GETBUCKS MICROfiNANCE BANK LIMITED
Incorporated in Zimbabwe on 17 January 2012 and converted to a public company limited by shares on 4 November 2015
(Registration number 322/2012)
Audited financial results for the year ended 31 December 2022
Financial highlights
Interest revenue | Headline earnings per share | Microfinance Bank's |
DECREASED 33% | DECREASED 140% | assets |
ZWL 1,092 million from ZWL 1,630 million | 8.94 cents per share from 56.71 cents per share | INCREASED 19% |
ZWL 4.145 billion from | ||
ZWL 3.5 billion | ||
Profit before tax | Earnings per share | |
INCREASED 186% | DECREASED 140% | |
ZWL 136.2 million from ZWL 47.6 million | 24.53 cents per share from 61.64 cents per share |
The board of directors of GetBucks Microfinance Bank Limited (the "Bank") present the audited financial results of the Microfinance Bank for the year ended 31 December 2022.
Financial highlights of the Microfinance Bank
The inflation adjusted audited full year financial results (the "financial results") when compared to the prior year ended 31 December
2021 ("comparative period"), are set out below:
- Interest revenue for the year decreased by 33% to ZWL1,092 million compared to ZWL1,630 million for the comparative period;
- Profit before tax for the year increased by 186% to ZWL136.2 million compared to a profit of ZWL47.6 million for the comparative period;
- Headline earnings per share decreased by 140% to a loss of 8.94 cents per share compared to the headline loss per share of 56.71 cents for the comparative period;
- Earnings per share decreased by 140% to a loss of 24.53 cents per share compared to the earnings per share of 61.64 cents per share for the comparative period; and
- The Microfinance Bank's assets increased by 19% to ZWL 4.145 billion compared to ZWL 3.5 billion for the comparative period.
No dividends were declared or paid during the period under review.
This short announcement should be read in conjunction with the complete set of financial statements for the year ended 31 December 2022 which have been audited by Grant Thornton Chartered Accountants (Zimbabwe) in accordance with International Standards on Auditing (ISAs). The auditors have issued a qualified opinion on the audited inflation adjusted financial statements of the Microfinance Bank, for the year then ended. The qualified opinion was issued regarding non-compliance with International Accounting Standard (IAS) 21 - 'The Effect of Changes in Foreign Exchange Rates' in the prior financial years and International Accounting Standard (IAS) 8 - 'Accounting Policies, Changes in Accounting Estimates and Errors' and an inability to obtain sufficient appropriate audit evidence on other receivables account balance. There is an emphasis of matter regarding material uncertainty related to going concern.
The auditor's report includes a section on key audit matters outlining matters that in the auditor's professional judgement, were of most significance in the audit of the inflation adjusted financial statements. The key audit matters were with respect to recognition of revenue and loans and advances.
The auditor's report on the inflation adjusted financial statements and the audited inflation adjusted financial statements, is available for inspection at the company's registered office and the auditor's report has been lodged with the Zimbabwe Stock Exchange.
This short form announcement is the responsibility of the Board and does not contain full or complete details. Any investment decisions by investors and/or shareholders should be based as a whole on consideration of the audited financial results for the full year ended 31 December 2022 which may be downloaded from the Company's website at: http://www.getbucksbank.com and may also be viewed, at no cost, at the Zimbabwe Stock Exchange website.
By Order of the Board of Directors,
Wimbayi Chigumbu
Chief Finance Officer
28 April 2023
Directors:
Dr. R. Mbire (Board Chairman), E. Chavora* (Managing Director), W. Chigumbu* (Chief Finance Officer),
M. Madamombe* (Chief Operating Officer),J. Machiva, P. Soko, T. Munowenyu, S. Chibaya. *Executive
Registered Office: 24 Princess Drive, Newlands, Harare, Zimbabwe.
