NMBZ Holdings Ld
31 March 2006
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
2005
HIGHLIGHTS
2005 2004
Historical Z$ million Z$ million
Attributable profit/(loss) 325 389 (9 636)
Basic earnings/(loss) per share (cents) 65 347 (2 258)
Dividend per share (cents) - -
Restated
Inflation Adjusted 2005 2004
Z$ million Z$ million
Attributable profit/(loss) 220 461 (293 389)
Basic earnings/(loss) per share (cents) 44 275 (68 742)
Dividend per share (cents) - -
Dr Gibson Manyowa Mandishona, the acting Chairman of NMBZ Holdings, said:
'The Group returned to profitability in the second half of the year. This was
buttressed by a well supported rights issue in November 2005, which raised net
proceeds of Z$60 billion that enhanced the Bank's capacity. The resilience of
the business model and the continuing support from stakeholders, especially
customers, should assist with the considerable challenges in the year ahead'.
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: enquiries@nmbz.co.zw
CHAIRMAN'S STATEMENT
The year under review was characterized by
• Rising inflation for most of the year
• Increased money supply growth
• High domestic debt
• Rising interest rates
• Persistent foreign currency shortages
• Continued concessionary lending
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.
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.
Commentary on results
Inflation adjusted profit before taxation improved from a loss of Z$562 039
million to a profit of Z$376 107 million during the period under review. The
Group recorded an inflation adjusted attributable profit of Z$220 461 million
compared to a loss of $293 389 million for the same period last year (Historical
cost attributable profit of Z$325 389 million compared to a loss of Z$9 636
million for 2004). Net interest income decreased by 30% to Z$528 905 million
from Z$759 829 million. The decrease was primarily as a result of a reduction in
income from lending activities and supplementary cost of funding as the Bank
recovered. Non-interest income increased by 25% to Z$337 187 million (2004 -
Z$269 041 million) and contributed 27% (2004 - 30%) of the net operating income.
Operating expenses, on an inflation adjusted basis, decreased by 33% to Z$620
242 million from Z$922 757 million over the same period last year driven largely
by the stringent cost containment measures. The improvement in profitability
occurred in the latter months of the year and this was before any impact from
the receipt of funds from the rights issue.
The loss on net monetary position occurs as a result of the restatement of
amounts to current value. The loss of Z$199 842 million is based on the
inflation index as provided by the Central Statistical Office of Zimbabwe. The
loss has been charged to income in accordance with the IAS 29 'Reporting in
Hyperinflationary Economies'.
While a conservative approach continues to be taken with respect to provisions
for bad and doubtful debts, on an inflation adjusted basis, a decrease in the
provisions from Z$260 784 million in the previous year to Z$32 565 million was
recorded. This is reflective of the decline in advances and other accounts
which on an inflation adjusted basis, decreased from Z$2 260 110 million to Z$1
053 471 million.
Dividend
In view of the proposed new capital requirements by 30 September 2006, no
dividend has been proposed.
BALANCE SHEET
The Group's total asset base, on an inflation adjusted basis, decreased by 16%
from Z$4 453 015 million at 31 December 2004 to Z$3 760 487 million. The
decrease was mainly caused by a reduction in advances and other accounts (53%),
customer's indebtedness for acceptances (95%), investment properties and
non-current assets held for sale (69%) and property and equipment (21%).
Financial assets at fair value through profit and loss grew by 500% mainly as a
result of the increase in the Treasury Bills portfolio.
Capital
The banking subsidiary's capital adequacy ratio at 31 December 2005 calculated
on the historical cost basis in accordance with the guidelines of the Reserve
Bank of Zimbabwe (RBZ) was 22.52% (31 December 2004 - 1.36%). The minimum
required by the RBZ is 10%.
The Bank has already complied with the RBZ's initial requirement of a minimum
capital base of Z$100 billion, after a well supported rights issue in November
2005 which raised Z$60 billion net of issue expenses. In view of the new
pronouncements from the RBZ regarding the capitalisation of banks, the Group
will undertake the necessary steps during the course of 2006 to meet the new
requirements.
OUTLOOK AND STRATEGY
After repaying the expensive RBZ Liquidity Support Facility, the Group returned
to profitability in the second half of the year. With confidence returning to
the banking sector, buttressed by a well supported rights issue, this has
enhanced the Bank's capacity. The resilience of the business model and the
continuing support from stakeholders, especially customers, should assist with
the considerable challenges in the year ahead. There has already been a
remarkable increase in deposits in the second half of 2005 and this trend is
expected to continue in 2006.
The recapitalisation of the Bank to the required equivalent of US$10 million by
30 September 2006 will be a strategic imperative in the new year and initiatives
are already underway to address this requirement. Significant shareholders have
indicated their willingness to support the Bank further.
DIRECTORATE
Mr J S Friedlander resigned from the Board effective 30 June 2005 and I would
like to express our appreciation for his valuable contributions over the years.
Mrs D J Sibanda was appointed to the Board on 7 October 2005 and Mr J P de la
Fargue was appointed to the Board on 23 December 2005. I would like to welcome
Mrs Sibanda and Mr de la Fargue to the Board and wish them a fruitful tenure.
APPRECIATION
In this particularly challenging year, management and staff have shown a high
level of commitment and strategic focus in protecting and safeguarding
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 their outstanding efforts towards
recovery in the most challenging environment. The recovery of the Group would
not have been achieved without support from a number of quarters including
shareholders with the rights issue and the RBZ. The Bank is particularly
appreciative of the continuing support of its customers.
GIBSON MANYOWA MANDISHONA
CHAIRMAN
30 March 2006
NMB BANK LIMITED: CORPORATE GOVERNANCE AND RISK MANAGEMENT
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, the United Kingdom Combined Code and RBZ. 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. 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.
4.1 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.
4.2 Market risk
This arises from adverse movements in the money market (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.
4.3 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.
4.4 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.
4.5 Legal risk
Legal risk is risk from uncertainty due to legal actions or uncertainty in the
applicability or interpretation of contracts, laws or regulations. Legal risk
may entail such issues as contract formation, capacity and contract frustration.
To manage this risk the Group employs a legal practitioner who is responsible
for the drafting, monitoring and execution of all contracts. Permanent
relationships are also maintained with firms of legal practitioners and access
to legal advice is readily available to all departments. The compliance
function is also responsible for identifying and monitoring legal risk and
ensuring that the Group remains in compliance with all regulatory requirements.
4.6 Reputational Risk
Reputational risk is the risk of loss of business as a result of negative
publicity or negative perceptions by the market with regards to the way the
Group can conduct its business. To manage this risk, the Group strictly
monitors customer's complaints, continuously train staff at all levels, conducts
market surveys and periodic reviews of business practices through its internal
audit department.
