in the operating environment, monetary and fiscal
policy implementation delays, runaway inflation and an unsustainable foreign
exchange rate policy are factors that will continue to dog the economy.
In order to resuscitate the economy and encourage growth, the following factors
are an imperative:
* Implementation of consistent monetary and fiscal policies to arrest the
galloping inflation.
* Implementation of a flexible and responsive exchange rate policy that takes
into account market conditions.
* Timely adoption and implementation of economic measures agreed to by the
Tripartite Negotiating Forum.
* Restoration of relationships with the international community.
Group
The Group will continue to put in place strategies to take full advantage of the
opportunities prevailing in the market. The growth of non-funded income will
continue to be a strategic imperative in the second half of the year. The
second half will witness the opening of our Gweru and Southerton branches and an
agency office in the Borrowdale Brooke area.
CONCLUSION
I would like to thank our clients for their valuable support. I would also like
to thank the Board, staff and management for their hard work in achieving these
results and for continuing to pursue excellence in the delivery of services to
our clients.
PADDY TENDAYI ZHANDA
Chairman
2 September 2003
UNAUDITED GROUP RESULTS
for the six months ended 30 June 2003
Income Statements
INFLATION ADJUSTED HISTORICAL
Unaudited Audited Restated
Unaudited Restated Restated Unaudited Unaudited Audited
6 months 6 months Year 6 months 6 months Year
Ended ended ended ended ended ended
30 June 30 June 31 Dec 30 June 30 June 31 Dec
2003 2002 2002 2003 2002 2002
Note Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million
Interest from lending 12 550 10 075 32 630 9 995 2 002 9 911
activities
Income from investing 11 788 10 039 42 680 9 638 2 035 16 711
activities
-------------- -------------- -------------- -------------- -------------- --------------
24 338 20 114 75 310 19 633 4 037 26 622
Interest expense (13 090) (9 134) (27 047) (8 764) (1 749) (8 154)
-------------- -------------- -------------- -------------- -------------- --------------
Net interest income 11 248 10 980 48 263 10 869 2 288 18 468
Other income 5 13 559 7 512 14 801 8 791 1 378 2 709
-------------- -------------- -------------- -------------- -------------- --------------
Net operating income 24 807 18 492 63 064 19 660 3 666 21 177
Operating expenditure 6 (7 723) (4 874) (17 823) (4 605) (900) (4 175)
Bad and doubtful debt (1 794) (289) (2 554) (1 794) (62) (1 168)
expense
Loss on net monetary (9 731) (6 976) (12 907) - - -
position
-------------- -------------- -------------- -------------- -------------- --------------
Profit before taxation 5 559 6 353 29 780 13 261 2 704 15 834
Taxation 7 (6 310) (6 678) (18 282) (4 407) (1 299) (6 365)
-------------- -------------- -------------- -------------- -------------- --------------
(Loss)/Profit after (751) (325) 11 498 8 854 1 405 9 469
taxation
Minority interests 586 (272) 278 385 (61) 87
-------------- -------------- -------------- -------------- -------------- --------------
(Loss)/Profit
attributable to
ordinary
Shareholders (165) (597) 11 776 9 239 1 344 9 556
============== ============== ============== ============== ============== ==============
(Loss)/Earnings per
share (cents)
- Basic 8 (42.3) (164.2) 3 239.4 2 370.5 369.7 2 628.7
- Headline 8 (42.3) (165.3) 3 223.7 2 370.5 369.4 2 624.6
- Diluted 8 (42.1) (163.9) 3 233.5 2 359.5 369.1 2 624.0
- Diluted headline 8 (42.1) (165.0) 3 217.9 2 359.5 368.8 2 619.8
Dividend per share 433.0 343.2 1 572.4 433.0 73.8 634.0
(cents)
Weighed average
Number of issued shares 390 364 364 390 364 364
(millions)
June 2002 earnings per share amounts have been restated to account for own
equity instruments, as stated in note 11.3.
