NMBZ Holdings Ld
31 August 2006
NMBZ HOLDINGS LIMITED
Holding company of
NMB Bank Limited
(Registered Commercial Bank)
UNAUDITED INFLATION ADJUSTED AND HISTORICAL COST
RESULTS FOR THE HALF-YEAR ENDED 30 JUNE 2006
HIGHLIGHTS
Inflation Adjusted
• Attributable loss of Z$547 647 million (30 June 2005 - Z$125 318 million
loss, 12 months to 31 December 2005- Z$725 831 million profit)
• Total asset base down 0.1% to Z$12 365 385 million
(31 December 2005 - Z$12 380 765 million)
Historical
• Attributable profit of Z$391 920 million (30 June 2005 - Z$6 770 million
loss, 12 months to 31 December 2005- Z$325 389 million profit)
• Total asset base up 233% to Z$10 462 309 million
(31 December 2005 - Z$3 142 601 million)
Dr Gibson Manyowa Mandishona, the Chairman of NMBZ Holdings Limited, said:
'The Group's results for the six months ended 30 June 2006 reflect the impact of
the market liquidity conditions over the period under review. With shareholder
support having been effectively secured for a recapitalisation of the Bank, the
second half of the year, economic circumstances permitting, should see an
improvement in performance'
Enquiries:
NMBZ HOLDINGS LIMITED Tel: +263-4-759 601/6
Dr David T Hatendi, Chief Executive Officer davidh@nmbz.co.zw
Mario dos Remedios, Chief Financial Officer mariodosr@nmbz.co.zw
Website http://www.nmbz.co.zw
Email enquiries@nmbz.co.zw
NMBZ HOLDINGS LIMITED
CHAIRMAN'S STATEMENT
The half year under review was characterized by:
• Rising inflation for most of the period
• Increased money supply growth
• High domestic debt
• Escalating interest rates
• Persistent foreign currency shortages
• Continued concessionary lending mainly to the agricultural sector
through the agricultural sector productivity enhancement facility (ASPEF)
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 IFRS's
The existence of hyperinflation as defined by International Accounting Standard
(IAS) 29 'Financial Reporting in Hyperinflationary Economies' 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
The inflation adjusted attributable loss of Z$547 647 million was recorded
compared to a loss of Z$125 318 million over the same period in 2005 and a Z$725
831 million profit for the 12 months to 31 December 2005. The Group recorded a
historical cost profit of Z$391 920 million compared to an attributable loss of
Z$6 770 million over the same period in 2005 and a Z$325 389 million profit in
the 12 months to 31 December 2005. Net interest income increased by 209% to
Z$826 835 million from Z$267 310 million at 30 June 2005. Inflation adjusted
non-interest income increased by 231% to Z$728 224 million and contributed 45%
(30 June 2005 - 36%) of the net operating income.
Operating expenses decreased by 6% in inflation adjusted terms over the same
period last year mainly due to cost containment measures undertaken by the
Group.
The gain or loss on net monetary position occurs as a result of the restatement
of amounts to current value. The loss of Z$538 543 million is based on the
inflation index as provided by the Central Statistical Office of Zimbabwe. The
gain has been accounted for in the income statement in accordance with the IAS
29.
The inflation adjusted impairment losses on loans and advances for the six
month period increased by 488% to Z$226 214 million (30 June 2005 - Z$38 462
million). The Board continues to adopt a conservative approach on provisions
in view of the unstable macro-economic environment.
NMBZ HOLDINGS LIMITED
Dividend
In view of the proposed new capital requirements by 30 September 2006, no
interim dividend has been proposed.
Balance Sheet
The Group's total asset base, on an inflation adjusted basis, decreased by 0.1%
to Z$12 365 385 million from Z$12 380 765 million at 31 December 2005.
In historical cost terms, the total asset base increased by 233% to Z$10 462 309
million from Z$3 142 601 million at 31 December 2005. It is also gratifying to
note that in historical cost terms, deposits increased by 133% to Z$4 818 375
million from Z$2 067 892 million at 31 December 2005.
Capital Adequacy
The banking subsidiary's capital adequacy ratio at 30 June 2006 calculated on
the historical cost basis in accordance with the guidelines of the RBZ was
12.47% (30 June 2005 - 0.15%, 31 December 2005 - 22.52%). This compares
favourably with the RBZ's minimum ratio of 10%. The Bank's total shareholder's
funds stood at Z$674 322 million at 30 June 2006.
OUTLOOK AND STRATEGY
The Group's results for the six months ended 30 June 2006 reflect the impact of
the market liquidity conditions over the period.
The Group has undertaken a Z$1 trillion rights issue to meet the new capital
requirements of an equivalent of US$10 million required by 30 September 2006.
The additional capital will be deployed to cushion the Bank against short-term
shocks from the market without adversely and materially affecting the Bank's
profitability and creates more opportunities for the Bank to participate in the
interbank market and attract additional depositors' funds.
With shareholder support having been effectively secured for a recapitalisation
of the Bank, the second half of the year, economic circumstances permitting,
should see an improvement in performance.
APPRECIATION
I would like to express my appreciation to our clients and the Monetary
Authorities for their invaluable support. In addition, I would like to thank
the Board, company's shareholders, management and staff for their endeavours
during the period under review.
GIBSON MANYOWA MANDISHONA
CHAIRMAN
30 August 2006
NMBZ HOLDINGS LIMITED
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 the requirements of the Reserve
Bank of Zimbabwe (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 reports to the Chief Executive Officer and is responsible
for the management of the overall risk profile for the Bank.
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.
NMBZ HOLDINGS LIMITED
4.3 Liquidity risk
Liquidity risk is the risk that operations cannot be funded and financial
commitments cannot be met timeously. The risk arises when there is a maturity
mismatch between assets and liabilities. The group identifies this risk through
maturity profiling of assets and liabilities.
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
Credit risk is the risk that a financial contract will not be honoured according
to the original set of terms. The risk arises when borrowers fail to repay
borrowings.
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 customers' 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 the minimisation of losses arising from risk
exposures.
5. REGULATORY COMPLIANCE
During the period under review, there were no instances of non-compliance with
regulatory requirements. The Group remains committed to complying with and
adhering to all regulatory requirements.