The directors are satisfied with the risk management processes in the Group as
these have contributed to be minimization of losses arising from risk exposures.
5. REGULATORY COMPLIANCE
During the period under review, the Bank was convicted of five (5) charges under
the Exchange Control Act and a fine of Z$1.42 billion was paid. On Counsel's
advice taken, an appeal has been filed and is pending.
On 18 October 2005, the Bank's Primary Dealership Status, through which it is
able to purchase financial instruments directly from the RBZ was withdrawn.
This came about because of non-receipt of payment due to technical challenges
which arose on the Bank's electronic payment platform which provides settlement
on a particular day. The Primary Dealership Status was restored on 28 October
2005 following an appeal to the Authorities.
The RBZ had issued on 30 September 2004 at the time the Bank sought the RBZ's
liquidity assistance a Corrective Order concerning certain aspects with regard
to Board composition, capital, liquidity, management information systems and the
governance and credit risk management of insider loans. Save for the full
repayment of all insider loans then identified (repaid subsequent to year end),
the Bank has taken measures to address all these matters and remains in regular
communication with the RBZ.
The Group remains committed to complying with and adhering to all regulatory
requirements.
CONSOLIDATED INCOME STATEMENTS
year ended 31 December 2005
INFLATION ADJUSTED HISTORICAL
Restated
Note 2005 2004 2005 2004
Z$ million Z$ million Z$ million Z$ million
Interest from lending activities 626 055 1 624 090 251 543 151 206
Income from investing activities 679 253 578 431 437 174 56 477
1 305 308 2 202 520 688 717 207 683
Interest expense 5 (776 403) (1 442 692) (402 572) (146 654)
Net interest income 528 905 759 829 286 145 61 029
Net foreign exchange gains/(losses) 362 664 (50 409) 212 056 (7 010)
Non-interest income 6 337 187 269 041 246 248 42 296
Loss on disposal of subsidiary - (73 378) - (4 530)
Net operating income 1 228 756 905 083 744 449 91 785
Operating expenditure 7 (620 242) (922 757) (221 038) (72 632)
Charge for bad and doubtful debts (32 565) (260 784) (32 565) (38 024)
Loss on net monetary position (199 842) (283 581) - -
Profit/(loss) before taxation 376 107 (562 039) 490 846 (18 871)
Taxation 8 (132 211) 269 199 (142 022) 9 315
Financial institutions levy 8 (23 435) (549) (23 435) (80)
Profit/(loss) for the year 220 461 (293 389) 325 389 (9 636)
Earnings/(Loss) per share (cents)
- Basic 10 44 275 (68 742) 65 347 (2 258)
- Headline 10 42 687 (54 051) 57 543 (1 477)
- Diluted basic 10 41 709 (67 960) 61 561 (2 232)
- Diluted headline 10 40 214 (53 434) 54 209 (1 460)
Dividend per share (cents) - - - -
CONSOLIDATED BALANCE SHEETS
year ended 31 December 2005
INFLATION ADJUSTED HISTORICAL
Restated
Note 2005 2004 2005 2004
Shareholders' funds Z$ million Z$ million Z$ million Z$ million
Share capital 11 298 151 298 025 213 107
Capital reserves 11 887 070 811 636 89 678 25 248
Revenue reserves (363 581) (581 256) 309 491 (13 112)
Total shareholders' funds 821 640 528 405 399 382 12 243
Liabilities
Deposits and other accounts 12 2 067 259 3 310 961 2 067 259 482 760
Financial liabilities held for trading 13 541 098 300 460 541 098 43 809
Provision for current taxation 21 773 9 465 21 773 1 380
Acceptances 4 445 94 714 4 445 13 810
Deferred taxation 304 271 209 010 108 645 3 572
3 760 486 4 453 015 3 142 602 557 574
Assets
Balances with banks and cash 14 933 865 847 157 933 865 123 521
Financial assets at fair value through 13 1 008 608 168 099 1 008 608 24 510
profit and loss
Available for sale securities 13 34 857 - 34 857 -
Advances and other accounts 15 1 053 471 2 260 110 1 053 471 329 539
Non-current assets held for sale 19 40 100 - 40 100 -
Customers' indebtedness for acceptances 4 445 94 714 4 445 13 810
Trade investment 16 2 067 3 628 2 067 529
Quoted and other investments 2 279 6 523 2 279 951
Investment properties 18 40 000 261 991 40 000 38 200
Property and equipment 17 640 794 810 793 22 910 26 514
3 760 486 4 453 015 3 142 602 557 574
CONSOLIDATED INFLATION ADJUSTED STATEMENT OF CHANGES IN EQUITY
At 31 December 2005
Capital Reserves Revenue
Reserves
Capital
Share Share Statutory Redemption Revaluation Accumulated
Capital Premium Reserve Reserve Reserve Other Profit/(loss) Total
Z$ m Z$ m Z$ m Z$ m Z$ m Z$ m Z$ m Z$ m
Balances at 1 January 298 025 712 012 37 817 57 226 3 799 782 (581 256) 528 405
2005
Net profit for the year - - - - - - 220 461 220 461
Shares issued - rights 126 71 234 - - - - - 71 360
issue
Share based payments - - - - - 4 200 - 4 200
Fair value loss on
available for sale
securities - - - - - - (4 032) (4 032)
Deferred tax on available
for sale securities
adjustment - - - - - - 1 246 1 246
Dividends paid - - - - - - - -
Balances at 31 December 298 151 783 246 37 817 57 226 3 799 4 982 (363 581) 821 640
2005
CONSOLIDATED INFLATION ADJUSTED STATEMENT OF CHANGES IN EQUITY
At 31 December 2004 (Restated)
Capital Reserves Revenue
Reserves
Capital
Share Share Statutory Redemption Revaluation Accumulated
Capital Premium Reserve Reserve Reserve Other Profit/ Total
(loss)
Z$ m Z$ m Z$ m Z$ m Z$ m Z$ m Z$ m Z$ m
Balances as at 1 January 298 025 506 383 37 817 57 226 829 782 (63 837) 837 225
2004
Capitalisation of reserves - 205 629 - - - - (205 629) -
Revaluation of properties - - - - 2 970 - - 2 970
Net loss for the year - - - (293 389) (293 389)
Dividends paid - - - - - - (18 401) (18 401)
Balances at 31 December 298 025 712 012 37 817 57 226 3 799 782 (581 256) 528 405
2004
CONSOLIDATED HISTORICAL STATEMENT OF CHANGES IN EQUITY
At 31 December 2005
Capital Reserves Revenue
Reserves
Capital
Share Share Statutory Redemption Revaluation Accumulated
Capital Premium Reserve Reserve Reserves Other Profit/ Total
(loss)
Z$ m Z$ m Z$ m Z$ m Z$ m Z$ m Z$ m Z$ m
Balances at 1 January 107 24 907 23 27 53 238 (13 112) 12 243
2005
Net profit for the year - - - - - - 325 389 325 389
Shares issued - rights 106 60 230 - - - - - 60 336
issue
Share based payments - - - - - 4 200 - 4 200