GETBUCKS MICROFINANCE BANK LIMITED
For the year ended 31 December 2022
Incorporated in Zimbabwe on 17 January 2012 and converted to a public company limited by shares on 4 November 2015 (Registration number 322/2012)
GetBucks is a member of the
Deposit Protection Corporation
Registered deposit taking microfinance institution
Abridged
Financial Statements
For the year ended 31 December 2022
CHAIRMAN'S STATEMENT | AUDITOR'S STATEMENT |
Dear Stakeholders,
I am pleased to present the results for the year ended 31 December 2022, which again showed that GetBucks Microfinance Bank Limited ('the Microfinance Bank'') has been very resilient, in the face of inflationary pressures and market disruptions in the operating environment.
The operating environment continued to be characterised by significant challenges in the year 2022, The central bank adopted an aggressive tight monetary policy beginning of the third quarter first by stopping all lending activities by banks and microfinance institutions and the uplifting the ban and then hiking the bank policy rate to 200% per annum in an effort to tame inflation. Annual inflation rate closed at 243.8% in December 2022 up from 60.74% in December 2021, the operating environment continued to experience significant increases in prices of goods and services. The market continued to suffer from inadequate foreign currency inflows and limited inflows into financial institutions due to the liquidation thresholds set by the regulators. Despite these challenges, the Microfinance Bank showed resilience.
Operational Results
The Microfinance Bank recorded a profit before tax of ZWL 136.2 million representing a 186% increase from prior year inflation adjusted profit of ZWL 47.6 million. Operating expenses increased by 19% during the year under review from ZWL 1.372 billion in 2021 to ZWL 1.64 billion in 2022. The increase was lower than the average inflation for the year under review as the Microfinance Bank embarked on a cost cutting drive while operating in an inflationary environment. Borrowings increased from ZWL976 million to ZWL 1.404 billion as the Microfinance Bank managed to mobilise new lines of credit. Customer deposits increased 132% to close at ZWL631 million from ZWL272 million in 2021. The increase is attributable to the increased use of the USD in the economy. The Microfinance Bank is now issuing loans in USD and deposits in this currency tend to stick a bit longer. There, however, still exists a general market's reluctance to hold on to monetary assets especially in ZWL considering the inflationary pressure and fear of real monetary loss due to currency depreciation. The loan book increased by 147%, growing from ZWL617 million in 2021 to close at ZWL 1.526 billion in 2022.
Financial Position
The Microfinance Bank grew its total assets by 19%, from ZWL 3.482 billion to ZWL 4.145 billion, the growth in the assets is main attributed to the increase in the loan book. The Microfinance Bank was able to access USD credit lines and extend these to its customer base. As at 31 December 2022, the Microfinance Bank had foreign currency denominated commitments of ZWL 1.330 billion.
Capital
The Microfinance Bank's net equity position was ZWL 1.534 billion as at 31 December 2022. To ensure compliance with the regulatory minimum capital requirement extended deadline of 31 December 2023, the Microfinance Bank is working on a recapitalisation plan as detailed in the Outlook section below.
Dividend
No dividend has been declared for the period under review.
Directorate
During the reporting period, Mr. Patrick Matute, and George Nheweyembwa resigned as directors of the board. Mr. Edwin Chavora, Mrs. Thembi Munowenyu and Ms. Sibusisiwe Chibaya were appointed to the board. Edwin Chavora was appointed as the substantive managing director on the 1st of July 2022. The Board of Directors wishes to extend its gratitude to the outgoing directors and wish Edwin every success in the new role.
Outlook
The Microfinance Bank is in the process of negotiating transactions as part of its capital raise initiative. The anticipated capital raise will help the Microfinance Bank address the regulatory minimum capital requirement of USD 5 million equivalent. The raised capital will reduce the Microfinance Bank's cost of funding, as well as capacitating the Microfinance Bank's expansion drive.
These abridged audited financial statements derived from the audited inflation adjusted financial statements of Getbucks Microfinance Bank Limited for the financial year ended 31 December 2022, should be read together with the complete set of audited inflation adjusted financial statements of the Microfinance Bank , for the year ended 31 December 2022, which have been audited by Grant Thornton Chartered Accountants (Zimbabwe) and the auditor's report signed by Edmore Chimhowa, Registered Public Auditor 0470.