NMBZ HOLDINGS LIMITED
CONSOLIDATED INCOME STATEMENTS
For the six months ended 30 June 2006
INFLATION ADJUSTED HISTORICAL
Unaudited Unaudited Unaudited 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
2006 2005 2005 2006 2005 2005
Note Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million
Interest from lending
activities 2 308 639 1 277 957 2 061 180 1 625 685 77 163 251 543
Income from investing
activities 1 672 366 302 908 2 236 327 1 222 970 18 093 437 174
------------- ------------- ------------ ------------- ------------- -----------
3 981 005 1 580 865 4 297 507 2 848 655 95 256 688 717
Interest expense 5 (3 154 170) (1 313 555) (2 556 176) (2 260 350) (76 515) (402 572)
------------- ------------ ------------ ------------- ------------- ------------
Net interest income 826 835 267 310 1 741 331 588 305 18 741 286 145
Non-interest income 6 728 224 219 894 1 110 131 631 370 12 660 246 248
Net foreign exchange
gains /(losses) 78 928 120 359 1 194 010 19 667 8 110 212 056
------------- ------------ ----------- ------------- ------------ -----------
Net operating income 1 633 987 607 563 4 045 472 1 239 342 39 511 744 449
Operating expenditure 7 (1 021 299) (1 088 856) (2 042 042) (531 557) (46 291) (221 038)
Impairment losses on
loans and advances
(226 214) (38 462) (107 215) (226 214) (2 994) (32 565)
(Loss)/gain on net
monetary position
(538 543) 476 256 (657 946) - - -
--------------- --------------- -------------- ------------- --------------- -----------
(Loss)/profit before
taxation (152 069) (43 499) 1 238 269 481 571 (9 774) 490 846
Taxation 8 (375 491 (81 819) (435 282) (69 564) 3 004 (142 022)
Financial institution 8 (20 087) - (77 156) (20 087) - (23 435)
levy
--------------- -------------- ------------ ------------ -------------- ------------
(Loss) /profit for the (547 647) (125 318) 725 831 391 920 (6 770) 325 389
period
======= ======= ======= ======= ======= =======
(Loss)/earnings per share (cents)
-Basic 10 (63 982) (29 361) 145 677 45 788 (1 586) 65 347
-Headline 10 (89 369) (23 201) 140 541 20 419 (1 847) 57 543
-Diluted 10 (62 273) (29 337) 137 321 44 565 (1 568) 61 561
-Diluted headline 10 (86 982) (23 181) 132 398 19 873 (1 826) 54 209
NMBZ HOLDINGS LIMITED
CONSOLIDATED BALANCE SHEETS
As at 30 June 2006
INFLATION ADJUSTED HISTORICAL
Unaudited Unaudited Unaudited Unaudited Unaudited Audited
at 30 June at 30 June at 31 Dec at 30 June at 30 June at 31 Dec
2006 2005 2005 2006 2005 2005
Note Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million
SHAREHOLDERS' FUNDS
Share capital 11 981 614 981 197 981 612 215 107 213
Capital reserves 11 2 922 290 2 672 174 2 920 528 90 788 25 248 89 678
Revenue reserves (1 868 142) (2 053 297) (1 211 321) 591 604 (20 515) 308 858
------------- ------------- ------------- -------------- ------------- --------------
Total shareholders' funds 2 035 762 1 600 074 2 690 819 682 607 4 840 398 749
------------- ------------- ------------- -------------- ------------- ---------------
LIABILITIES
Deposits and other 12 4 818 375 4 994 388 6 820 393 4 818 375 388 080 2 067 892
accounts
Financial liabilities at
fair value
through profit and loss 4 813 152 1 129 991 1 781 474 4 813 152 87 961 541 098
Provision for current 38 621 (48 541) 71 684 38 621 (3 564) 21 773
taxation
Acceptances 110 179 055 14 634 110 13 938 4 445
Deferred taxation 659 365 763 339 1 001 761 109 444 275 108 644
-------------- ------------ ------------- -------------- ------------- ---------------
12 365 385 8 618 306 12 380 765 10 462 309 491 530 3 142 601
======== ======== ======== ======== ======== ========
ASSETS
Balances with banks and 14 3 286 261 1 603 834 3 074 593 3 286 261 124 846 933 865
cash
Financial assets at fair 13
value through profit and
loss 3 279 756 564 090 3 320 672 3 279 756 43 910 1 008 608
Available-for-sale 13 11 741 - 114 761 11 741 - 34 857
securities
Advances and other 15 3 506 872 3 191 225 3 468 375 3 506 872 248 412 1 053 471
accounts
Non-current assets 20 - - 132 022 - - 40100
held-for-sale
Customers' indebtedness
for acceptances
110 179 055 14 634 110 13 938 4 445
Trade investment 16 2 067 11 947 6 805 2 067 529 2067
Quoted and other 17 2 279 21 351 7 503 2 279 945 2 279
investments
Investment properties 21 335 000 817 397 131 693 335 000 36 200 40 000
Property & equipment 18 1 941 299 2 229 407 2 109 707 38 223 22 750 22 909
------------- ------------- ------------- -------------- ------------- --------------
12 365 385 8 618 306 12 380 765 10 462 309 491 530 3 142 601
======== ======== ======== ======== ======== ========
NMBZ HOLDINGS LIMITED
CONSOLIDATED INFLATION ADJUSTED STATEMENT OF CHANGES IN EQUITY
As at 30 June 2006
Capital Reserves Revenue
Reserves
Capital
Share Share Statutory Redemption Accumulated
Capital Premium Reserve Reserve Other Profit / Total
(loss)
Z$million Z$million Z$million Z$ million Z$million Z$ million Z$million
Balances at 1 January 981 197 2 344 179 124 506 188 407 15 082 (1 927 979) 1 725 392
2005
Net loss for the six
months ended 30 June
2005 - - - - - (125 318) (125 318)
----------- ----------- ------------ ------------- ------------ ------------ -----------
Balances at 30 June 2005 981 197 2 344 179 188 407 14 666 15 082 (2 053 297) 1 600 074
----------- ----------- ----------- ------------- ------------ ------------ -----------
Net profit for the six
months ended 31 December
2005 - - - - - 851 149 851 149
Shares issued - rights 415 248 874 - - - - 249 289
issue
Share issue expenses - (14 348) - - - - (14 348)
Fair value loss on
available-for-sale
securities - - - - - (13 275) (13 275)
Deferred tax on
available-for-sale
securities adjustment - - - - - 4 102 4 102
Share based payments - - - - 13 828 - 13 828
----------- ----------- ------------ ------------- ------------ ------------ ------------
Balances at 31 December 981 612 2 578 705 124 705 188 407 28 910 (1 211 321) 2 690 819
2005
----------- ----------- ------------ ------------- ------------ ------------
------------
Net loss for the six
months ended 30 June
2006 - - - - - (547 647) (547 647)
Fair value loss on
available-for-sale
securities - - - - - (157 994) (157 994)
Deferred tax on
available-for-sale
securities adjustment - - - - - 48 820 48 820
Shares issued- options
exercised 2 5 897 - - (3 879) - 2 020
Share issue expenses - (256) - - - - (256)
Balances at 30 June 2006 981 614 2 584 346 124 506 188 407 25 031 (1 868 142) 2 035 762
====== ======= ======= ======= ======= ======== =======
NMBZ HOLDINGS LIMITED
CONSOLIDATED HISTORICAL COST STATEMENT OF CHANGES IN EQUITY
As at 30 June 2006
Capital Reserves
Revenue
Capital Reserves
Share Share Statutory Redemption Accumulated
Capital Premium Reserve Reserve Other Profit/ Total
(loss)
Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million
Balances at 1 January 107 24 907 23 27 291 (13 745) 11 610
2005
Net loss for the six
months ended 30 June
2005 - - - - - (6 770) (6 770)
---------- ----------- ------------ ------------ ----------- ------------ ------------
Balances at 30 June 107 24 907 23 27 291 (20 515) 4 840
2005
----------- ----------- ------------ ------------- ----------- ------------- ------------
Net profit for the six
months ended 31
December 2005 - - - - - 332 159 332 159
Shares issued - rights 106 63 914 - - 238 - 64 020
issue
Share issue expenses - (3 684) - - - - (3 684)
Fair value loss on
available-for-sale
securities - - - - - (4 032) (4 032)
Deferred tax on
available-for-sale
securities adjustment - - - - - 1 246 1 246
Share based payments - - - - 4 200 - 4 200
---------- ----------- ------------ ------------ ------------ ------------- --------------
Balances at 31 December 213 85 137 23 27 4 491 308 858 398 749
2005
Net profit for the six
months ended 30 June
2006 - - - - - 391 920 391 920
Fair value loss on
available-for-sale
securities - - - - - (157 994) (157 994)
Deferred tax on
available-for-sale
securities adjustment - - - - - 48 820 48 820
Shares issued- options
exercised 2 2 544 - - (1 178) - 1 368
Share issue expenses - (256) - - - - (256)
------------ ------------- ------------ -------------- ------------ ------------- -------------
Balances at 30 June 215 87 425 23 27 3 313 591 604 682 607
2006
======= ======== ======== ======== ======== ======== ========
NMBZ HOLDINGS LIMITED
CONSOLIDATED CASHFLOW STATEMENTS
For the six months ended 30 June 2006
INFLATION ADJUSTED HISTORICAL
Unaudited Unaudited Unaudited 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
2006 2005 2005 2006 2005 2005
CASHFLOW FROM OPERATING ACTIVITIES Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million
Profit/(loss) before taxation and
loss on net monetary adjustment 386 474 (519 755) 1 869 215 481 571 (97 740) 490 846
Non-cash items
(Profit)/loss on disposal of (919) (7 091) 61 570 (702) (3 612) (4 338)
property, plant & equipment
Depreciation 189 987 350 953 429 705 3 356 2 466 5 027
Property and equipment write-off - 29 908 - - 884 -
Share-based payments - - 13 828 - - 4200
Impairment losses on loans and 226 214 38 462 107 215 226 214 2 994 32 565
advances