UNAUDITED GROUP RESULTS
As at 30 June 2003
Balance Sheets
INFLATION ADJUSTED HISTORICAL
Unaudited Audited Restated
Unaudited Restated Restated Unaudited Unaudited Audited
At 30 June at 30 June at 31 Dec at 30 June at 30 June at 31 Dec
2003 2002 2002 2003 2002 2002
Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million
Shareholders' Funds
Share capital 5 831 5 783 5 815 107 91 91
Capital reserves 12 745 11 557 12 165 631 51 51
Revenue reserves 7 167 (10 253) 7 652 18 006 870 8 778
-------------- -------------- -------------- -------------- -------------- --------------
Total shareholders' funds 25 743 7 087 25 632 18 744 1 012 8 920
Minority Interest (1 160) 880 192 (446) 101 (59)
-------------- -------------- -------------- -------------- -------------- --------------
24 583 7 967 25 824 18 298 1 113 8 861
Liabilities
Deferred taxation 4 692 116 5 968 2 329 25 1 487
Deposits and other accounts 27 477 88 733 80 696 27 477 19 097 36 901
Provision for current taxation 4 971 7 081 9 924 4 971 1 548 4 538
Financial liabilities held for 70 050 83 236 41 860 70 050 17 914 19 142
trading
Acceptances 14 248 37 783 30 397 14 248 8 131 13 900
-------------- -------------- -------------- -------------- -------------- --------------
146 021 224 916 194 669 137 373 47 828 84 829
============== ============== ============== ============== ============== ==============
Assets
Balances with banks and cash 40 059 20 410 41 635 40 059 4 393 19 039
Financial assets held for 58 864 80 179 35 973 58 864 17 256 16 450
trading
Advances and other accounts 16 123 76 197 63 016 16 123 16 380 28 816
Investments:
Trade investment 395 399 385 3 3 3
Quoted and other investments 279 103 4 476 279 22 2 047
Property, plant & equipment 16 053 9 845 18 787 7 797 1 643 4 574
Deferred taxation - - - - - -
Customers' indebtedness for
acceptances 14 248 37 783 30 397 14 248 8 131 13 900
-------------- -------------- -------------- -------------- -------------- --------------
146 021 224 916 194 669 137 373 47 828 84 829
============== ============== ============== ============== ============== ==============
UNAUDITED GROUP RESULTS
INFLATION ADJUSTED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2003
Capital Reserves
Restated Restated Restated Restated Restated Revenue Total
Share Share Statutory Capital Other Reserves Z$ million
Capital Premium Reserve Z$ Redemption Z$ million Restated
Z$ million Z$ million million Reserve Accumulated
Z$ million Profit
Z$ million
Balances at 1
January 2002 5 843 9 928 1 642 1 122 17 4 295 22 847
Own Equity
Instruments (85) (1 621) - - - (17 075) (18 781)
Loss on net
monetary position
- own equity
instruments 25 469 - - - 4 939 5 433
------------ ----------- ------------ ------------- ------------ ------------ -------------
As restated 5 783 8 776 1 642 1 122 17 (7 841) 9 499
at 1 January
2001
Shares issued in
May 2002 - - - - - - -
Net loss/profit
for the period - - - - - (597) (597)
Dividends - - - - - (1 815) (1 815)
------------- ----------- ------------ ------------- ------------ ------------ --------------
Balances
at 1 July 2002 5 783 8 776 1 642 1 122 17 (10 253) 7 087
Net profit
for the period - - - - - 12 373 12 373
Dividends - - - - - (898) (898)
Loss on net
monetary position
- own equity
instruments 32 608 - - - 6 430 7 070
------------ ----------- ------------ ------------- ----------- ------------ -------------
Balances at 31
December 2002 5 815 9 384 1 642 1 122 17 7 652 25 632
Net loss for the
period - - - - - (165) (165)
Share issue -
options 3 332 - - - - 335
Proceeds on own
equity instruments 22 417 - - - 2 254 2 693
Loss on net
monetary position
on proceeds on own
equity instruments (9) (169) - - - (235) (413)
Dividends - - - - - (2 339) (2 339)
------------ ----------- ----------- ------------- ------------ ------------ -------------
Balances at
30 June 2003 5 831 9 964 1 642 1 122 17 7 167 25 743
------------- ----------- ----------- ------------- ------------ ------------ ------------
UNAUDITED GROUP RESULTS
HISTORICAL STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2003
Capital Reserves Revenue
Reserves
Share Share Statutory Redemption Accumulated
Capital Premium Reserve Reserve Other Profit Total
Z$ million ZZ$ million Z$ million ZZ$ million Z$ million ZZ$ million Z$ million
Balances at 1
January 2002,
as previously
stated 104 248 23 27 1 2 467 2 870
Own equity
instruments - cost (13) (248) - - - (2 612) (2 873)
---------- ---------- --------- ---------- ------- ---------- ----------