A qualified opinion has been issued on the audited inflation adjusted financial statements of the Microfinance Bank, for the year then ended. The qualified opinion was issued regarding non-compliance with International Accounting Standard (IAS) 21 - 'The Effect of Changes in Foreign Exchange Rates' in the prior financial years and International Accounting Standard (IAS) 8 - 'Accounting Policies, Changes in Accounting Estimates and Errors' and an inability to obtain sufficient appropriate audit evidence on other receivables account balance. There is an emphasis of matter regarding material uncertainty related to going concern.
The auditor's report includes a section on key audit matters outlining matters that in the auditor's professional judgement, were of most significance in the audit of the inflation adjusted financial statements. The key audit matters were with respect to recognition of revenue and loans and advances. The auditor's report on the inflation adjusted financial statements and the audited inflation adjusted financial statements, is available for inspection at the company's registered office and the auditor's report has been lodged with the Zimbabwe Stock Exchange.
STATEMENT OF FINANCIAL POSITION
As at 31 December 2022
INFLATION ADJUSTED | HISTORICAL COST | ||||
All figures in ZWL | Notes | 2022 | 2021 | 2022 | 2021 |
ASSETS | |||||
Cash and cash equivalents | 4 | 549 415 056 | 711 862 892 | 549 415 056 | 207 083 544 |
Loans and advances to customers | 5.1 | 1 526 655 858 | 617 194 904 | 1 526 655 858 | 179 544 277 |
Other assets | 6 | 144 500 370 | 164 341 282 | 90 076 157 | 38 151 136 |
Tax receivable | 7 | 23 081 190 | 26 629 084 | - | 1 122 554 |
Investment properties | 9 | 517 000 000 | 475 896 332 | 517 000 000 | 138 440 000 |
Right of use asset | 10 | 52 887 768 | 30 343 273 | 15 612 468 | 445 185 |
Property and equipment | 11 | 1 311 248 561 | 1 437 137 601 | 1 151 149 830 | 322 979 205 |
Intangible assets | 12 | 20 313 402 | 19 035 465 | 3 736 865 | 804 850 |
Total assets | 4 145 102 205 | 3 482 440 833 | 3 853 646 234 | 888 570 751 | |
EQUITY AND LIABILITIES | |||||
Equity attributable to the owners of | |||||
the Company | |||||
Share capital | 13.1 | 25 307 | 25 307 | 116 | 116 |
Share premium | 13.2 | 1 483 650 138 | 1 483 650 138 | 8 562 235 | 8 562 235 |
Revaluation reserves | 476 386 657 | 549 788 816 | 793 886 312 | 158 927 372 | |
(Accumulated loss)/retained earnings | (433 642 340) | (403 048 545) | 472 980 506 | 227 661 885 | |
Total equity | 1 526 419 762 | 1 630 415 716 | 1 275 429 169 | 395 151 608 | |
LIABILITIES |
Trading in USD ensures a significant degree of certainty in planning and operations; however the local currency continues to be pummeled by both inflation and exchange loss against all the major currencies. These vices necessitate the Microfinance Bank continues to implement capital preservation initiatives to preserve shareholder value.
Appreciation
I would like to thank all our valued stakeholders, my fellow directors, management and staff for their hard work and contribution during the year and the achievement of these results in a tough operating environment.
DR. R. MBIRE
CHAIRMAN
28 April 2023
MANAGING DIRECTOR'S STATEMENT
It gives me great pleasure to present to you the Getbucks Microfinance Bank's financial performance for the year ended 31 December 2022.
Introduction
The period under review was challenging. The local currency continued to devalue against the United States Dollar causing sustained high levels of inflation. Disruptions plagued the market as monetary and fiscal authorities crafted a raft of measures to contain inflation. The measures included effecting a moratorium on lending, hiking bank policy interest rates to 200% and the withholding of payments to government suppliers.