Fair value loss on
available for sale
securities - - - - - - (4 032) (4 032)
Deferred tax on
available for sale
securities - - - - - - 1 246 1 246
Dividends paid - - - - - - - -
Balances at 31 December 213 85 137 23 27 53 4 438 309 491 399 382
2005
CONSOLIDATED HISTORICAL COST 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 Reserves - 24 327 - - - (24 327) -
Revaluation of properties - - - - 238 - 238
Net loss for the year - - - (9 636) (9 636)
Dividends paid - - - - - (2 177) (2 177)
Balances at 31 December 2004 107 24 907 23 27 291 (13 112) 12 243
CONSOLIDATED CASH FLOW STATEMENTS
year ended 31 December 2005
INFLATION ADJUSTED HISTORICAL
Restated
2005 2004 2005 2004
CASH FLOWS FROM OPERATING ACTIVITIES Note Z$ million Z$ million Z$ million Z$ million
Profit/(loss) before taxation and monetary Position 575 949 (278 458) 490 846 (18 871)
Non-cash items
Loss/(profit) on disposal of property and equipment 18 701 10 294 (4 338) 294
Depreciation 130 517 267 334 5 027 3 782
Property and equipment write off 21 468 2 503 884 365
Investment properties fair value adjustment (43 900) (10 082) (43 900) (23 040)
Trade investment fair value adjustment (1 536) 17 146 (1 536) (481)
Quoted investments fair value adjustment (1 328) - (1 328) -
Provision for bad and doubtful debts 32 565 260 784 32 565 38 024
Minority interest written off - (9 814) - 59
Share based payments 4 200 - 4 200 -
Loss on disposal of interest in subsidiary - 73 378 - 4 530
Loss on disposal of investment property 19 399 - 1 708 -
Investment property monetary adjustment 212 075 - - -
Quoted and other investment monetary adjustment 5 528 - - -
Trade investments monetary adjustment 3 097 - - -
Loss on net monetary position (199 842) (283 581) - -
Operating cash flows before changes in operating
assets and liabilities 776 893 49 504 484 128 4 662
Changes in operating assets and liabilities
Financial liabilities held for trading 240 639 (767 825) 497 289 (23 115)
Deposits and other accounts (1 243 700) 544 530 1 584 500 309 454
Advances and other accounts 1 174 072 (130 097) (756 497) (217 790)
Financial assets at fair value through profit and (840 509) (126 696) (984 098) (21 916)
loss
Available for sale securities (38 889) - (38 889) -
Eliminating effect of net liabilities retained on
sale of
subsidiary - (85 511) - (5 290)
68 506 (516 095) 786 433 46 005
Taxation
Corporate tax paid (60 982) (32 084) (38 462) (2 140)
Net cash inflows/(outflows) from operating activities 7 524 (548 179) 747 971 43 865
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds on disposal of property and equipment 18 169 40 046 6 053 539
Purchase of property and equipment (10 386) (214 675) (4 022) (17 675)
Proceeds from disposal of quoted and other 42 9 348 6 50
investments
Proceeds from disposal of subsidiary - 12 133 - 760
Net cash inflows/(outflows) from investing activities 7 825 (153 148) 2 037 (16 326)
Net cash inflows/(outflows) before financing 15 349 (701 327) 750 008 27 539
activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares - rights issue 71 360 - 60 336 -
Dividends paid - (18 401) - (2 177)
71 360 (18 401) 60 366 (2 177)
Net increase/(decrease) in cash and cash equivalents 86 709 (719 728) 810 344 25 362
Cash and cash equivalents at beginning of year 847 156 1 566 884 123 521 98 159
Cash and cash equivalents at the end of the year 933 865 847 156 933 865 123 521
14
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2005
__________________________________________________________________________________________________
NOTES TO THE FINANCIAL STATEMENTS
1. INCORPORATION AND ACTIVITIES
The Company is incorporated in Zimbabwe and is an investment holding company.
Its principal operating subsidiary is engaged in banking and other companies
hold property. The details of the Bank's non-operating subsidiary are shown
under note 'f' to the bank's accounts.
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 2005 48 205.60 1.0000
31 December 2004 7 028.70 6.8584
31 December 2003 3 019.90 15.9626
4.2 Financial instruments
The fair value of financial instruments is the amount for which an asset could
be exchanged, or a liability settled between knowledgeable, willing parties in
an arm's length transaction. 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.
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2005
_________________________________________________________________________________________________
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.
4.4 Share - based payments
The Group issues share options to certain employees in terms of the Employee
Share Option Scheme. Share options are measured at fair value at the date of
grant. The fair value determined at the date of grant of the options is
expensed on a straight-line basis over the vesting period, based on the Group's
estimate of shares that will eventually vest. Fair value is measured using the
Black-Scholes option pricing model. The expected life used in the model has
been adjusted, based on management's best estimate, for the effects of
non-transferability, exercise restrictions and other behavioural considerations.
4.5 Property and equipment
International Accounting Standard 16 (IAS 16) stipulates that the residual value
and the useful life of an asset must be reviewed at least each financial
year-end. If the residual value of an asset increases by an amount equal to or
greater than the asset's carrying amount, then the depreciation of the asset
ceases. Depreciation will resume only when the residual value decreases to an
amount below the asset's carrying amount.
5. INTEREST EXPENSE
INFLATION ADJUSTED HISTORICAL
Restated
2005 2004 2005 2004
Z$ million Z$ million Z$ million Z$ million
RBZ Liquidity Support 288 215 370 483 55 366 50 758
Statutory reserves 229 177 - 229 177 -
Trading activities 259 011 1 092 041 118 029 97 645
Capitalised interest - (19 832) - (1 749)
776 403 1 442 692 402 572 146 654
The Bank has accounted for a financial obligation in respect of interest on
statutory reserves. A further interest obligation of Z$421 302 million will be
payable in the course of 2006.