As restated
at 1 January 2002 91 - 23 27 1 (145) (3)
Net profit for 6
months ended
30 June 2002 - - - - - 1 344 1 344
Dividends - - - - - (329) (329)
----------- ---------- ---------- ---------- ---------- ---------- ----------
Balances at
30 June 2002 91 - 23 27 1 870 1 012
Net profit for the
six months ended
31 December 2002 - - - - - 8 212 8 212
Dividends - - - - - (304) (304)
---------- ----------- ------------ ---------- ------- ----------- ------------
Balances at
31 December 2002 91 - 23 27 1 8 778 8 920
Net profit for the
six months ended period - - - - - 9 239 9 239
Dividends - - - - - (2 030) (2 030)
Own equity
instruments -
proceeds 13 248 - - - 2 019 2 280
Share issue -
options 3 332 - - - - 335
---------- ----------- ------------ ---------- ------- ------------ ------------
Balances at
30 June 2003 107 580 23 27 1 18 006 18 744
========== =========== ============ ========== ======= ============ ============
UNAUDITED GROUP RESULTS
for the six months ended 30 June 2003
Cashflow Statements
INFLATION ADJUSTED HISTORICAL
Unaudited Unaudited Audited Unaudited Unaudited Audited
6 months Restated Restated 6 months 6 months ended Year
ended 6 months Year ended 30 June 2002 ended
30 June ended ended 30 Jun Z$ million 31 Dec
2003 30 June 31 Dec 2003 2002
Z$ million 2002 2002 Z$ million Z$ million
Note Z$ million Z$ million
Profit before
taxation and loss
on net
monetary position 9 15 290 13 329 42 687 13 261 2 704 15 834
Non-cash items
Profit on disposal
of property, plant
& Equipment - (5) (81) - (1) (21)
Depreciation 618 449 3 825 367 91 291
Charge for bad and
doubtful debts 2 828 289 2 554 2 828 62 1 168
Monetary loss (9 731) (6 976) (12 907) - - -
IAS 39 Fair value
adjustment 623 - - 623 - -
----------- ----------- ----------- ----------- ----------- -----------
Operating cash
flows before
changes in
operating assets
and liabilities 9 628 7 086 36 078 17 079 2 856 17 272
Changes in
operating assets
and liabilities:
Financial
liabilities held
for trading 18 373 52 425 10 949 49 448 21 258 14 423
Deposits and other
accounts (51 578) 1 046 7 023 (9 424) 5 683 23 487
Advances and other
accounts 45 828 (5 520) 5 129 9 865 (5 568) (19 172)
Financial assets
held for trading (37 265) (13 866) (1 113) (45 775) (11 507) (1 156)
------------- ------------- ------------- ------------- ------------- -------------
(15 014) 41 171 58 066 21 193 12 722 34 854
Taxation
Corporate tax paid (10 379) (7 442) (9 960) (3 132) (241) (1 555)
------------- ------------- ------------- ------------- ------------- -------------
Net cash
(outflow)/inflow
from operating
activities (25 393) 33 729 48 106 18 061 11 781 33 299
Cash Flows From
Investing
Activities
Proceeds on
disposal of
property, plant
and equipment - 3 482 543 - 1 89
Purchase of
property, plant
and equipment (3 160) (1 548) (12 238) (3 592) (667) (3 866)
Purchase of quoted
and other quoted
and Investment (7) - - - - -
Proceeds from
disposal of quoted
and other
investments 4 197 9 435 (1 012) 1 768 801 (1 223)
------------- ------------- ------------- ------------- ------------- -------------
Net cash outflow
from investing
activities 1 030 11 369 12 707 (1 824) 135 (5 000)
------------- ------------- ------------- ------------- ------------- -------------
Net cash
(outflow)/inflow
before
financing
activities (24 363) 45 098 35 399 16 237 11 916 28 299
------------- ------------- ------------- ------------- ------------- -------------
Cash Flows From
Financing
Activities
Proceeds from
issue of shares 335 - - 335 - -
Dividends paid (2 339) (1 815) (2 713) (2 030) (329) (672)
Proceeds from own
equity instruments 2 693 - - 2 280 - -
------------- ------------- -------------- ------------- ------------- -------------
689 (1 815 (2 713) 585 (329) (672)
------------- ------------- -------------- ------------- ------------- -------------
Net
(decrease)/increase
in cash and cash
equivalents (23 674) 43 283 32 686 16 822 11 587 27 627
Cash and cash
equivalents at
beginning of period 74 527 36 637 41 841 34 031 5 600 6 404
------------- ------------- ------------- ------------- ------------- -------------
Cash and cash
equivalents
at the end of
period 10 50 853 79 920 74 527 50 853 17 187 34 031
============== ============= ============= ============= ============= =============
NMBZ HOLDINGS LIMITED
NOTES TO THE ACCOUNTS
1. Accounting Policies
The interim statements have been prepared on the basis of the accounting
policies set out in the financial statements for the year ended 31 December
2002.