Operating Environment
The institution battled rising operational cost because of the high levels of Inflation during the period under review. The moratorium on lending also disrupted the revenue generation side of the business. High interest rates discouraged borrowers from borrowing the local currency unit and focus shifted to United States dollar lending.
Our Products and Service Commitments
Despite the tough economic environment that institution held on to it's market share in the microlending space showing high the levels of goodwill in the brand. United States denominated loans were rolled out and the uptake has been encouraging.
Outlook
We are optimistic about the business prospects for the Microfinance Bank in 2023. The recapitalization of the institution that was expected to be concluded in 2022 will happen in 2023 which should see us being able to underwrite more business.
The increased use of the United States dollar in the economy will boost the institutions lending capacity and also help preserve earnings.
Headwinds will continue to come from inflationary pressures being experienced due to currency volatility. Elections will also slow down growth as businesses tend to adopt a wait and see approach in an election year.
Appreciation
My heartfelt appreciation goes out to all our valued customers and stakeholders who have shown unwavering support to GetBucks Microfinance Bank. I am very grateful to my fellow directors for the steering arms that held strong during the year, and I am equally grateful to the Microfinance
Bank's employees for their resilience and dedication. Thank you all.
Edwin Chavora
MANAGING DIRECTOR
Deposits from customers | 14 | 631 521 352 | 272 410 215 | 631 521 352 | 79 245 137 |
Other financial liabilities | 15 | 274 228 275 | 356 958 647 | 274 228 275 | 103 840 590 |
Borrowings | 16 | 1 404 219 345 | 976 142 281 | 1 404 219 345 | 283 963 393 |
Deferred tax liability | 8 | 308 713 471 | 246 513 974 | 265 822 753 | 26 370 023 |
Tax payable | 7 | - | - | 2 425 340 | - |
Total liabilities | 2 618 682 443 | 1 852 025 117 | 2 578 217 065 | 493 419 143 | |
Total equity and liabilities | 4 145 102 205 | 3 482 440 833 | 3 853 646 234 | 888 570 751 |
The above statement of financial position should be read in conjunction with the accompanying notes.
The financial statements were approved by the Board of Directors on 28 April 2023 and signed on its behalf by:
Dr. R. Mbire | Mr. E. Chavora | ||||
CHAIRMAN | MANAGING DIRECTOR | ||||
28 April 2023 | 28 April 2023 | ||||
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME | |||||
for the year ended 31 December 2022 | |||||
INFLATION ADJUSTED | HISTORICAL COST | ||||
All figures in ZWL | Notes | 2022 | 2021 | 2022 | 2021 |
Interest income | 17 | 1 092 439 379 | 1 630 101 026 | 727 138 889 | 375 556 964 |
Interest expense | 18 | (693 490 776) | (668 779 326) | (482 340 426) | (156 343 236) |
Net interest income | 398 948 603 | 961 321 700 | 244 798 463 | 219 213 728 | |
Fee and commission income | 19 | 403 135 554 | 392 599 132 | 265 864 602 | 93 279 222 |
Other income | 89 911 644 | 21 066 783 | 72 168 353 | 4 740 600 | |
Gain on foreign exchange | 295 154 786 | 26 205 955 | 202 420 663 | 6 631 582 | |
Fair value adjustment | 9 | 292 171 607 | 352 742 | 547 471 240 | 70 190 350 |
Total net income | 1 479 322 194 | 1 401 546 313 | 1 332 723 321 | 394 055 482 | |
Allowance for expected credit losses | (48 033 923) | (77 579 160) | (31 028 845) | (18 944 343) | |
Operating expenses | 20 | (1 635 635 410) (1 372 006 310) (1 025 427 177) | (322 325 585) | ||