INFLATION ADJUSTED HISTORICAL
Restated
2005 2004 2005 2004
6. NON-INTEREST INCOME Z$ million Z$ million Z$ million Z$ million
Net gains from quoted and other
investments 83 (2 640) 83 18
Net commission and fee income 112 852 272 532 49 502 18 524
Fair value adjustment on financial 137 627 - 137 627 -
instruments
Fair value adjustment on investment properties 43 900 10 082 43 900 23 040
Fair value adjustment on trade investments 1 536 (17 146) 1 536 481
(Loss)/profit on disposal of property and equipment (18 701) (10 294) 4 338 (294)
Loss on disposal of investment property (19 399) - (1 708) -
Other net operating income 79 289 16 507 10 970 527
337 187 269 041 246 248 42 296
7. OPERATING EXPENDITURE
INFLATION ADJUSTED HISTORICAL
Restated
2005 2004 2005 2004
Z$ million Z$ million Z$ million Z$ million
The operating profit is after charging the
following:-
Administration costs 219 645 306 763 96 186 33 366
Depreciation 130 517 267 334 5 027 3 782
Staff costs 270 080 348 660 119 825 35 484
620 242 922 757 221 038 72 632
8. TAXATION
INFLATION ADJUSTED HISTORICAL
Restated
2005 2004 2005 2004
Tax Charge Z$ million Z$ million Z$ million Z$ million
Current taxation 34 662 4 698 34 662 385
Prior year tax adjustment - 3 196 - 466
Aids levy 1 039 96 1 039 14
Deferred tax charge/(credit) 96 510 (277 189) 106 321 (10 480)
132 211 (269 199) 142 022 (9 315)
Financial institutions levy
- current 23 435 - 23 435 -
- Prior years under provision - 549 - 80
Total taxation 155 646 (268 650) 165 457 (9 235)
9. BAD AND DOUBTFUL DEBTS
Provisions are applied to write off advances in part or in whole when
they are considered wholly or partly irrecoverable. The aggregate provisions
which are made during the year are charged to income.
9.1 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.
9.2 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.
9.3 Regulatory Guidelines and International Accounting Standards
requirements
The Banking Regulations 2000 gives guidance on provisioning for doubtful debts
and stipulates certain minimum percentages to be applied to the respective
categories of the loan book.
International Accounting Standard 39 (IAS 39), prescribes the
provisioning for doubtful debts based on the actual loan losses incurred in the
past applied to the sectorial analysis of book debts and the discounting of
expected cash flows on specific problem accounts.
The two prescriptions are likely to give different results. The Group
has taken the view that where the IAS 39 charge is less than the amount provided
for in the Banking Regulations, the difference is charged against equity and
where it is more, the full amount will be charged to the income statement.
9.4 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.
10. EARNINGS PER SHARE
The calculation of earnings per share is based on the following figures:-
10.1 Earnings/(losses)
INFLATION ADJUSTED HISTORICAL
Restated
2005 2004 2005 2004
Z$ million Z$ million Z$ million Z$ million
Basic 220 461 (293 389) 325 389 (9 636)
Headline earnings (note 10.4) 212 557 (230 690) 286 528 (22 556)
INFLATION ADJUSTED HISTORICAL
10.2 Number of shares 2005 2004 2005 2004
Weighted average shares in issue 497 938 947 426 804 812 497 938 947 426 804 812
Diluted number of shares 528 563 716 431 722 412 528 563 716 431 722 412
10. 3 Earnings/(loss) per share (cents)
INFLATION ADJUSTED HISTORICAL
Restated
2005 2004 2005 2004
Basic 44 275 (68 742) 65 347 (2 258)
Headline 42 687 (54 051) 57 543 (1 477)
Diluted basic 41 709 (67 960) 61 561 (2 232)
Diluted headline 40 214 (53 434) 54 209 (1 460)
10.4 Headline earnings
INFLATION ADJUSTED HISTORICAL
Restated
2005 2004 2005 2004
Z$ million Z$ million Z$ million Z$ million
Profit/(loss) attributable to shareholders 220 461 (293 389) 325 389 (9 636)
Add/(deduct) non-recurring items:
Loss/(profit) on disposal of property 18 701 10 294 (4 338) 294
and equipment
Loss on disposal of subsidiary - 73 378 - 4 530
Fair value adjustment on investment properties (43 900) (10 082) (43 900) (23 040)
Loss on disposal of investment property 19 399 - 1 708 -
Fair value adjustment on trade investment - 17 146 - (481)
Tax effect (2 104) (28 037) 7 669 5 777
212 557 (230 690) 286 528 (22 556)
11. SHARE CAPITAL
HISTORICAL AND INFLATION ADJUSTED
GROUP AND COMPANY
2005 2004 2005 2004
11.1 Authorised Shares Shares Z$ million Z$ million
Ordinary shares of Z$0.25 each 1 250 000 000 560 000 000 313 140
Restated
11.2 Issued and fully paid 2005 2004 2005 2004
Shares Shares Z$ million Z$ million
At 1 January 426 804 812 426 804 812 107 107
Shares issued during the year - rights issue 426 804 812 - 106 -
At 31 December - Historical 853 609 624 426 804 812 213 107
Effect of IAS 29 - - 297 938 297 918
At 31 December Inflation adjusted 853 609 624 426 804 812 298 151 298 025
Of the unissued ordinary shares of 396 390 376, options which may be granted in
terms of the NMBZ 2005 Employee Share Option Scheme (ESOS) amount to 85 360 962.
As at 31 December 2005, 30 624 769 share options were outstanding from the
2001 and 2005 ESOSs.
Of the unissued ordinary shares, 200 000 000 are under the control of the
shareholders and 196 390 376 are under the control of the directors.