Loss on disposal of interest in - - 63 868 - - 1 708
subsidiary
(Loss)/ gain on net monetary (538 543) 476 256 (657 946) - - -
position
------------ -------------- ------------- ------------- ------------- ---------
Operating cash flows before changes
in operating assets and 263 213 368 733 1 914 455 710 439 (7 042) 530 008
liabilities
Changes in operating assets and
liabilities:
Financial liabilities at fair 3 031 679 140 785 792 260 4 272 054 44 152 497 289
value through profit or loss
Deposits and other accounts (2 002 019) (5 927 028) (4 094 676) 2 750 483 (95 596)1 584 500
Advances and other accounts (961 251) 4 211 301 3 865 440 (2 679 620) 78 133 (756 497)
Financial assets at fair value 40 916 - (2 767234) (2 271 148) - 948 098
through profit or loss
Available-for-sale securities (45 732) - (128 035) (134 878) - (38 889)
Investment properties (71 284) 45 155 553 688 (254 900) 2 000 (43 900)
Trade investments 4 738 - 5 139 - - (1 536)
Quoted and other investements 5 224 - 13 828 - - (1 328)
------------ --------------- ------------- ------------- ------------- ---------
265 484 (1 161 054) 154 865 2 392 430 21 647 785 549
Taxation
Corporate tax paid (35 176) (79 931) (200 773) (23 435) (4 954) (38 462)
-------------- -------------- ------------- ------------- ------------- ---------
Net cash inflow/(outflows) from 230 308 (1 240 985) (45 908) 2 368 995 16 693 747 087
operating activities
CASH FLOWS FROM INVESTING
ACTIVITIES
Proceeds on disposal of property 1 180 90 683 59 818 707 5 320 6 053
and equipment
Purchase of property and equipment (21 842) (24 447) (34 194) (18 674) (1 294) (4 022)
Property and equipment adjustment - - 70 680 - - 884
Proceeds from disposal of quoted - 129 138 - 6 6
and other investments
------------- ------------- ------------- ------------- ------------- ---------
Net cash (outflows)/inflows from (20 662) 66 365 96 442 (17 967) 4 032 2 921
investing activities
------------- ------------- ------------- ------------- ------------- ---------
Net cash inflow/(outflows) before 209 646 (1 174 620) 50 534 2 351 028 20 725 750 008
financing activities
-------------- -------------- ------------- ------------- ------------- ---------
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from issue of 2 022 - 234 941 1 368 - 60 336
shares-options exercised
-------------- -------------- -------------- ------------- ------------- ---------
2 022 - 234 941 1 368 - 60 336
--------------- --------------- -------------- ------------- ------------- ---------
Net increase/(decrease) in cash and 211 668 (1 171 620) 285 475 2 352 396 20 725 810 344
cash equivalents
Cash and cash equivalents at 3 074 593 3 342 544 2 789 118 933 865 148 031 123 521
beginning of the period
------------- ------------ ------------- ------------- ------------- ---------
CASH AND CASH EQUIVALENTS AT END OF
PERIOD (note 14) 3 286 261 2 167 924 3074 593 3 286 261 168 756 933 865
======== ======== ======== ======== ======== ========
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the six months ended 30 June 2006
1. INCORPORATION AND ACTIVITIES
The company is incorporated in Zimbabwe and is an investment holding company.
Its subsidiaries are engaged in banking and property holding. The details of
the Bank's non-operating subsidiary are shown under note 'h' to the Bank's
accounts.
2. CURRENCY
These interim 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 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
30 June 2006 158 708.80 1.0000
31 December 2005 48 205.60 3.2923
30 June 2005 12 354.20 12.8465
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.
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (cont'd)
for the six months ended 30 June 2006
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
Unaudited Unaudited Unaudited 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
2006 2005 2005 2006 2005 2005
Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million
RBZ liquidity support - 933 016 948 899 - 53 549 55 366
Statutory reserves (397 477) - 754 527 (120 728) - 229 177
Trading activities 3 551 647 380 539 852 750 2 381 078 22 966 118 029
------------ ------------ ------------ ------------ ------------ ------------
3 154 170 1 313 555 2 556 176 2 260 350 76 515 402 572
======= ======= ======= ======= ======= ======
The financial obligation with respect to interest on statutory reserves of Z$299
177 million for 2005 and Z$421 302 million for 2006 as reported in the 31
December 2005 accounts was satisfactorily resolved resulting in a credit
adjustment during the period under review
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the six months ended 30 June 2006
6. NON-INTEREST INCOME
INFLATION ADJUSTED HISTORICAL
Unaudited Unaudited Unaudited Unaudited Unaudited Audited
6 months 6 months Year 6 months 6 months Year
ended ended ended ended ended ended
30 June 30 June 31 Dec 30 June 30 June 31 Dec
2006 2005 2005 2006 2005 2005
Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million
Net gains from quoted and other
investments - - 270 - - 82
Net commission and fee income 228 642 174 301 371 546 140 611 10 292 49 502
Fair value adjustment on financial
instruments 232 268 6 271 453 114 232 268 488 137 627
Fair value adjustment on trade
investment - - 5 057 - - 1 536
Fair value adjustment on investment
properties 254 900 (45 155) 144 533 254 900 (2 000) 43 900
Loss on disposal of property and
equipment - - (63 868) - - (1 708)
Profit/(loss) on disposal of
property and equipment 919 7 091 (61 570) 702 3 612 4338
Other operating income 11 495 77 386 261 049 2 889 268 10 971
------------ ------------ ----------- ------------ ------------ ------------
728 224 219 894 1 110 131 631 370 12 660 246 248
======= ======= ======== ======= ======= =======
7. OPERATING EXPENDITURE
The operating profit is after
charging the following:
Administration costs 394 867 335 191 723 144 248 513 20 228 96 186
Depreciation 189 987 350 953 429 705 3 356 2 466 5 027
Staff costs 436 445 402 712 889 193 279 688 23 597 119 825
------------ ------------ ----------- ------------ ------------ ------------
1 021 299 1 088 856 2 042042 531 557 46 291 221 038
======= ======= ====== ======= ======= =======
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the six months ended 30 June 2006
8. TAXATION
INFLATION ADJUSTED HISTORICAL
Unaudited Unaudited Unaudited 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
2006 2005 2005 2006 2005 2005
Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million
Tax Charge
Current taxation 19 364 - 114 129 19 364 - 34 665
Aids levy 581 - 3 421 581 - 1 039
Deferred tax charge / 355 546 81 819 317 732 46 619 (3 004) 106 318
(credit)
---------- ---------- ---------- ---------- ---------- ----------
375 491 81 819 435 282 69 564 (3 004) 142 022
Financial institutions 20 087 - 77 156 20 087 - 23 435
levy
---------- ---------- ---------- ---------- ---------- ----------
395 578 81 819 512 438 89 651 (3 004) 165 457
====== ====== ====== ====== ====== ======
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 the income statement.
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 issued by the RBZ 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 sectoral 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.
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the six months ended 30 June 2006
10. EARNINGS PER SHARE
The calculation of earnings per share is based on the following figures:
INFLATION ADJUSTED HISTORICAL
Unaudited Unaudited Unaudited Unaudited Audited
Unaudited
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
2006 2005 2005 2006 2005 2005
Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million
10.1 (Losses)/earnings
Basic earnings (547 647) (125 318) 725 831 391 920 (6 770) 325 389
Headline earnings(note 10.4) (764 947) (99 023) 699 809 174 770 (7 884) 286 528
10.2 Number of shares
Weighted average shares in issue 855 938 224 426 804 812 497 938 947 855 938 224 426 804812 497 938 947
Diluted number of shares 879 430 394 427 162 412 528 563 716 879 430 394 431 722 412 528 563 716
10.3 (Loss)/earnings per share (cents)
Basic (63 982) (29 261 145 767 45 788 (1 586) 65 347
Headline (89 369) (23 201) 140 541 20 419 (1 847) 57 543
Diluted basic (62 273) (29 337) 137 321 44 393 (1 568) 61 561
Diluted headline (86 982) (23 181) 132 398 19 873 (1 826) 54 209
10.4 Headline Earnings
(Loss)/profit attributable to (547 647) (125 318) 725 831 391 920 (6 770) 325 389
shareholders
Add/deduct non-recurring items:
(Profit)/loss on disposal of
property and equipment (919) (7 091) 61 570 (702) (3 612) (4 338)
Fair value adjustment on investment
properties (254 900) 45 155 (144 533) (254 900) 2 000 (43 900)
Loss on disposal of investment - - 63 868 - - 1 708
property
Tax effect 38 519 (11 769) (6 927) 38 452 498 7 669
------------- ----------- ------------ ------------ ------------ --------------
(764 947) (99 023) 699 809 174 770 (7 884) 286 528
======== ======= ======= ======= ======= ========
The calculation of headline earnings per share is 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.