Net monetary adjustment | 340 578 700 | 95 681 103 | - | - | |
Profit before taxation | 136 231 561 | 47 641 946 | 276 267 299 | 52 785 554 | |
Income tax (expense) / credit | 21 | (166 825 356) | 62 119 621 | (30 948 678) | 54 236 605 |
(Loss) / profit for the year | (30 593 795) | 109 761 567 | 245 318 621 | 107 022 159 | |
Revaluation (loss) / gains on property | |||||
and equipment | 11 | (97 505 525) | 730 325 207 | 843 462 992 | 211 667 422 |
Tax on revaluation of property and | |||||
equipment | 8 | 24 103 366 | (180 536 391) | (208 504 052) | (52 740 050) |
Total comprehensive (loss)/income | |||||
for the year, net of tax | (103 995 954) | 659 550 383 | 880 277 561 | 265 949 531 | |
Basic and diluted (loss)/earnings per | |||||
share (cents) | 13 | (8.94) | 56.71 | 75.68 | 22.87 |
Headline (loss)/earnings per share | |||||
(cents) | 13 | (24.53) | 61.64 | 42.71 | 19.59 |
The above statement of comprehensive income should be read in conjunction with the accompanying
28 April 2023 | notes. |
Registered deposit taking microfinance institution | Directors: Dr. R. Mbire (Board Chairman), E. Chavora* (Managing Director), W. Chigumbu* (Chief Finance Officer), M. Madamombe* (Chief Operating Officer), |
w w w. ge t b u ck s . c o m | J. Machiva, P. Soko, T. Munowenyu, S. Chibaya. *Executive | Registered Office: 24 Princess Drive, Newlands, Harare, Zimbabwe. |
Abridged
Financial Statements
For the year ended 31 December 2022
STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2022
INFLATION ADJUSTED | ||||||
Share | Share | Revaluation (Accumulated | Total | |||
All figures in ZWL | capital | premium | reserves | loss) | equity | |
YEAR ENDED 31 DECEMBER 2021 | ||||||
Balance at 1 January 2021 | 25 307 | 1 483 650 138 | - | (512 810 112) | 970 865 333 | |
Total comprehensive income for the year | - | - | 549 788 816 | 109 761 567 | 659 550 383 | |
Balance at 31 December 2021 | 25 307 | 1 483 650 138 | 549 788 816 | (403 048 545) | 1 630 415 716 | |
Balance at 1 January 2022 | 25 307 | 1 483 650 138 | 549 788 816 | (403 048 545) | 1 630 415 716 | |
Total comprehensive (loss) for the year | - | - | (73 402 159) | (30 593 795) | (103 995 954) | |
Balance at 31 December 2022 | 25 307 | 1 483 650 138 | 476 386 657 | (433 642 340) | 1 526 419 762 | |
HISTORICAL COST | ||||||
Share | Share | Revaluation | Retained | Total | ||
All figures in ZWL | capital | premium | reserves | earnings | equity | |
YEAR ENDED 31 DECEMBER 2021 | ||||||
Balance at 1 January 2021 | 116 | 8 562 235 | - | 120 639 726 | 129 202 077 | |
Total comprehensive income for the year | - | - | 158 927 372 | 107 022 159 | 265 949 531 | |
Balance at 31 December 2021 | 116 | 8 562 235 | 158 927 372 | 227 661 885 | 395 151 608 | |
YEAR ENDED 31 DECEMBER 2022 | ||||||
Balance at 1 January 2022 | 116 | 8 562 235 | 158 927 372 | 227 661 885 | 395 151 608 | |
Total comprehensive | ||||||
income for the year | - | - | 634 958 940 | 245 318 621 | 880 277 561 |
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2022
-
GENERAL INFORMATION
GetBucks Microfinance Bank Limited ("Getbucks" or "the Microfinance Bank") is registered as a Deposit Taking Microfinance Bank by the Reserve Bank of Zimbabwe, under the MicroFinance Act (Chapter 24:29), and is a subsidiary of GetBucks Limited which holds 53.7%, (December 2021 :53.7%) of the Microfinance Bank's ordinary shares. The Microfinance Bank was listed on the Zimbabwe Stock Exchange on 15 January 2016 and obtained its deposit taking licence in the same month.