11.3 Capital Reserves
INFLATION ADJUSTED HISTORICAL
Restated
2005 2004 2005 2005
Z$ million Z$ million Z$ million Z$ million
Statutory reserve fund 37 817 37 817 23 23
Share premium 783 246 712 012 85 137 24 907
Capital redemption reserve 57 226 57 226 27 27
Revaluation reserve 3 799 3 799 53 53
Other 4 982 782 4 438 238
887 070 811 636 89 678 25 248
12. DEPOSITS AND OTHER ACCOUNTS
12.1 Deposits and other accounts by type
INFLATION ADJUSTED HISTORICAL
Restated
2005 2004 2005 2004
Z$ million Z$ million Z$ million Z$ million
RBZ Temporary Liquidity Support - 637 372 - 92 933
RBZ Productive Sector Facility 284 832 653 633 284 832 95 304
RBZ - Statutory Reserves 576 427 - 576 427 -
Deposits from other banks 34 585 160 171 34 585 23 354
Other money market deposits 552 357 107 444 552 357 15 666
Current and deposit accounts 862 681 1 098 290 862 681 160 138
Total deposits 2 310 882 2 656 910 2 310 882 387 395
Trade and other creditors 297 475 954 511 297 475 139 174
2 608 357 3 611 421 2 608 357 526 569
Less financial liabilities held for (541 098) (300 460)
trading (note 13.1) (541 098) (43 809)
2 067 259 3 310 961 2 067 259 482 760
12.2 Maturity analysis
INFLATION ADJUSTED HISTORICAL
Restated
2005 2004 2005 2004
Z$ million Z$ million Z$ million Z$ million
Less than one month 2 259 760 1 107 028 2 259 760 161 412
1 to 3 months 31 454 138 759 31 454 20 232
3 to 6 months 19 666 1 057 757 19 666 154 228
6 months to 1 year 2 353 366 2 51 523
1 to 5 years - - - -
Over 5 years - - - -
2 310 882 2 656 910 2 310 882 387 395
12.3 Sectoral analysis of deposits
INFLATION ADJUSTED
Restated
2005 2004
Z$ million % Z$ million %
Banks and other financial institutions 112 477 5 633 881 24
Reserve Bank of Zimbabwe 861 664 37 1 291 005 48
Transport and telecommunications companies 59 415 3 151 -
Mining companies 28 051 1 30 849 1
Industrial companies 557 822 24 125 721 5
Other deposits 554 744 24 573 952 22
Municipalities and parastatals 221 - 1 351 -
Agriculture 136 488 6 - -
2 310 882 100 2 656 910 100
12.4 Sectoral analysis of deposits
HISTORICAL
2005 2004
Z$ million % Z$ million %
Banks and other financial institutions 112 477 5 92 424 24
Reserve Bank of Zimbabwe 861 664 37 188 237 48
Transport and telecommunications companies 59 415 3 22 -
Mining companies 28 051 1 4 498 1
Industrial companies 557 822 24 18 331 5
Other deposits 554 744 24 83 686 22
Municipalities and parastatals 221 - 197 -
Agriculture 136 488 6 - -
2 310 882 100 387 395 100
13. FINANCIAL INSTRUMENTS
13.1 Financial liabilities held for trading
Fair
Cost Value Restated Historical
2005 2005 2004 2004
Z$ million Z$ million Z$ million Z$ million
Fixed term deposits 66 981 70 939 85 065 12 403
Negotiable Certificates of Deposits 98 387 99 851 98 356 14 341
Liabilities re-discounted 364 903 370 308 117 039 17 065
Total financial liabilities held for trading 530 271 541 098 300 460 43 809
13.2 Financial assets at fair value through profit and loss
Government and public sector securities 792 706 934 961 65 244 9 513
Treasury bills 737 706 883 933 42 982 6 267
Government stock 55 000 51 028 22 262 3 246
Bills - own acceptances 72 683 73 647 102 855 14 997
Total financial assets at fair value through profit 865 389 1 008 608 168 099 24 510
and loss
13.3 Available for sale securities
Treasury bills 38 889 34 857 - -
13.4 Financial liabilities held for trading
INFLATION ADJUSTED HISTORICAL
Restated
2005 2004 2005 2004
Z$ million Z$ million Z$ million Z$ million
Less than 1 month 489 976 99 172 489 976 14 460
1 to 3 months 31 454 198 345 31 454 28 920
3 to 6 months 19 666 981 19 666 143
6 months to 1 year 2 1 962 2 286
1 to 5 years - - - -
Over 5 years - - - -
541 098 300 460 541 098 43 809
13.5 Financial assets at fair value through profit and loss
INFLATION ADJUSTED HISTORICAL
Restated
2005 2004 2005 2004
Z$ million Z$ million Z$ million Z$ million
Less than 1 month 217 190 27 130 217 190 3 956
1 to 3 months 63 278 54 258 63 278 7 911
3 to 6 months 275 199 17 473 275 199 2 548
6 months to 1 year 402 932 34 946 402 932 5 095
1 to 5 years 50 009 34 292 50 009 5 000
Over 5 years - - - -
1 008 608 168 099 1 008 608 24 510
14. CASH AND CASH EQUIVALENTS
INFLATION ADJUSTED HISTORICAL
Restated
2005 2004 2005 2004
Z$ million Z$ million Z$ million Z$ million
Balances with other banks and cash
Statutory reserve 445 427 516 074 445 427 75 247
Current, nostro accounts and cash 488 438 331 083 488 438 48 274
Total cash and cash equivalents 933 865 847 157 933 865 123 521
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.
15. ADVANCES AND OTHER ACCOUNTS
INFLATION ADJUSTED HISTORICAL
Restated
2005 2004 2005 2004
Z$ million Z$ million Z$ million Z$ million
15.1.1 Advances
Fixed term loans 480 468 727 759 480 468 106 112
Local loans and overdrafts 313 498 1 189 528 313 498 173 441
Other accounts 259 505 342 823 259 505 49 986
1 053 471 2 260 110 1 053 471 329 539
15.1.2 Maturity analysis
Less than 1 month 500 212 383 750 500 212 55 953
1 to 3 months 120 295 767 501 120 295 111 907
3 to 6 months 143 909 242 540 143 909 35 364
6 months to 1 year 13 653 485 081 13 653 70 728
1 to 5 years 41 963 539 845 41 963 78 713
Over 5 years 33 442 - 33 442 -
Total advances 853 474 2 418 717 853 474 352 665
Specific and portfolio doubtful debt provisions (46 983) (306 186) (46 983) (44 644)
Suspended interest (12 525) (195 245) (12 525) (28 468)
793 966 1 917 286 793 966 279 553
Other accounts 259 505 342 824 259 505 49 986
Total 1 053 471 2 260 110 1 053 471 329 539
Included in other accounts is the equivalent of an amount of US$1.8 million that
was outstanding at 31 December 2003 and 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 offered settlement at Z$824
to the US$, being the historical rate prior to the introduction of the
controlled foreign exchange auction system resulting in a loss to the Bank of $9
700 million. Discussions with the Authorities were held and the Bank was
informed subsequent to year end that settlement will be at a rate of Z$824 to
the US$ and the current year results reflect this position. The Bank will be
appealing against this ruling.