11 SHARE CAPITAL
11.1 Authorised
HISTORICAL AND INFLATION ADJUSTED
2006 2006 2006 2006 2006 2006
June June June June June June
Z$ million Z$ million Z$ million
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
2006 2005 2005 2006 2005 2005
Shares Shares Shares Z$ million Z$ million Z$ million
Ordinary share of $0.25c each 1 250 000 000 560 000 000 1 250 000 000 313 140 313
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the six months ended 30 June 2006
11.2 Issued fully paid
HISTORICAL AND INFLATION ADJUSTED
2006 2006 2006 2006 2006 2006
June June June June June June
Z$ million Z$ million Z$ million
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
2006 2005 2005 2006 2005 2005
Shares Shares Shares Z$ million Z$ million Z$ million
At 1 January 853 609 624 426 804 812 426 804 812 213 107 107
Shares issued during the
year
-options/rights issued 7 132 599 - 426 804 812 2 - 106
At 31 December - Historical 860 742 223 426 804 812 853 609 624 215 107 213
Effect of IAS29 - - - 981 399 981 090 981 399
---------------- ----------------- ---------------- ------------- -------------- --------------
At 31 December 2005
Inflation adjusted 860 742 223 426 804 812 853 609 624 981 614 981 197 981 612
========== =========== ========== ========= ========= =========
Of the unissued ordinary shares of 389 257 777, options which may be granted in
terms of the NMBZ 2005 Employee Share Option Scheme (ESOS) amount to 85 360 962.
As at 30 June 2006, 23 472 170 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 189 257 777 are under the control of the directors.
11.3 Capital Reserves
INFLATION ADJUSTED HISTORICAL
Unaudited Unaudited Unaudited Unaudited Unaudited Audited
30 June 30 June 31 Dec 30 June 30 June 31 Dec
2006 2005 2005 2006 2005 2005
Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million
Statutory reserve fund 124 506 124 506 124 506 23 23 23
Share premium 2 584 346 2 344 179 2 578 705 87 425 24 907 85 137
Capital redemption reserve 188 407 188 407 188 407 27 27 27
Revaluation reserve 12 508 15 082 12 508 53 - 53
Other 12 523 - 16 402 3 260 291 4 438
----------- ------------ ------------ ------------ ---------- -----------
2 922 290 2 672 174 2 920 528 90 788 25 248 89 678
======= ======= ======= ======= ====== =======
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the six months ended 30 June 2006
12. DEPOSITS AND OTHER ACCOUNTS
12.1 Deposits and other accounts by type
INFLATION ADJUSTED HISTORICAL
Unaudited Unaudited Unaudited Unaudited Unaudited Audited
30 June 30 June 31 Dec 30 June 30 June 31 Dec
2006 2005 2005 2006 2005 2005
Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million
RBZ temporary liquidity
support - 2 775 - - 216 -
RBZ Productive sector/
ASPEF facility 760 893 240 140 937 761 760 893 18 693 284 832
RBZ Statutory reserves - - 1 897 789 - - 576 427
Deposits from other banks 608 237 396 623 113 865 608 237 30 874 34 585
Other money market
deposits
4 829 686 19 655 1 181 542 4 829 686 1 530 552 357
Current and deposit 3 031 987 2 890 976 2 840 232 3 031 987 225 040 862 681
accounts
------------- -------------- -------------- -------------- ------------ -------------
Total deposits 9 230 803 3 550 169 7 608 189 9 230 803 276 353 2 310 882
Trade and other creditors 400 724 2 574 210 993 678 400 724 199 688 298 108
-------------- --------------- --------------- --------------- ------------- --------------
9 631 527 6 124 379 8 601 867 9 631 527 476 041 2 608 990
Less: Financial
liabilities at fair value
through profit and loss
(note 13.1) (4 813 152) (1 129 991) (1 781 474) (4 813 152) (87 961) (541 098)
--------------- --------------- ---------------- --------------- --------------- --------------
4 818 375 4 994 388 6 820 393 4 818 375 388 080 2 067 892
======== ========= ========== ========= ========= ========
12.2 Maturity analysis
INFLATION ADJUSTED HISTORICAL
Unaudited Unaudited Unaudited Unaudited Unaudited Audited
30 June 30 June 31 Dec 30 June 30 June 31 Dec
2006 2005 2005 2006 2005 2005
Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million
Less than 1 month 8 815 366 3 510 793 7 439 878 8 815 366 273 288 2 259 760
1 to 3 months 399 841 19 694 103 557 399 841 1 533 31 454
3 to 6 months 441 19 682 64 747 441 1 532 19 666
6 months to 1 year 15 155 - 7 15 155 - 2
1 to 5 years - - - - - -
Over 5 years - - - - - -
-------------- --------------- -------------- -------------- ------------- -------------
9 230 803 3 550 169 7 608 189 9 230 803 276 353 2 310 882
======== ========= ======== ======== ======= ========
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the six months ended 30 June 2006
12.3 Sectoral analysis of deposits
INFLATION ADJUSTED
Unaudited Unaudited Unaudited
30 June 30 June 31Dec
2006 2005 2005
Z$ million % Z$ million % Z$ million %
Banks and other financial 1 020 833 11 312 221 9 370 312 5
institutions
Reserve Bank of Zimbabwe 760 893 8 242 914 7 2 836 813 37
Telecommunications companies 928 762 10 100 639 3 195 614 3
Industrial companies 2 532 780 28 1 559 374 44 92 853 1
Agriculture 397 512 4 48 367 1 1 836 477 24
Other deposits 3 388 436 37 980 573 28 1 826 228 24
Municipalities and parastatals 1 389 - 7 053 - 728 -
Mining Companies 200 198 2 299 028 8 449 164 6
------------- ---------- ------------- ------------ ----------- ----------
9 230 803 100 3 550 169 7 608189 680 916 100
======= ===== ======== ======= ====== ======
12.4 Sectoral analysis of deposits
HISTORICAL
Unaudited Unaudited Audited
30 June 30 June 31 Dec
2006 2005 2005
Z$ million % Z$ million % Z$ million %
Banks and other financial 1 020 833 11 24 304 9 112 477 5
institutions
Reserve Bank of Zimbabwe 760 893 8 18 909 7 861 664 37
Telecommunications companies 928 762 10 7 834 3 59 415 3
Industrial companies 2 532 780 28 121 385 44 557 822 24
Agriculture 397 512 4 3 765 1 136 488 6
Other deposits 3 388 436 37 76 330 28 554 744 24
Municipalities and parastatals 1 389 - 549 - 221 -
Mining Companies 200 198 2 23 277 8 28 051 1
------------- ---------- ------------- ----------- -------------- ----------
9 230 803 100 276 353 100 2 310 882 100
======= ====== ======== ====== ======== ======
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the six months ended 30 June 2006
13. FINANCIAL INSTRUMENTS
13.1 Financial liabilities at fair value through profit and loss
INFLATION ADJUSTED HISTORICAL
Unaudited Unaudited Unaudited Unaudited Unaudited Audited
30 June 30 June 31 Dec 30 June 30 June 31 Dec
2006 2005 2005 2006 2005 2005
Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million
Fixed term deposits 681 881 691 296 233 555 681 881 53 813 70 939
TB sales-buybacks 869 626 178 451 328 742 869 626 13 891 99 851
Negotiable certificate of
deposits
3 261 645 260 244 1 219 177 3 261 645 20 258 370 308
--------------- -------------- -------------- ------------ ----------- ------------
4 813 152 1 129 991 1 781 474 4 813 152 87 961 541 098
========= ======== ======== ======= ====== =======
13.2 Financial assets at fair value through profit and loss
Government and public
sector securities 3 233 234 361 205 3 078 201 3 233 234 28 117 934 961
Bills receivable 46 522 202 885 242 471 46 522 15 793 73 647
------------ ------------ -------------- ------------- ------------ ------------
3 279 756 564 090 3 320 672 3 279 756 43 910 1 008 608
======= ======= ======== ======== ======= =======
13.3 Available-for-sale securities
Treasury bills( two year 11 741 - 114 761 11 741 - 34 857
bills)
======= ======= ======= ======= ======= =======
13.4 Financial liabilities at fair value through profit or loss
Less than 1 month 4 397 715 376 223 1 613 163 4 397 715 29 286 489 976
1 to 3 months 399 841 752 445 103 557 399 841 58 572 31 454
3 to 6 months 441 441 64 747 441 34 19 666
6 months to 1 year 15 155 882 7 15 155 69 2
1 to 5 years - - - - - -
Over 5 years - - - - - -
-------------- ------------- ------------- -------------- ----------- ------------