2. Accounting Convention
Unless otherwise disclosed, these financial statements are prepared in
conformity with International Financial Reporting Standards promulgated by the
International Accounting Standards Board (IASB). International Financial
Reporting Standards (IFRS's) include standards and interpretations approved by
the IASB as well as International Accounting Standards (IAS's) and SIC
interpretations issued under previous constitutions.
3. Currency
These interim statements are expressed in Zimbabwe dollars.
4. Basis of preparation
The financial statements have been prepared on the historical cost basis and
restated in accordance with IAS 29, which requires that the results be stated in
terms of the measuring unit current at the balance sheet date. The index used
was based on the closing index value for 30 June 2003. The comparative figures
for the six months ended 30 June 2002 and the financial year ended 31 December
2002 have been restated based on the value current at 30 June 2003. The income
statement for the six month period was derived from monthly index values
relative to 30 June 2003. The comparative income statements have been restated
on average index values for the respective periods relative to 30 June 2003.
The interim report was approved by the Board on 2 September 2003.
Indices
The indices used were compiled by the Central Statistical Office of Zimbabwe and
are based on the Consumer Price Index which is the most widely accepted measure
of the inflation rate available.
The indices and conversion factors were as follows:
Date Indices Conversion factors
30 June 2003 7 631.4 1.00
31 December 2002 3 489.7 2.19
30 June 2002 1 642.4 4.65
IAS 29 discourages the publication of historical results as a supplement to
inflation adjusted accounts. The Zimbabwe Accounting Practices Board and the
Zimbabwe Stock Exchange have permitted companies in Zimbabwe to publish
historical results in conjunction with inflation adjusted results.
5. Other income
INFLATION ADJUSTED HISTORICAL
Unaudited Audited Restated
Unaudited Restated Restated Unaudited Unaudited Audited
6 months 6 months Year 6 months 6 months Year
ended ended ended ended ended ended
30 June 30 June 31 Dec 30 June 30 June 31 Dec
2003 2002 2002 2003 2002 2002
Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million
Net commission and fee 1 082 711 1 986 659 137 561
income
Income 1 432 711 2 103 872 137 594
Expense (350) - (117) (213) - (33)
Gains less losses from 756 (531) (400) 460 (7) 68
quoted and other investments
- as previously reported 756 747 (400) 460 268 68
- Effects of own equity - (1 278) - - (275) -
instruments
Broking income 69 1 183 1 172 55 237 283
Profit on disposal of - 5 81 - 1 21
equipment
Net dealing income 6 381 3 022 9 108 4 326 559 1 016
Other operating income 5 271 3 122 2 854 3 291 451 760
----------- ----------- ------------ ----------- ----------- ------------
13 559 7 512 14 801 8 791 1 378 2 709
=========== =========== ============ =========== =========== ============
6. Operating expenditure
The operating profit is after charging the following:
Administration costs 2 908 2 086 4 358 1 746 416 1 475
Depreciation 618 449 3 825 367 91 291
Staff costs 4 197 2 339 9 640 2 492 393 2 409
------------- ------------- ------------- ------------- ------------- -------------
7 723 4 874 17 823 4 605 900 4 175
============= ============= ============= ============= ============= =============
7. Taxation Charge
Zimbabwe income tax 2 978 3 311 8 031 2 978 712 3 667
Aids levy 90 200 193 90 43 88
Deferred tax charge 2 568 2 515 8 503 665 403 1 899
Financial institutions levy 674 652 1 555 674 141 711
------------- ------------- ------------- -------------- ------------- --------------
6 310 6 678 18 282 4 407 1 299 6 365
============= ============= ============= ============== ============= ==============
8. Loss)/earnings per share
8.1 Basic (loss)/earnings per share - Inflation adjusted
The calculation of inflation adjusted basic loss per share for the six months
ended 30 June 2003 of 42.3 cents (2002 - (164.2 cents)) is based on the loss
after taxation attributable to ordinary shareholders of (Z$165 million (2002-
(Z$597 million)) and the weighted average shares in issue of 389 757 429 (2002-
363 523 767). The calculation of basic earnings per share for the year ended 31
December 2002 of 3 239.4 cents is based on the profit after tax attributable to
ordinary shareholders of Z$11 776 million and on 363 523 767 weighted average
shares in issue.