15.2 Sectoral analysis of utilisations
INFLATION ADJUSTED
Restated
2005 2004
Z$ million % Z$ million %
Industrials 336 868 39 1 169 638 47
Agriculture and horticulture 301 923 35 314 032 12
Conglomerates 36 141 4 99 879 4
Services 8 258 1 50 115 2
Mining 12 503 1 118 026 5
Food & Beverages 64 408 8 89 056 3
Other 97 818 12 672 686 27
857 919 100 2 513 432 100
The above sectoral analysis comprises advances of Z$853 474 million (2004 - Z$2
418 718 million) and customers' indebtedness for acceptances of Z$4 445 million (2004 - Z$94 715
million).
15.3 Sectoral analysis of utilisation
HISTORICAL
2005 2004
Z$ million % Z$ million %
Industrials 336 868 39 170 541 47
Agriculture and horticulture 301 923 35 45 788 12
Conglomerates 36 141 4 14 563 4
Services 8 258 1 7 307 2
Mining 12 503 1 17 209 5
Food & Beverages 64 408 8 12 985 3
Other 97 818 12 98 082 27
857 919 100 366 475 100
The above sectoral analysis comprises advances of Z$853 474 million (2004 -
Z$352 665 million) and customers' indebtedness for acceptances of Z$4 445 million (2004 - Z$13 810
million).
The material concentration of loans and advances are in the industrial sector
39% (2004 - 47%) and agriculture and horticulture 35% (2004 - 12%)
15.4 Provisions for doubtful debts including acceptances
INFLATION ADJUSTED
-------------------- 2005----- ------------Restated 2004---------
Specific Portfolio Total Specific Portfolio Total
Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million
At 1 January 268 266 37 920 306 186 89 392 50 457 139 850
Charge against profits 34 271 (1 706) 32 565 244 543 16 241 260 784
Bad debts written off (30 226) - (30 226) (14 684) - (14 984)
Monetary adjustment (229 151) (32 391) (261 542) (50 985) (28 778) (79 764)
At 31 December 43 160 3 823 46 983 268 266 37 920 306 186
15.5 Provisions for doubtful debts including acceptances
HISTORICAL
-------------------- 2005----- ------------------- 2004---------
Specific Portfolio Total Specific Portfolio Total
Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million
At 1 January 39 115 5 529 44 644 5 600 3 161 8 761
Charge against profits 34 271 (1 706) 32 565 35 656 2 368 38 024
Bad debts written off (30 226) - (30 226) (2 141) - (2 141)
At 31 December 43 160 3 823 46 983 39 115 5 529 44 644
15.6 Non performing loans and advances
INFLATION ADJUSTED HISTORICAL
Restated
2005 2004 2005 2004
Z$ million Z$ million Z$ million Z$ million
Total non performing loans and advances 33 267 527 404 33 267 76 899
Specific provision for doubtful debts (20 742) (268 266) (20 742) (39 115)
Interest in suspense (12 525) (195 245) (12 525) (28 468)
- 63 893 - 9 316
The residue on these accounts, where applicable, represents recoverable portions
covered by realisable security.
16. TRADE INVESTMENT
INFLATION ADJUSTED HISTORICAL
Restated
2005 2004 2005 2004
Z$ million Z$ million Z$ million Z$ million
Takura Ventures (Pvt) Ltd 3 628 3 319 529 484
Fair value adjustment 1 538 - 1 538 -
Other - 309 - 45
Monetary adjustment (3 099) - - -
2 067 3 628 2 067 529
17. PROPERTY AND EQUIPMENT
INFLATION ADJUSTED HISTORICAL
Restated
2005 2004 2005 2004
Z$ million Z$ million Z$ million Z$ million
Cost 1 780 306 1 886 108 32 955 31 777
Accumulated depreciation (1 139 512) (1 075 315) (10 045) (5 263)
Net book value 640 794 810 793 22 910 26 514
18. INVESTMENT PROPERTY
INFLATION ADJUSTED HISTORICAL
Restated
2005 2004 2005 2004
Z$ million Z$ million Z$ million Z$ million
At 1 January 261 991 1 913 38 200 52
Transfers from capital work in progress - 58 317 - 3 100
Reclassification from property & equipment - - 12 008
191 679
Disposals (13 716) - (2 000) -
Fair value adjustments 43 900 10 082 43 900 23 040
Transfer to non-current assets held for sale (40 100) - (40 100) -
Monetary adjustment (212 075) - - -
At 31 December 40 000 261 991 40 000 38 200
There was no rental income or operating expenses arising from investment
properties in the current year.
The investment property comprise Stand Number 19207 of subdivision of Stand
14908 of Harare Township. The property was valued for year end purposes on 3
February 2006 by an independent and professional valuer and the open market
value was Z$40 000 million.
The remainder of Lot H of Borrowdale Estate, owned by Carey Farm (Pvt) Ltd, a
wholly owned subsidiary of the Bank was reclassified to non-current asset held
for sale per Note 19.
19. NON-CURRENT ASSET HELD FOR SALE
INFLATION ADJUSTED HISTORICAL
Restated
2005 2004 2005 2004
Z$ million Z$ million Z$ million Z$ million
As at 1 January - - - -
Transfer from investment properties 40 100 - 40 100 -
40 100 - 40 100 -
A decision to dispose the remainder of Lot H of Borrowdale Estate, owned by the
Bank's wholly owned subsidiary, Carey Farm (Private) limited, was taken late in
December 2005. It is expected that the property will be sold for cash and that
the disposal will be completed within 12 months from December 2005.
The property measures 89.2623 hectares (223.16 acres) in extent. The
beneficial interest in Carey Farm (Private) Limited arose from shareholding
acquired in settlement of a debt owed to the Bank amounting to $10 008 million.
The acquisition is in compliance with Section 34 of the Banking Act (Chapter
24.20). The land was valued by an independent and professional valuer on 3
February 2006 for year end purposes.
20. CONTINGENT LIABILITIES
Contingent liabilities as at 31 December 2005 were in respect of
guarantees (Z$86 039 million) and withholding tax (Z$6 697 million) (31
December 2004 - Z$11 780 million).