4 813 152 1 129 991 1 781 474 4 813 152 87 961 541 098
======== ======== ======== ======== ====== =======
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the six months ended 30 June 2006
13.5 Financial assets at fair value through profit or loss
INFLATION ADJUSTED HISTORICAL
Unaudited Unaudited Unaudited Unaudited Unaudited Audited
30June 30 June 31 Dec 30 June 30 June 31 Dec
2006 2005 2005 2006 2005 2005
Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million
Less than 1 month 185 192 137 462 715 061 185 192 10 700 217 190
1 to 3 months 1 377 442 274 924 208 332 1 377 442 21 401 63 278
3 to 6 months 162 939 50 568 906 046 162 939 3 936 275 199
6 months to 1 year 1 153 561 101 136 1 326 587 1 153 561 7 873 402 932
1 to 5 years 400 622 - 164 646 400 622 - 50 009
Over 5 years - - - - - -
------------- ------------ -------------- -------------- ----------- --------------
3 279 756 564 090 3 320 672 3 279 756 43 910 1 008 608
======== ======= ======== ======== ====== ========
14. CASH AND CASH EQUIVALENTS
14.1 Balances with Reserve Bank of Zimbabwe
Statutory reserve 2 767 245 693 801 1 466 493 2 767 245 54 007 445 427
14.2 Balances with other banks and cash
Current, nostro 519 016 910 033 1 608 100 519 016 70 839 488 438
accounts and cash
------------- ------------- -------------- -------------- ------------ ------------
3 286 261 1 603 834 3 074 593 3 286 261 124 846 933 865
-------------- ------------- -------------- -------------- ------------ ------------
14.3 Other
Government and public
sector securities - 361 205 - - 28 117 -
Bills receivable - 202 885 - - 15 793 -
-------------- -------------- ------------- ------------- ------------- ------------
- 564 090 - - 43 910 -
-------------- -------------- ------------- ------------- ------------- ------------
Total cash and cash 3 286 261 2 167 924 3 074 593 3 286 261 168 756 933 865
equivalents
======== ======== ======== ======== ======== =======
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the six months ended 30 June 2006
15. Advances and other accounts
15.1 Advances and other accounts
INFLATION ADJUSTED HISTORICAL
Unaudited Unaudited Unaudited Unaudited Unaudited Audited
30 June 30 June 31Dec 30June 30June 31Dec
2006 2005 2005 2006 2005 2005
Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million
15.1.1 Total advances and other accounts
Fixed term loans 766 363 129 634 1 581 860 766 363 10 091 480 468
Local loans and overdrafts 1 558 440 1 655 632 1 032 139 1 558 440 128 878 313 498
Other accounts 1 182 069 1 405 959 854 376 1 182 069 109 443 259 505
----------- ------------ --------------- ------------ ------------ -----------
3 506 872 3 191 225 3 468 375 3 506 872 248 412 1 053 471
======= ======= ========= ======= ======= =======
15.1.2 Maturity analysis
Less than 1 month 1 898 204 776 121 1 646 864 1 898 204 60 415 500 212
1 to 3 months 282 411 1 552 244 396 051 282 411 120 830 120 295
3 to 6 months 235 808 70 587 473 796 235 808 5 495 143 909
6 months to 1 year 56 619 141 175 44 950 56 619 10 989 13 653
1 to 5 years 128 393 - 138 156 128 293 - 41 963
Over 5 years - - 110 102 - - 33 442
------------ ----------- --------------- ------------ ------------ -----------
Total advances 2 601 435 2 540 127 2 809 919 2 601 435 197 729 853 474
Provision for losses on
loans and advances (264 107) (592 597) (154 684) (264 107) (46 129) (46 983)
Suspended interest (12 525) (162 264) (41 236) (12 525) (12 631) (12 525)
----------- ----------- ------------ ------------ ----------- -----------
2 324 803 1 785 266 2 613 999 2 324 803 138 969 793 966
Other accounts 1 182 069 1 405 959 854 376 1 182 069 109 443 259 505
-------------- -------------- -------------- -------------- ------------- -------------
Total 3 506 872 3 191 225 3 468 375 3 506 872 248 412 1 053 471
======== ======== ======== ======== ======== ========
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the six months ended 30 June 2006
15.2 Sectoral analysis of utilizations
INFLATION ADJUSTED
Unaudited Unaudited Unaudited
30 June 30 June 31 Dec
2006 2005 2005
Z$ million % Z$ million % Z$ million %
Industrials 470 623 18 1 286 062 47 1 109 081 39
Agriculture and horticulture 695 573 27 459 304 17 994 031 35
Conglomerates 166 122 6 126 447 5 118 988 4
Services 91 623 4 93 869 3 27 188 1
Mining 8 008 0 221 075 8 41 164 2
Food & beverages 52 112 2 166 812 6 212 052 8
Utilities 1 100 875 42 - - 311 695 11
Other 16 609 1 365 611 14 10 354 -
----------- -------- ----------- --------- ----------- ----------
2 601 545 100 2 719 180 100 2 824 553 100
======= ===== ======= ===== ====== ======
The above sectoral analysis comprises advances of Z$2 601 435 million (December
2005 - Z$2 809 919 million) and customers' indebtedness for acceptances of Z$110
million (December 2005 - Z$14 634 million).
15.3 Sectoral analysis of utilisations
HISTORICAL
Unaudited Unaudited Audited
30 June 30 June 31 Dec
2006 2005 2005
Z$ million % Z$ million % Z$ million %
Industrials 470 623 18 100 110 47 336 868 39
Agriculture and horticulture 695 573 27 35 753 17 301 923 35
Conglomerates 166 122 6 9 843 5 36 141 4
Services 91 623 4 7 307 3 8 258 1
Mining 8008 - 17 209 8 12 503 2
Food & beverages 52 112 2 12 985 6 64 408 8
Utilities 1 100 875 42 - - 94 740 11
Other 16 609 1 28 460 14 3 078 -
-------------- ----------- ------------ ----------- ------------ ------------
2 601 545 100 211 667 100 857 919 100
======== ======= ======= ====== ======= =======
The above sectoral analysis comprises advances of Z$2 601 545 million (December
2005 - Z$853 474 million) and customers' indebtedness for acceptances of
Z$110 million (December 2005 - Z$4 445 million).
15.4 Risk concentrations
The material concentration of loans and advances are to the utilities sector 42%
(2005 - 11%).
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the six months ended 30 June 2006
15.5 Provisions for losses on loans and advances (including acceptances)
INFLATION ADJUSTED
Unaudited Unaudited
June 2006 Dec 2005
Specific Portfolio Total Specific Portfolio Total
Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million
At 1 January 142 097 12 587 154 684 882 595 124 757 1 007 352
Charge against profits 226 214 - 226 214 112 828 (5 613) 107 215
Bad debts written off (9 090) - (9 090) (99 444) - (99 444)
Monetary adjustment (98 937) (8 764) (107 701) (753 882) (106 557) (860 439)
------------ ----------- ------------- ------------ ------------- ------------
At 30 June 260 284 3 823 264 107 142 097 12 587 154 684
======= ====== ======= ======= ======= =======
15.6 Provisions for losses on loans and advances (including acceptances)
HISTORICAL
Unaudited Audited
June 2006 Dec 2005
Specific Portfolio Total Specific Portfolio Total
Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million
At 1 January 43 160 3 823 46 983 39 115 5 529 44 644
Charge against profits 226 214 - 226 214 34 271 (1 706) 32 565
Bad debts written off (9 090) (9 090) (30 226) - (30 226)
-
------------ ----------- ------------- ------------ ----------- ------------
At 30 June 260 284 3 823 264 107 43 160 3 823 46 983
======= ====== ======= ======= ======= =======
15.7 Non performing loans and advances
INFLATION ADJUSTED HISTORICAL
Unaudited Unaudited Unaudited Unaudited Unaudited Audited
30 June 30 June 31 Dec 30 June 30 June 31 Dec
2006 2005 2005 2006 2005 2005
Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million
Total non performing loans
and advances 262 585 783 765 109 526 262 585 61 010 33 267
Provisions for losses on
loans and advances (260 284) (541 827) (68 290) (260 284) (42 177) (20 742)
Interest in suspense (2 301) (162 264) (41 236) (2 301) (12 631 (12 565)
------------- ------------- ----------- ------------- ------------ ------------
- 79 674 - - 6 202 -
======= ======= ====== ======= ======= ======
The residue on these accounts represents recoverable portions covered by
realisable security.