Basic earnings per share - Historical
The calculation of historical basic earnings per share for the six months ended
30 June 2003 of 2 370.5 cents (2002 - 369.7 cents) is based on profit after
taxation attributable to ordinary shareholders of Z$9 239 million (2002-Z$1 344
million) and the weighted average shares in issue of 389 757 429 (2002 - 363 523
767). The calculation of basic earnings per share for the year ended 31
December 2002 of 2 628.7 cents is based on the profit after tax attributable to
ordinary shareholders of Z$9 556 million and on 363 523 767 weighted average
shares in issue.
8.2 Headline earnings per share - Inflation adjusted
The calculation of inflation adjusted headline loss per share for the six months
ended 30 June 2002 of 42.3 cents (2002 - (165.3 cents)) is based on adjusted
loss after taxation attributable to ordinary shareholders of Z$165 million (2002
- (Z$601 million)) and the weighted average shares in issue of 389 757 429 (2002
- 363 523 767). The calculation of headline earnings per share for the year
ended 31 December 2002 of 3 223.7 cents is based on the adjusted profit after
tax attributable to ordinary shareholders of Z$11 719 million and on 363 523 767
weighted average shares in issue.
Headline earnings per share - Historical
The calculation of historical headline earnings per share for the six months
ended 30 June 2003 of 2 370.5 cents (2002 - 369.4 cents) is based on adjusted
profit after taxation attributable to ordinary shareholders of Z$9 239 million
(2002 - Z$1 343 million) and the weighted average shares in issue of 389 757 429
(2002 - 363 523 767). The calculation of headline earnings per share for the
year ended 31 December 2002 of 2 624.6 cents is based on the adjusted profit
after tax attributable to ordinary shareholders of Z$9 541 million and on 363
523 767 weighted average shares in issue. The adjustments were as follows:-
INFLATION ADJUSTED HISTORICAL
Unaudited Audited Restated
Unaudited Restated Restated Unaudited Unaudited Audited
6 months 6 months Year 6 months 6 months Year
ended ended ended ended ended ended
30 June 30 June 31 Dec 30 June 30 June 31 Dec
2003 2002 2002 2003 2002 2002
Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million
(Loss)/Profit attributable to (165) (597) 11 776 9 239 1 344 9 556
shareholders
Deduct non-recurring items:
Profit on disposal of:
Equipment - (5) (81) - (1) (21)
Tax effect - 1 24 - - 6
---------- ---------- --------- ---------- ---------- --------
(165) (601) 11 719 9 239 1 343 9 541
========== ========== ========= ========== ========== ========
Weighted average number of 390 364 364 390 364 364
shares (millions)
========== ========== ========= ========== ========== ========
The headline earnings are calculated in accordance with the Statement of
Investment Practice No.1 issued by the Institute of Investment Management and
Research to assist users of accounts to identify earnings derived from trading
activities.
8.3 Diluted (loss)/earnings per share - Inflation adjusted
The inflation adjusted diluted loss per share for the six months ended 30 June
2003 is 42.1 cents (2002 - (163.9) cents). The calculation is based on loss
after taxation attributable to ordinary shareholders of Z$165 million (2002 -
(Z$597 million)) and on shares of 391 559 714 (2002 - 364 183 767). The
calculation of diluted earnings per share for the year ended 31 December 2002 of
3 233.5 cents is based on profit after taxation attributable to ordinary
shareholders of Z$11 776 million and on diluted shares of 364 183 767.