21. EXCHANGE RATES
The following exchange rates have been used to translate the foreign balances to
Zimbabwe dollars at period end:-
31 Dec 2005 31 Dec 2004
Z$ Z$
British Sterling GBP1.00 146 158.86 11 846.34
United States Dollar USD1.00 84 587.57 6 200.00
NMB BANK LIMITED
CONSOLIDATED INCOME STATEMENTS
year ended 31 December 2005
INFLATION ADJUSTED HISTORICAL
Restated
Note 2005 2004 2005 2004
Z$ million Z$ million Z$ million Z$ million
Interest from lending
activities 626 054 1 624 090 251 543 151 206
Income from investing
activities 679 253 578 437 437 174 56 475
1 305 307 2 202 527 688 717 207 681
Interest expense (776 403) (1 442 692) (402 572) (146 654)
Net interest income 528 904 759 835 286 145 61 027
Net foreign exchange
gain/(losses) 362 664 (50 409) 212 056 (7 010)
Non interest income a 340 888 168 712 244 665 34 159
Net operating income 1 232 456 878 138 742 866 88 176
Operating expenditure b (616 613) (919 670) (219 272) (72 462)
Charge for bad and doubtful
debts (32 565) (260 784) (32 565) (38 024)
Loss on net monetary
position (165 644) (256 929) - -
Profit/(loss) before
taxation 471 634 (559 245) 491 029 (22 310)
Taxation (150 503) 274 088 (142 763) 9 923
Financial institutions levy (23 435) (549) (23 435) (80)
Profit/(loss) after taxation 243 696 (285 706) 324 831 (12 467)
Earnings/(loss) per share (cents):
- Basic c 1 562 156 (1 843 265) 2 082 049 (80 432)
- Headline c 1 405 793 (1 789 684) 1 823 836 (173 148)
Dividend per share (cents) - - - -
NMB BANK LIMITED
CONSOLIDATED BALANCE SHEETS
As at 31 December 2005
INFLATION ADJUSTED HISTORICAL
Restated
2005 2004 2005 2004
SHAREHOLDER'S FUNDS Note Z$ Z$ Z$ million Z$ million
million million
Share capital 140 104 140 103 32 31
Capital reserves 984 383 913 422 85 207 25 208
Revenue reserves (338 300) (579 210) 306 278 (15 767)
Total shareholder's funds 786 187 474 315 391 517 9 472
Liabilities
Deposits and other 2 069 844 3 309 113 2 069 844 482 144
accounts
Financial liabilities 541 098 297 929 541 098 43 440
held for trading
Amount owing to holding 40 274 40 40
company
Provision for current 21 719 6 510 21 719 1 054
taxation
Acceptances 4 445 94 714 4 445 13 810
Deferred taxation 293 011 179 457 109 048 3 233
3 716 344 4 362 312 3 137 711 553 193
Assets
Balances with banks and e 933 865 842 829 933 865 122 890
cash
Financial assets at fair
value through profit
and loss 1 008 608 168 099 1 008 608 24 510
Available for sale 34 857 - 34 857 -
securities
Advances and other 1 053 086 2 260 398 1 053 086 329 581
accounts
Non-current assets held f 40 100 - 40 100 -
for sale
Customers' indebtedness 4 445 94 714 4 445 13 810
for acceptances
Quoted and other 85 62 85 9
investments
Investment properties g 40 000 248 274 40 000 36 200
Property and equipment h 601 298 747 936 22 665 26 193
3 716 344 4 362 312 3 137 711 553 193
NMB BANK LIMITED
CONSOLIDATED INFLATION ADJUSTED STATEMENT OF CHANGES IN EQUITY
At 31 December 2005
Capital Reserves
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 2005 140 103 872 635 37 817 2 970 (579 210) 474 315
Net profit for the period - - - - 243 696 243 696
Fair value loss on available - - - (4 032) (4 032)
for sale securities
-
Deferred tax on available for
sale securities
- - - - 1 246 1 246
Dividend paid - - - - - -
Shares issued 1 70 961 - - - 70 962
Balances at 31 December 2005
140 104 943 596 37 817 2 970 (338 300) 786 187
At 31 December 2004 (Restated)
Capital Reserves
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 140 090 667 007 37 817 - (69 462) 775 452
Net loss for the period - - - - (285 706) (285 706)
Revaluation of properties - - - 2 970 - 2 970
Shares issued 13 205 628 - - (205 641) -
Dividend paid - - - - (18 401) (18 401)
Balances at 31 December 2004 140 103 872 635 37 817 2 970 (579 210) 474 315
NMB BANK LIMITED
CONSOLIDATED HISTORICAL STATEMENT OF CHANGES IN EQUITY
At 31 December 2005
Capital Reserves
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 2005 31 24 947 23 238 (15 767) 9 472
Net profit for the period - - - - 324 831 324 831
Fair value loss on available for
sale securities
- - - - (4 032) (4 032)
Deferred tax on available for
sale securities
- - - - 1 246 1 246
Shares issued 1 59 999 - - - 60 000
Dividends paid - - - - - -
Balances at 31 December 2005 32 84 946 23 238 306 278 391 517
HISTORICAL STATEMENT OF CHANGES IN EQUITY
At 31 December 2004
Capital Reserves
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 - - - - (12 467) (12 467)
Shares issued 1 24 327 - - (24 328) -
Dividend paid - - - - (2 177) (2 177)
Balances at 31 December 2004 31 24 947 23 238 (15 767) 9 472
NMB BANK LIMITED
CONSOLIDATED CASH FLOWS STATEMENTS
year ended 31 December 2005
INFLATION ADJUSTED HISTORICAL
Restated
2005 2004 2005 2004
CASH FLOWS FROM OPERATING ACTIVITIES Note Z$ million Z$ million Z$ million Z$ million
Profit/(loss) before taxation and monetary position 583 279 (293 731) 491 029 (22 310)
Non-cash items
Profit/(loss) on disposal of property and equipment 18 701 10 294 (4 338) 294
Depreciation 128 622 264 528 4 950 3 686
Property, plant and equipment prior year adjustment - - 884 -
Investment properties fair value adjustment (43 900) 1 721 (43 900) (21 092)
Quoted investments fair value adjustment (83) - (83) -
Provision for bad and doubtful debts 32 565 260 784 32 565 38 024
Property and equipment write-off - 14 999 - 365
Loss on net monetary position (165 644) (256 929) - -
Investment property monetary adjustment 212 075 - - -
Quoted and other investment monetary adjustment 18 - - -
Amount owing to Holding Company monetary adjustment (235) (263) - -
Operating cash flows before changes in operating
assets and liabilities 765 398 1 303 481 107 (1 033)
Changes in operating assets and liabilities
Financial liabilities held for trading 243 169 (764 465) 497 658 (23 115)
Deposits and other accounts (1 230 683) 534 208 1 587 690 308 845
Financial assets at fair value through profit and (840 509) (126 709) (984 098) (21 917)
loss
Available for sale securities (38 889) - (38 889) -
Advances and other accounts 1 174 746 (103 692) (756 068) (216 159)
73 232 (459 355) 787 400 46 621
Taxation
Corporate tax paid (60 982) (31 885) (38 462) (2 141)