The Microfinance Bank is a limited liability Company incorporated and domiciled in Zimbabwe. The Microfinance Bank's business is conducted in Zimbabwe.
The address of its registered office is 24 Princess Drive, Newlands, Harare, Zimbabwe.
On 21 June 2017 shareholders approved the change of name to Getbucks Microfinance Bank to better reflect the nature of the operations being undertaken.
- SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
2.1 Basis of preparation
The financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") and in the manner required by the Companies and other Business Entities Act (Chapter 24:31), except for non-compliance with International Accounting Standard ("IAS") 21, The Effects of Changes in Foreign Exchange Rates described in note 2.2 and International Accounting Standard ("IAS") 29 Financial Reporting in Hyperinflationary Economies, and interpretations issued by the IFRS Interpretations Committee ("IFRS IC") as issued by the International Accounting Standards Board ("IASB").
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in note 3.
The financial statements have been prepared based on the statutory records that are maintained under the historical cost basis and adjusted for the effects of applying IAS29. The financial statements are presented in Zimbabwean dollars and all values are rounded to the nearest dollar.
2.1.1 Changes in accounting policy and disclosures Amended standards and interpretations
Balance at 31 December 2022 | 116 | 8 562 235 | 793 886 312 | 472 980 506 | 1 275 429 169 |
The above statement of changes in equity should be read in conjunction with the accompanying notes.
STATEMENT OF CASH FLOWS
For the year ended 31 December 2022 | |||||
INFLATION ADJUSTED | HISTORICAL COST | ||||
All figures in ZWL | Notes | 2022 | 2021 | 2022 | 2021 |
Cash flows from operating activities | |||||
Cash (utilised) in operations | 23 | (1 407 742 810) | (680 651 336) (1 714 931 004) | (398 902 967) | |
Interest received | 1 535 298 873 | 1 977 028 249 | 1 032 904 629 | 453 336 053 | |
Interest paid | (236 688 817) | (295 299 088) | (159 237 383) | (67 712 600) | |
Net cash flows (utilised in) / generated from | |||||
operating activities | (109 132 754) | 1 001 077 825 | (841 263 758) | (13 279 514) | |
Cash flows from investing activities | |||||
Proceeds from disposal of property, | |||||
plant and equipment | 803 002 444 | 4 597 898 | 233 596 376 | 1 054 306 | |
Purchase of property, plant and | |||||
equipment | 11 | (21 812 007) | (137 585 252) | (17 115 409) | (10 826 802) |
Additions to intangible assets | 12 | (3 410 558) | (3 624 901) | (3 370 510) | ( 806 704) |
Purchase of investment property | 9 | (43 237 235) | (87 917 555) | (29 088 760) | (20 159 650) |
Net cash flows generated from/ | |||||
(utilised in) investing activities | 734 542 644 | (224 529 810) | 184 021 697 | (30 738 850) | |
Cash flows from financing activities | |||||
New borrowings | 2 775 241 303 | 27 509 271 050 | 1 867 101 995 | 6 307 924 212 | |
Repayments | (1 590 361 374) (27 093 978 696) (1 069 949 085) (6 212 696 945) | ||||
Net cash flows generated from financing | |||||
activities | 1 184 879 929 | 415 292 354 | 797 152 910 | 95 227 267 | |
Net increase in cash and cash | |||||
equivalents | 1 810 289 819 | 1 191 840 369 | 139 910 849 | 51 208 903 | |
Cash and cash equivalents at the | |||||
beginning of the year | 711 862 892 | 824 642 617 | 207 083 544 | 149 243 059 | |
Net foreign exchange differences on | |||||
cash and cash equivalents | 26 205 954 | 174 222 230 | 202 420 663 | 6 631 582 | |
Inflation effect on cash and cash equivalents | (1 998 943 609) | (1 478 842 324) | - | - | |
Cash and cash equivalents at the | |||||
end of the year | 4 | 549 415 056 | 711 862 892 | 549 415 056 | 207 083 544 |
At the date of authorisation of these consolidated financial statements, several new, but not yet effective, Standards and amendments to existing Standards, and Interpretations have been published by the IASB. None of these Standards or amendments to existing Standards have been adopted early by the Company.