Diluted earnings per share - Historical
The historical diluted earnings per share for the six months ended 30 June 2003
is 2 359.5 cents (2002 - 369.1cents). The calculation is based on profit after
taxation attributable to ordinary shareholders of Z$9 239 million (2002 - Z$1
344 million) and on shares of 391 559 714 (2002 - 364 183 767). The calculation
of diluted earnings per share for the year ended 31 December 2002 of 2 624.0
cents is based on profit after taxation attributable to ordinary shareholders of
Z$9 556 million and on diluted shares of 364 183 767.
8.4 Diluted headline (loss)/earnings per share - Inflation adjusted
The inflation adjusted diluted headline loss per share for the six months ended
30 June 2003 is 42.1 cents (2002 -(165.0) cents). The calculation is based on
adjusted loss after taxation of Z$165 million (2002 - (Z$601 million)) and on
shares of 391 559 714 (2002- 364 183 767). The calculation of diluted headline
earnings per share for the year ended 31 December 2002 of 3 217.9 cents is based
on adjusted profit after taxation of Z$11 719 million and on diluted shares of
364 183 767.
Diluted headline earnings per share - Historical
The historical diluted headline earnings per share for the six months ended 30
June 2003 is 2 359.5 cents (2002 - 368.8 cents). The calculation is based on
adjusted profit after taxation of Z$9 239 million (2002 - Z$1 343 million) and
on shares of 391 559 714 (2002 - 364 183 767). The calculation of diluted
headline earnings per share for the year ended 31 December 2002 of 2 619.8 cents
is based on adjusted profit after taxation of Z$9 541 million and on diluted
shares of 364 183 767.
9. Profit before taxation and net loss on net monetary position
INFLATION ADJUSTED HISTORICAL
Unaudited Audited
Unaudited Restated Restated Unaudited Unaudited Audited
6 months 6 months Year 6 months 6 months Year
ended ended ended ended ended ended
30 June 30 June 31 Dec 30 June 30 June 31 Dec
2003 2002 2002 2003 2002 2002
Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million
Net operating income 24 807 18 492 63 064 19 660 3 666 21 177
Operating expenditure (7 723) (4 874) (17 823) (4 605) (900) (4 175)
Bad and doubtful debts expense (1 794) (289) (2 554) (1 794) (62) (1 168)
----------- ----------- ----------- ----------- ---------- ----------
15 290 13 329 42 687 13 261 2 704 15 834
=========== =========== =========== =========== ========== ==========
10. Cash and Cash Equivalents
INFLATION ADJUSTED HISTORICAL
Unaudited Audited
Unaudited Restated Restated Unaudited Unaudited Audited
6 months 6 months Year 6 months 6 months Year
ended ended ended ended ended ended
30 June 30 June 31 Dec 30 June 30 June 31 Dec
2003 2002 2002 2003 2002 2002
Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million
Balances with banks 40 059 20 410 41 635 40 059 4 393 19 039
and cash Government
and public sector
securities 6 186 54 796 15 358 6 186 11 784 7 023
Bills 4 608 4 714 17 534 4 608 1 010 7 969
receivable
--------------- -------------- -------------- -------------- ------------- --------------
50 853 79 920 74 527 50 853 17 187 34 031
=============== ============== ============== ============== ============= ==============
11.3 Own Equity Instruments
11.3.1 Own equity instruments amounting to 52 467 333
shares (the "Shares") at a cost of Z$2 873 million were sold initially
off-market to offshore investors unrelated to the Group in the period under
review for US$2.714 million (Z$2 280 million at the official exchange rate).
11.3.2 The Shares had been accumulated in the year to 31
December 2001 by the company not for cancellation, but to consummate a strategic
acquisition which was expected to enhance significantly shareholder value. As a
result of the deferral of the negotiations at 31 December 2001, the company
swapped its debt to the Bank with the strategic scrip. The Shares were reflected
in the Group financial statements for the year ended 31 December 2001 at market
value under "Quoted and other investments".
11.3.3 Negotiations for the strategic acquisition were terminated in the
course of 2002. The financial statements at 31 December 2002 therefore reflect
the re-evaluation of the holding of the Shares. In terms of International
Accounting Standard (IAS) 32, Financial Instruments: Disclosure and
Presentation, reacquired own equity instruments are measured at cost and are
presented in the balance sheet as a deduction from equity.