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the six months ended 30 June 2006
16. TRADE INVESTMENT
INFLATION ADJUSTED HISTORICAL
Unaudited Unaudited Unaudited Unaudited Unaudited Audited
June June Dec June June Dec
2006 2005 2005 2006 2005 2005
Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million
Takura Ventures (Private) Ltd 2 067 10 932 6 805 2 067 484 2 067
Other - 1 015 - - 45 -
-------------- ------------- ------------- ------------ -------------- -------------
2 067 11 947 6 805 2 067 529 2 067
======== ======== ======== ======== ======== ========
17. QUOTED AND OTHER INVESTMENTS
Quoted investments 1 723 12 140 5 672 1 723 537 1 723
Unquoted investments 556 9 211 1 831 556 408 556
-------------- ------------- ------------- ------------ -------------- -------------
2 279 21 351 7 503 2 279 945 2 279
======== ======== ======== ======== ======== ========
18. PROPERTY AND EQUIPMENT
Cost 5 882 441 5 995 963 5 861 355 51 581 31 146 32 957
Accumulated depreciation (3 941 142) (3 766 556) (3 751 648) (13 396) (8 396) (10 048)
-------------- ------------- ------------- ------------ -------------- -------------
Net book value 1 941 299 2 229 407 2 109 707 38 223 22 750 22 909
======== ======== ======== ======== ======== ========
19. CONTINGENT LIABILITIES
Contingent liabilities in respect of guarantees as at 30 June 2006 amounted to
Z$244 685 million (31 December 2005 - Z$92 736 million).
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the six months ended 30 June 2006
20. NON CURRENT ASSETS HELD FOR SALE
INFLATION ADJUSTED HISTORICAL
Unaudited Unaudited Unaudited Unaudited Unaudited Audited
June June Dec June June Dec
2006 2005 2005 2006 2005 2005
Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million
At 1 January 132 022 - - 40 100 - -
Transfer (to)/from
investment properties
(132 022) - 132 022 (40 100) - 40 100
-------------- ------------- ------------- ------------ -------------- -------------
At 30 June 2006 - - 132 022 - - 40 100
======== ======== ======== ======== ======== ========
Some of the conditions necessary for the property to qualify for recognition
under non-current assets held-for-sale no longer existed at the reporting date
21. INVESTMENT PROPERTY
INFLATION ADJUSTED HISTORICAL
Unaudited Unaudited Unaudited Unaudited Unaudited Audited
June June Dec June June Dec
2006 2005 2005 2006 2005 2005
Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million
At 1 January 131 693 817 561 862 561 40 000 38 300 38 200
Disposals - - (45 158) - (2 000) (2 000)
Fair value adjustments 254 900 - 144 533 254 900 - 43 900
Transfer from/(to)
non-current assets
held-for-sale 132 022 - (132 022) 40 100 - (40 100)
Monetary adjustment (183 615) - (698 221) - - -
-------------- ------------- ------------- ------------ -------------- -------------
335 000 817 397 131 693 335 000 36 200 40 000
======== ======== ======== ======== ======== ========
There was no rental income or operating expenses arising from investment
properties during the period under review. The investment properties comprise
Stand number 19207 of subdivision of Stand 14908 of Harare Township as well as
the remainder of Lot H of Borrowdale Estate, owned by Carey Farm (Pvt) Ltd, a
wholly owned subsidiary of the Bank which was reclassified from non-current
assets held-for-sale to investment property per note 20.
The properties were valued for reporting purposes in June 2006 by independent
and professional valuers and the open market value was Z$335 000 million.
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the six months ended 30 June 2006
22. EXCHANGE RATES
The following exchange rates have been used to translate the foreign balances to
Zimbabwe dollars at period end:-
30 June 30 June 31 Dec
2006 2005 2005
Z$ million Z$ million Z$ million
British sterling GBP1.00 185 380.11 17 997.24 145 128.86
United States Dollar USD1.00 101 195.54 9 879.84 84 587.57
NMB BANK LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the six months ended 30 June 2006
CONSOLIDATED INCOME STATEMENTS
INFLATION ADJUSTED HISTORICAL
Unaudited Unaudited Unaudited 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
2006 2005 2005 2006 2005 2005
Note Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million
Interest from lending 2 308 639 1 277 957 2 061 177 1 625 685 77 163 251 543
activities
Interest from investing 1 672 366 302 908 2 236 326 1 222 970 18 093 437 174
activities
------------ ------------- ------------- ------------- ------------ -------------
3 981 005 1 580 865 4 297 503 2 848 655 95 256 688 717
Interest expense (3 154 170) (1 313 555) (2 556 176) (2 260 350) (76 515) (402 572)
------------- ------------ ------------ ------------- ------------- ------------
Net interest income 826 835 267 310 1 741 327 588 305 18 741 286 145
Non-interest income a 728 224 241 630 1 122 316 631 370 14 354 244 665
Net foreign exchange gains 78 928 120 359 1 194 010 19 667 8 110 212 056
------------- ------------ ----------- ------------- ------------ ------------
Net operating income 1 633 987 629 299 4 057 653 1 239 342 41 205 742 866
Operating expenditure b (1 005 906) (1 084 540) (2 030 094) (531 498) (46 262) (219 272)
Impairment losses on loans
advances (226 214) (38 462) (107 215) (226 214) (2 994) (32 565)
(Loss)/gain on net monetary
position (549 209) 480 009 (545 355) - - -
------------ ------------- ------------- ------------ -------------- ------------
(Loss)/profit before (147 342) (13 694) 1 374 989 481 630 (8 051) 491 029
taxation
Taxation (375 491) (81 819) (495 505) (69 564) 3 004 (142 763)
Financial institution levy (20 087) - (77 156) (20 087) - (23 435)
------------ ------------- ------------- ------------ ------------ ------------
(Loss)/ profit attributable
to ordinary shareholders (542 920) (95 513) 802 328 391 979 (5 047) 324 831
====== ======= ======= ======== ======= ======
(Loss)/earnings per share
(cents)
Basic c (3 480 256) (616 213) 5 143 128 2 512 686 (32 561) 2 082 250
Headline c (4 873 205) (647 787) 4 628 321 1 120 699 (48 665) 1 823 833
NMB BANK LIMITED
CONSOLIDATED BALANCE SHEETS
As at 30 June 2006
INFLATION ADJUSTED HISTORICAL
Unaudited Unaudited Unaudited Unaudited Unaudited Audited
30 June 30 June 31 Dec 30 June 30 June 31 Dec
2006 2005 2005 2006 2005 2005
Note Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million
SHAREHOLDER'S FUNDS
Share capital d 461 269 461 266 461 269 32 31 32
Capital reserves 3 240 915 3 007 287 3 240 915 85 207 25 208 85 207
Revenue reserves (1 765 890) (2 002 465) (1 113 796) 589 083 (20 814) 306 278
------------- ------------- ------------- ----------- --------- -----------
Total shareholder's funds 1 963 294 1 466 088 2 588 388 674 322 4 425 391 517
LIABILITIES
Deposits and other 4 821 673 4 978 287 6 814 612 4 821 673 386 212 2 069 844
accounts
Financial liabilities at
fair value through
profit and loss 4 813 152 1 129 991 1 781 474 4 813 152 87 961 541 098
Amount owing to holding
company
40 514 132 40 40 40
Provision for current 38 567 (51 675) 71 506 38 567 (3 618) 21 719
taxation
Acceptances 110 179 055 14 634 110 13 938 4 445
Deferred taxation 621 128 672 630 964 689 109 847 229 109 048
-------------- -------------- --------------- --------------- ------------ --------------
12 230 964 8 374 890 12 235 435 10 457 711 489 187 3 137 711
======== ======== ======== ======== ======= ========
ASSETS
Balances with banks and e 3 286 261 1 595 715 3 074 593 3 286 261 124 214 933 865
cash
Financial assets held for
trading e 3 279 756 564 090 3 320 672 3 279 756 43 910 1 008 608
Advances and other 3 506 742 3 191 777 3 467 108 3 506 742 248 455 1 053 086
accounts
Customers' indebtedness
for acceptances 110 179 055 14 634 110 13 938 4 445
Quoted and other f 85 77 280 85 3 85
investments
Investment properties h 335 000 817 397 131 693 335 000 36 200 40 000
Property and equipment i 1 811 269 2 026 779 1 979 672 38 016 22 467 22 665
-------------- -------------- ---------------- --------------- ------------ --------------
12 230 964 8 374 890 12 235 435 10 457 711 489 187 3 137 711
======== ======== ========= ========= ======= ========
NMB BANK LIMITED
CONSOLIDATED INFLATION ADJUSTED STATEMENT OF CHANGES IN EQUITY