Management anticipates that all relevant pronouncements will be adopted for the first period beginning on or after the effective date of the pronouncement. New Standards, amendments and Interpretations not adopted in the current year have not been disclosed as they are not expected to have a material impact on the Group's financial statements.
Covid-19-Related Rent Concessions beyond 30 June 2021 (Amendment to IFRS 16)
In May 2020, the IASB issued Covid-19-Related Rent Concessions (Amendment to IFRS 16). The pronouncement amended IFRS 16 Leases to provide lessees with an exemption from assessing whether a COVID-19-related rent concession is a lease modification. On issuance, the practical expedient was limited to rent concessions for which any reduction in lease payments affects only payments originally due on or before 30 June 2021. Since lessors continue to grant COVID-19-related rent concessions to lessees and since the effects of the COVID-19 pandemic are ongoing and significant, the IASB decided to look into whether to extend the time period over which the practical expedient is available for use.
The Changes in Covid-19-Related Rent Concessions beyond 30 June 2021 (Amendment to IFRS
- amend IFRS 16 to permit a lessee to apply the practical expedient regarding COVID-19-related rent concessions to rent concessions for which any reduction in lease payments affects only payments originally due on or before 30 June 2022 (rather than only payments originally due on or before 30 June 2021); and specify that, in the reporting period in which a lessee first applies the amendment, a lessee is not required to disclose the information required by paragraph 28(f) of IAS 8.
New and revised IFRS Standards in issue but not yet effective
-
Amendments to IAS 12 - Deferred Tax related to Assets and Liabilities arising from a Single Transaction
In specific circumstances, entities are exempt from recognising deferred tax when they recognise assets or liabilities for the first time. There had been some diversity in practice as to whether the exemption applied to transactions such as leases and decommissioning obligations. These are transactions where entities recognise both an asset and a liability. The amendments require an entity to recognise deferred tax on certain transactions (eg leases and decommissioning liabilities) that give rise to equal amounts of taxable and deductible temporary differences on initial recognition. The amendments clarify that the initial recognition exemption set out in IAS 12 'Income Taxes' does not apply and entities are required to recognise deferred tax on these transactions. The aim of the amendments is to reduce diversity in the reporting of deferred tax on leases and decommissioning obligations.
Effective date January 1, 2023 -
Amendments to IAS 1 - Disclosure of Accounting Policies
The amendments include a definition of 'accounting estimates' as well as other amendments to IAS 8 that will help entities distinguish changes in accounting policies from changes in accounting estimates. This distinction between these two types of changes is important as changes in accounting policies are normally applied retrospectively to past transactions and events, whereas changes in accounting estimates are applied prospectively to future transactions and events.
Effective date January 1, 2023
Registered deposit taking microfinance institution | Directors: Dr. R. Mbire (Board Chairman), E. Chavora* (Managing Director), W. Chigumbu* (Chief Finance Officer), M. Madamombe* (Chief Operating Officer), |
w w w. ge t b u ck s . c o m | J. Machiva, P. Soko, T. Munowenyu, S. Chibaya. *Executive | Registered Office: 24 Princess Drive, Newlands, Harare, Zimbabwe. |
Abridged
Financial Statements
For the year ended 31 December 2022
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 31 December 2022
- SIGNIFICANT ACCOUNTING POLICIES (continued)
-
Amendments to IAS 8 - Definition of Accounting Estimates
The amendment clarifies that in applying the '10 percent' test to assess whether to derecognise a financial liability, an entity includes only fees paid or received between the entity (the borrower) and the lender, including fees paid or received by either the entity or the lender on the other's behalf. The amendment is applied prospectively to modifications and exchanges that occur on or after the date the entity first applies the amendment. The amendment is effective for annual periods beginning on or after 1 January 2022, with early application permitted.