11.3.4 The financial statements for the year ended 31 December 2001 were
restated to account for own equity instruments as a deduction from equity in
order to account for the asset more conservatively. This approach is reflected
in the restated comparative figures for 2001 in the financial statements for the
year ended 31 December 2002. The income statement figures were not adjusted
because the marking to market adjustment was not material (see note 11.3.5).
11.3.5 At the Annual General Meeting (AGM) for the year ended 31
December 2001, the company distributed annual reports and financial statements
which had not been signed. The auditors signed together with the directors a
different set of financial statements for the year ended 31 December 2001 after
this meeting as the statutory financial statements to reflect the treatment set
out in 11.3.3 above. The differences between the approved financial statements
and the signed financial statements for the year ended 31 December 2001 are set
out below.
BALANCE SHEET
Published Signed
Annual Report Annual Report
Historical Historical Difference
Z$ million Z$ million Z$ million
Shareholder's funds
Share capital 104 91 13
Capital reserves 299 51 248
Revenue reserves 2 467 (145) 2 612
--------- --------- ---------
Total shareholder's funds 2 870 (3) 2 873
Minority interest and liabilities 27 873 27 873 -
--------- ---------- ---------
30 743 27 870 2 873
========= ========== =========
Assets
Quoted and other investments 3 696 823 2 873
Other assets 27 047 27 047 -
---------- ---------- ----------
30 743 27 870 2 873
========== ========== ==========
INCOME STATEMENT
The marking to market loss on the own equity instruments was Z$24 million (Z$17
million after tax) and hence was deemed immaterial to adjust the 31 December
2001 income statement. The comparative figures for June 2002 have been restated.
11.3.6 As mentioned above, the Shares were disposed of in the period under
review. No Extraordinary General Meeting (EGM) was deemed necessary by the
directors to approve this sale. This transaction has been accounted for in terms
of IAS 32. No gain or loss is recognised in the income statement on the sale,
issuance or cancellation of these shares. Consideration received is presented
in the financial statements as a change in equity. Accordingly, the loss on
disposal of the own equity instruments has been charged to revenue reserves in
the statement of changes in equity. The income statement however reflects the
revaluation of the underlying asset received.
12. Capital commitments
Capital commitments amounting to Z$2 513 million (31 December 2002 - Z$5 470
million) will be financed from the Group's own resources.
13. Contingent liabilities
Contingent liabilities as at 30 June 2003 amounted to Z$842 million (31 December
2002 - Z$750 million). The increase is mainly a result of an increase in
confirmed letters of credit amounting to Z$358 million (31 December 2002 - Z$85
million).
14. Related Parties
Loans to directors and officers or their companies amounting to Z$3 162 million
are included in advances and other accounts.
Loans to officers (including executive directors) amounting to Z$1 317 million
were granted at preferential rates of up to 16% as part of their overall
remuneration agreements. Loans to no-executive directors, Group Companies and
officers' companies are on normal commercial terms.
Dividend Announcement
The Board has declared an interim dividend for the period ending 30 June 2003 of
433 cents per share payable to members recorded in the share register of the
Company on Friday, 19 September 2003.
The transfer books and register of members will be closed from end of business
day on Friday, 19 September 2003 to end of business day on Friday, 26 September
2003.
Dividend cheques to resident shareholders will be mailed on or about Tuesday, 30
September 2003.
Dividends payable to non-resident shareholders will be paid subject to Exchange
Control Regulations and approval. Resident and non-resident shareholder's tax
of 15% will be deducted where applicable.
By order of the Board
M B Narotam
Secretary
2 September 2003
SECRETARY AND REGISTERED OFFICE
Secretary
M B Narotam
Email: muneshn@nmbz.co.zw
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
Auditors
KPMG Chartered Accountants (Zimbabwe)
Mutual Gardens
100 The Chase (West)
Emerald Hill
Harare
Zimbabwe
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
Legal Practitioners to the Company
In Zimbabwe In UK
Kantor and Immerman Dechert
MacDonald House 2 Serjeants' Inn
10 Selous Avenue London EC4Y 1LT
Harare UK
Zimbabwe
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR UOABROVRKRAR