As at 30 June 2006
Capital Reserves
Revenue
Reserves
Share Share Statutory Accumulated
Capital Premium Reserve Other Profit/(loss) Total
Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million
Balances at 1 January 461 266 2 873 003 124 506 9 778 (1 906 592) 1 561 601
2005
Net loss for the six
months ended 30 June
2005 - - - - (95 513) (95 513)
------------ -------------- ------------ ------------- --------------- ------------
Balances at 30 June 2005 461 266 2 873 003 124 506 9 778 (2 002 465) 1 466 088
------------- -------------- ------------ ------------- --------------- -------------
Net loss for the six
months ended 31 December
2005 - - - - 897 841 897 841
Fair value loss on
available-for-sale
securities - - - - (13 274) (13 274)
Deferred tax on
available-for-sale
adjustments - - - - 4 102 4 102
Shares Issued 3 233 628 - - - 233 631
----------- ------------- ------------ -------------- --------------- --------------
Balances at 31 December
2005
461 269 3 106 631 124 506 9 778 (1 113 796) 2 588 388
------------ -------------- ------------ -------------- --------------- --------------
Net loss for the six
months ended 30 June
2006 - - - - (542 920) (542 920)
Fair value loss on
available-for-sale
securities - - - - (157 994) (157 994)
Deferred tax on
available-for-sale
adjustments - - - - 48 820 48 820
----------- -------------- ------------ -------------- --------------- --------------
Balances at 30 June 2006 461 269 3 106 631 124 506 9 778 (1 765 890) 1 936 294
======= ======== ======= ======== ========= ========
NMB BANK LIMITED
CONSOLIDATED HISTORICAL COST STATEMENT OF CHANGES IN EQUITY
As at 30 June 2006
Capital Reserves Revenue
Reserves
Share Share Statutory Accumulated
Capital Premium Reserve Other Profit/(loss) Total
Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million
Balances at 1 January 2005 31 24 947 23 238 (15 767) 9 472
Net loss for the six months
ended 30 June 2005
- - - - (5 047) (5 047)
Dividends - - - - - -
------------ ----------- ------------ --------- ------------ --------------
Balances at 30 June 2005 31 24 947 23 238 (20 814) 4 425
------------- ----------- ------------ --------- ------------ --------------
Net profit for the six
months ended 31 December
2005 - - - - 329 878 329 878
Fair value loss on
available-for-sale
securities - - - - (4 032) (4 032)
Deferred tax on
available-for- sale
adjustments - - - - 1 246 1 246
Shares issued - 59 999 - - - 60 000
------------ ----------- ------------ --------- ------------ -------------
Balances at 31 December 2005
32 84 946 23 238 306 278 391 517
------------- ----------- ------------ --------- ------------ -------------
Net profit for the six
months ended 30 June 2006
- - - - 391 979 391 979
Fair value loss on
available-for-sale
securities - - - - (157 994) (157 994)
Deferred tax on
available-for- sale
adjustments - - - - 48 820 48 820
------------ ----------- ------------ --------- ------------ -------------
Balances at 30 June 2006 32 84 946 23 238 589 083 674 322
======= ======= ======= ===== ======= =======
NMB BANK LIMITED
CONSOLIDATED CASH FLOW STATEMENTS
For the six months ended 30 June 2006
INFLATION ADJUSTED HISTORICAL
Unaudited Unaudited Unaudited 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
2006 2005 2005 2006 2005 2005
CASHFLOW FROM OPERATING ACTIVITIES Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million
Profit/(loss) before taxation and
monetary adjustment 401 867 (493 703) 1 920 344 481 630 (8 051) 491 029
Non-cash items
(Profit)/loss on disposal of property
and equipment (919) (7 091) 61 570 (702) (3 612) (4 338)
Depreciation 189 987 346 637 423 466 3 318 2 428 4 950
Property and equipment write-off - 29 907 - - 884 -
Provision for impairment losses on
loans and advances 226 214 38 462 107 215 226 214 2994 32 565
(Loss)/gain on net monetary position (549 209) 480 009 (545 355) - - -
------------- ------------- ------------- ------------- ------------- -------------
Operating cash flows before changes in
operating assets and liabilities 267 940 394 221 1 967 240 710 460 (5 357) 524 206
Changes in operating assets and
liabilities:
Financial liabilities at fair value 3 031 679 149 109 800 593 4 272 054 44 521 497 658
through profit and loss
Deposits and other accounts (1 992 939) (5 916 687) (4 080 084) 2 751 829 (95 943) 1 587 700
Available-for-sale securities (45 732) - (128 035) (134 878) - (38 889)
Quoted and other investments 195 - (211) - - (82)
Advances and other accounts (963 173) 4 211 712 3 867 656 (2 679 6190 78 132 (756 070)
Investment properties (71 284) - 553 688 (254 900) - (43 900)
Financial assets at fair value through 40 916 - (2 767 234) (2 271 148) - (984 098)
profit and loss
Amount owing to holding company
monetary adjustment (92) - (774) - - -
------------- ------------- ------------- ------------- ------------- -------------
267 510 (1 161 645) 212 839 2 393 798 21 353 786 525
Taxation
Corporate tax paid (35 176) (73 212) (200 773) (23 435) (4 611) (38 472)
------------- ------------- ------------- ------------- -------------
Net cash inflow/ (outflows) from 232 334 (1 234 857) 12 066 2 370 363 16 692 748 053
operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds on disposal of property and 1 180 90 683 88 356 707 5 320 6 054
equipment
Purchase of property and equipment (21 846) (24 447) (34 194) (18 674) (1 294) (4 022)
Property and equipment prior year - - - - - 884
adjustment
Proceeds from disposal of quoted and
other investments - 128 138 - 6 6
------------- ------------- ------------- ------------- ------------- -------------
Net cash (outflows)/ inflows from (20 666) 66 365 54 300 (17 967) 4 032 2 922
investing activities
------------- ------------- ------------- ------------- -------------
Net cash inflow/ (outflows) before 211 668 (1 168 493) 66 366 2 352 396 20 724 750 975
financing activities
------------- ------------- ------------- ------------- ------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares - - 233 358 - - 60 000
------------- ------------- ------------- ------------- ------------- -------------
- - 233 358 - - 60 000
------------- ------------- ------------ -------------- ------------- ------------
Net increase/ (decrease) in cash and 211 668 (1 168 493) 299 724 2 352 396 20 724 810 975
cash equivalents
Cash and cash equivalents at beginning
of the period 3 074 593 3 328 298 2 774 869 933 865 147 400 122 890
------------- ------------- ------------- ------------- ------------- -------------
CASH AND CASH EQUIVALENTS 3 286 261 2 159 805 3 074 593 3 286 261 168 124 933 865
AT END OF PERIOD (note e) ======== ======== ======== ======== ======== ========
NMB BANK LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2006
a. NON-INTEREST INCOME
INFLATION ADJUSTED HISTORICAL
Unaudited Unaudited Unaudited 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
2006 2005 2005 2006 2005 2005
Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million
Investment property fair value
adjustment 254 900 174 301 144 533 254 900 - 43 900
Fair value adjustment on
financial instruments 232 268 6 271 453 114 232 268 488 137 627
Net commission and fee income 228 642 - 371 546 140 611 9 986 49 502
Gains less losses from quoted
and other investments - - 270 - - 82
Profit/(loss) on disposal of
fixed assets 919 7 091 (61 570) 702 3 612 4 338
Other operating income 11 495 53 967 214 423 2 889 268 9 216
----------- ----------- ------------ ------------ ------------ -------------
728 224 241 630 1 122 316 631 370 14 354 244 665
====== ======= ======= ======= ======= =======
b. OPERATING EXPENDITURE
The operating profit is
after
charging the following:
Administration costs 379 474 335 191 717 435 248 492 20 237 94 497
Depreciation 189 987 346 637 423 466 3 318 2 248 4 950
Staff costs 436 445 402 712 889 193 279 688 23 597 119 825
------------- ------------- -------------- ---------- ---------- ----------
1 005 906 1 084 540 2 030 094 531 498 46 262 219 272
======== ======== ======== ====== ====== ======
NMB BANK LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2006
c. EARNINGS PER SHARE
The calculation of earnings per share is based on the following figures.