Net cash inflows/(outflows) from operating activities 12 250 (491 240) 748 938 44 480
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds on disposal of property and equipment 18 169 3 450 6 053 308
Purchase of property and equipment (10 386) (208 612) (4 022) (17 296)
Proceeds on disposal of quoted and other investments 42 822 6 47
------------- ------------- ------------- -------------
Net cash inflows/(outflows) from investing activities 7 825 (204 340) 2 037 (16 941)
-------------- ------------- ------------- -------------
Net cash inflows/(outflows) before financing 20 075 (695 580) 750 975 27 539
activities
-------------- ------------- ------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares 70 962 - 60 000 -
Dividends paid - (18 401) - (2 177)
Net cash inflows/(outflows) from financing activities 70 962 (18 401) 60 000 (2 177)
Net increase/(decrease) in cash and cash equivalents 91 037 (713 981) 810 975 25 362
Cash and cash equivalents at beginning of the year 842 828 1 556 809 122 890 97 528
Cash and cash equivalents at the end of the year e 933 865 842 828 933 865 122 890
NMB BANK LIMITED
a. NON-INTEREST INCOME
INFLATION ADJUSTED HISTORICAL
Restated
2005 2004 2005 2004
Z$ million Z$ million Z$ million Z$ million
Net gains from quoted and other investments 83 (2 640) 83 18
Investment property fair value adjustment 43 900 (1 721) 43 900 21 092
Net commission and fee income 112 852 166 861 49 502 12 816
Fair value of financial instruments 137 627 (17 146) 137 627 481
Profit/(loss) on disposal of property and equipment (18 701) (10 294) 4 338 (294)
Other net operating income 65 127 33 652 9 215 46
340 888 168 712 244 665 34 159
b. OPERATING EXPENDITURE
INFLATION ADJUSTED HISTORICAL
Restated
The operating profit is after 2005 2004 2005 2004
charging the following: Z$ million Z$ million Z$ million Z$ million
Administration costs 217 911 306 482 94 497 33 292
Depreciation 128 622 264 528 4 950 3 686
Staff costs 270 080 348 660 119 825 35 484
Total 616 613 919 670 219 272 72 462
c. EARNINGS PER SHARE
The calculation of earnings per share is based on the following figures:
c.1 Earnings/(losses)
INFLATION ADJUSTED HISTORICAL
Restated
2005 2004 2005 2004
Z$ million Z$ million Z$ million Z$ million
Basic 243 696 (285 706) 324 831 (12 467)
Headline earnings (note c.4) 219 303 (277 401) 284 518 (26 838)
c.2 Number of shares (million)
Weighted average shares in issue 15.6 15.5 15.6 15.5
NMB BANK LIMITED
c. EARNINGS PER SHARE
c.3 Earnings/(loss) per share (cents)
INFLATION ADJUSTED HISTORICAL
Restated
2005 2004 2005 2004
Basic 1 562 156 (1 843 265) 2 082 249 (80 432)
Headline 1 405 793 (1 789 684) 1 823 836 (173 148)
c.4 Headline earnings
INFLATION ADJUSTED HISTORICAL
The adjustments are as follows Restated
2005 2004 2005 2004
Z$ million Z$ million Z$ million Z$ million
Profit/(loss) attributable to shareholders 243 696 (285 706) 324 831 (12 467)
Add/(deduct) non-recurring items:
Profit/(loss) on disposal of property and equipment 18 701 10 294 (4 338) 294
Fair value adjustment on investment properties (43 900) 1 721 (43 900) (21 092)
Tax effect 806 (3 710) 7 925 6 427
219 303 277 401 284 518 (26 838)
d. SHARE CAPITAL
d.1 Authorised
The authorized ordinary share capital at 31 December 2005 is at the historical
cost figure of Z$50 million
(2004 - 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
(2004 - Z$31 million) comprising 16 million (2004 - 15.5 million) ordinary
shares of Z$2.00 each.
e. CASH AND CASH EQUIVALENTS
INFLATION ADJUSTED HISTORICAL
Restated
2005 2004 2005 2004
Z$ million Z$ million Z$ million Z$ million
Balances with banks and cash
Statutory reserve 445 427 516 074 445 427 75 247
Current, Nostro accounts and cash 488 438 326 755 488 438 47 643
Total cash and cash equivalents 933 865 842 829 933 865 122 890
f. NON-CURRENT ASSETS HELD FOR SALE
INFLATION ADJUSTED HISTORICAL
Restated
2005 2004 2005 2004
Z$ million Z$ million Z$ million Z$ million
Borrowdale Race Course Property 40 100 - 40 100 -
The non current asset held for sale 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 property was reclassified into
Non-current asset held for sale from investment properties, under which it was
reported in 2004. The land was valued by an independent and professional valuer
for year end purposes on 3 February 2006. The total value of the unencumbered
freehold land and buildings was Z$40 100 million.
g. INVESTMENT PROPERTY
INFLATION ADJUSTED HISTORICAL
Restated
2005 2004 2005 2004
Z$ million Z$ million Z$ million Z$ million
Borrowdale Race Course Property 40 000 248 274 40 000 36 200
The 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$40 000 million.
h. PROPERTY AND EQUIPMENT
INFLATION ADJUSTED HISTORICAL
2005 2004 2005 2004
Z$ million Z$ million Z$ million Z$ million
Cost 1 709 781 1 794 109 32 535 31 358
Accumulated depreciation (1 108 483) (1 046 173) (9 870) (5 165)
Net book value 601 298 747 936 22 665 26 193
i. CAPITAL ADEQUACY - HISTORICAL
2005 2004
Z$ million Z$ million
Share capital 32 31
Share premium 84 969 24 970
Retained earnings 306 278 (15 134)
391 279 9 867
Less: credit to insiders (7 164) (7 810)
Tier 1 capital 384 115 2 057
Tier 2 capital 19 089 3 892
Subordinated Debt 40 40
Revaluation reserves 238 238
General provisions 18 811 3 614
Total capital base 403 204 5 949
Total risk weighted assets 1790 797 437 358
Tier 1 capital adequacy ratio 21. 45% 0.47%
Total capital adequacy ratio 22. 52% 1.36%
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 Tuesday 30
May 2006 at 1430 hours for the following purposes:
ORDINARY BUSINESS
1. To receive and adopt the Financial Statements for the year ended 31
December 2005 together with the reports of the directors and Auditors thereon.
2. To appoint Directors.
In accordance with the Articles of Association, Mr J P de la Fargue and
Mrs D J Sibanda who were appointed during the financial year will retire at the
forthcoming Annual General Meeting and Messrs J T Makoni and J A Mushore retire
by rotation. All the retiring directors, being eligible, offer themselves for
re-election.
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
30 March 2006
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