c.1 (Losses)/earnings
INFLATION ADJUSTED HISTORICAL
Unaudited Unaudited Unaudited 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
2006 2005 2005 2006 2005 2005
Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million
Basic (542 920) (95 513) 802 328 391 979 (5 047) 324 831
Headline (760 220) (100 407) 722 018 174 829 (7 543) 284 518
c.2 Number of shares (million)
Weighted average shares in issue 15.6 15.5 15.6 15.6 15.5 15.6
c.3 (Loss)/earnings per share (cents
Basic (3 480 256) (616 213) 5 143 128 2 512 686 (32 561) 2 082 250
Headline (4 873 205) (647 787) 4 628 321 1 120 699 (48 665) 1 823 833
c.4 Headline earnings per share
The adjustments are as follows:
(Loss)/profit attributable to
shareholders (542 920) (95 513) 802 328 391 979 (5 047) 324 831
Deduct non-recurring items:
Profit on disposal of property
and equipment (919) (7 091) 61 570 (702) (3 612) (4 338)
Fair value adjustment on
investment properties (254 900) - (144 534) (254 900) - (43 900)
Tax effect 38 519 2 197 2 654 38 452 1 116 7 925
------------ ------------ ----------- ----------- ----------- -----------
(760 220) (100 407) 722 018 174 829 (7 534) 284 518
======= ======= ====== ====== ====== ======
NMB BANK LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the six months ended 30 June 2006
d. SHARE CAPITAL
d.1 Authorised
INFLATION ADJUSTED HISTORICAL
Unaudited Unaudited Unaudited 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
2006 2005 2005 2006 2005 2005
Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million
Ordinary shares of $2 each 25 25 25 50 50 50
====== ====== ====== ====== ====== ======
d.2 Issued and fully paid
INFLATION ADJUSTED HISTORICAL
Unaudited Unaudited Unaudited Unaudited Unaudited Audited
6 months 6 months Year 6 months 6 months Year
ended ended ended ended ended ended
30 June 30 June 31 Dec 30 June 30 June 31 Dec
2006 2005 2005 2006 2005 2005
Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million
At 1 January 461 269 461 266 461 266 32 31 31
Issue of shares - - 3 - - 1
----------- ----------- ------------ ------------ ------------ -------------
At 30 June 2006 461 269 461 266 461 269 32 31 32
====== ====== ====== ====== ====== ======
Subject to the provisions of section 183 of the Companies Act (Chapter 24.03),
the unissued shares are under the control of the directors.
NMB BANK LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2006
e. CASH AND CASH EQUIVALENTS
INFLATION ADJUSTED HISTORICAL
Unaudited Unaudited Unaudited 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
2006 2005 2005 2006 2005 2005
e.1 Balances with banks and Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million
cash
Balances with RBZ 2 767 245 693 801 1 466 493 2 767 245 54 007 445 427
Current, nostro accounts & 519 016 901 914 1 608 100 519 016 70 207 488 438
cash
----------- ------------- -------------- --------------- -------------- ------------
3 286 261 1 595 715 3 074 593 3 286 261 124 214 933 865
e.2 Financial assets held for trading
Government and public sector
securities - 361205 - - 28 117 -
Bills receivable - 202 885 - - 15 793 -
------------- -------------- ------------- ------------- ------------- -------------
Total cash and cash 3 286 261 2 159 805 3 074 593 3 286 593 168 124 933 865
equivalents
======= ======== ======== ======== ======== ========
f. QUOTED INVESTMENTS
The quoted investments represent shares held by the Bank of Z$85 million
at historical cost (Z$85 million - December 2005) and Z$85 million in inflation
adjusted terms (Z$280 million - December 2005).
g. NON-CURRENT ASSETS HELD FOR SALE
INFLATION ADJUSTED HISTORICAL
Unaudited Unaudited Unaudited Unaudited Unaudited Audited
6 months 6 months Year 6 months 6 months Year
ended ended ended ended ended ended
30 June 30 June 31 Dec 30 June 30 June 31 Dec
2006 2005 2005 2006 2005 2005
Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million
At 1 January 132 022 - - 40 100 - -
Transfer (to)/from investment
property (132 022) - 132 022 (40 100) - 40 100
---------- ---------- ---------- ---------- ---------- ----------
- - 132 022 - - 40 100
====== ====== ====== ====== ====== ======
Some of the conditions necessary for the property to qualify for recognition
under non-current assets held-for-sale no longer existed at reporting date.
NMB BANK LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2006
h. INVESTMENT PROPERTIES
INFLATION ADJUSTED HISTORICAL
Unaudited Unaudited Unaudited 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
2006 2005 2005 2006 2005 2005
Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million
At 1 January 131 693 817 397 861 951 40 000 36 200 36 200
Disposals - - (45 126) - - -
Transfer from/(to) non-current
assets held-for-sale 132 022 - (132 022) 40 100 - (40 100)
Fair value adjustments 254 900 - 144 431 254 900 - 43 900
Monetary adjustments (183 615) - (697 541) - - -
---------- ---------- ---------- ---------- ---------- ----------
335 000 817 397 131 693 335 000 36 200 40 000
====== ====== ====== ====== ====== ======
h.1 Borrowdale Estate property
The investment property is in the Bank's subsidiary, Carey Farm (Private)
Limited. The Bank's beneficial interest therein is 100%. The subsidiary's only
asset is a certain piece of land situated in the District of Harare, called The
Remainder of Lot H of Borrowdale Estate measuring 89.2623 hectares (223.16
acres) in extent. The beneficial interest in the subsidiary arose from
shareholding acquired in settlement of a debt owed to the Bank amounting to $10
008 million. This acquisition is in compliance with Section 34 of the Banking
Act (Chapter 24:20).
The land was valued by an independent and professional valuer in June 2006. The
total value of the unencumbered freehold land was Z$120 000 million.
h.2 Borrowdale Race course property
This investment property which is 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 in June 2006. The total value
of the unencumbered freehold land was Z$215 000 million.
i. PROPERTY AND EQUIPMENT
INFLATION ADJUSTED HISTORICAL
Unaudited Unaudited Unaudited Unaudited Unaudited Audited
30 June 30 June 31 Dec 30 June 30 June 31 Dec
2006 2005 2005 2006 2005 2005
Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million
Cost 5 650 424 5 300 658 5 629 172 51 161 30 821 32 535
Accumulated depreciation (3 839 155) (3 273 879) (3 649 500) (13 145) (8 354) (9 870)
----------- ------------ ------------ ------------ ----------- ------------
Net book value 1 811 269 2 026 779 1 979 672 38 016 22 467 22 665
======= ======= ======= ======= ====== =======
NMB BANK LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2006
j. CAPITAL ADEQUACY
HISTORICAL
Unaudited Unaudited Audited
30 June 30 June 31 Dec
2006 2005 2005
Z$ million Z$ million Z$ million
Share capital 32 31 32
Share premium 84 969 24 970 84 969
Retained earnings 589 083 (20 181) 306 278
------------ ------------ ------------
674 084 4 820 391 279
Credit to insiders (14 364) (7 692) (7 164)
------------- ------------- ------------
Tier 1 capital 659 720 (2 872) 384 115
Tier 2 capital
Subordinated debt 40 40 40
Revaluation reserves 238 238 238
General provisions 38 434 3 140 18 811
------------ ------------ ------------
Total capital base 698 432 546 403 204
======= ======= =======
Total risk weighted assets 5 600 633 367 866 1 790 797
------------ ------------ ------------
Tier 1 Capital adequacy ratio 11.78% (0.78)% 21.45%
Total Capital adequacy ratio 12.47% 0.15% 22.52%
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/S Nujoma 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
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The company news service from the London Stock Exchange