Effective date January 1, 2022 - Foreign currency translation
-
Functional and presentation currency
Items included in the financial statements of the Microfinance Bank are measured using the currency of the primary economic environment in which the entity operates ("the functional currency"). The financial statements are presented in Zimbabwe dollar ("ZWL"), which is the Microfinance Bank's functional and presentation currency.
The country pronounced the Zimbabwe Dollar as the sole legal tender on 24 June 2019, moving from a multi currency system that used a basket of foreign currencies as legal tender. The currency has a limited range of local bond notes, coins and various forms of electronic payment platforms. The pronouncement, however, did not affect the opening or operation of foreign currency designated accounts, otherwise known as 'Nostro FCA accounts' which continued to be designated in foreign currencies with which they were opened and were operated.
From an IAS 21 perspective, the separation of the ZWL FCA and Nostro FCA accounts on 1 October 2018 by the RBZ was a strong indicator of a change in functional currency. However, the Microfinance Bank maintained the 1:1 parity between the US$ and the ZWL for accounting purposes for the period to 22 February 2019 in order to comply with laws of Zimbabwe that did not recognise ZWL FCA as currency until 22 February 2019 when SI 33 of 2019 was promulgated. An alternative way of accounting for these changes that complies with IFRS was to use the Old Mutual Implied Rate ("OMIR") for conversion of ZWL FCA denominated numbers to the US$. Though this approach would be IFRS compliant, this would result in non compliance with the laws and regulations of Zimbabwe, prior to the introduction of local currency on 22 February 2019. The above means that prior year comparative figures are not compliant with IAS 21. - Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuations where items are re-measured. Foreign exchange gains or losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of profit or loss, except when deferred in equity as qualifying cash flow hedges and qualifying net investment hedges. Foreign exchange translation gains or losses are presented on the face of the statement of comprehensive income.
-
Functional and presentation currency
- Cash and cash equivalents
Cash and cash equivalents includes cash on hand, other short-term highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value, and bank overdrafts. There were no overdrafts as at the reporting date. - Intangible assets
Software licenses
Separately acquired software licences are shown at historical cost, less accumulated amortisation. The acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortised over their estimated useful lives of three years. Costs associated with maintaining computer software programmes are recognised as an expense as incurred. - Equipment
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Recognition and measurement
The cost of an item of equipment is recognised as an asset if, and only if; it is probable that future economic benefits associated with the item will flow to the entity and the cost of the item can be measured reliably. Equipment is stated at historical cost less accumulated depreciation and impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing working condition for its intended use, the cost of dismantling the asset and removing items and restoring the site on which they are located. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. Where parts of equipment have different useful lives, they are accounted for (major components) as separate equipment. - Subsequent measurement
The cost of replacing part of an item of property and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Microfinance Bank and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the statement of profit or loss within 'administrative expenses' during the financial period in which they are incurred. Subsequent costs can also be recognised as separate assets.
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Recognition and measurement
Depreciation is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives, as follows:
Items | Average useful life |
Furniture and fixtures | 6 years |
Motor vehicles | 5 years |
Office equipment | 5 years |
IT equipment | 3 years |
Leasehold improvements | Shorter of useful life or duration of the lease |
agreement |
Depreciation methods, useful lives and residual values are reassessed at each reporting date.
Gains or losses on disposals are determined by comparing proceeds with carrying amount. These are included in the statement of comprehensive income within other income.
The carrying amounts of the Microfinance Bank's items of equipment are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated. An impairment allowance is recognised whenever the carrying amount exceeds its recoverable amount.
An assets' carrying amount is written down immediately to its recoverable amount if the assets' carrying amount is greater than the estimated recoverable amount.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
For the year ended 31 December 2022
- SIGNIFICANT ACCOUNTING POLICIES (continued)
- Equipment (continued)
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Revaluation
Under the revaluation model, revaluations should be carried out regularly, so that the carrying amount of an asset does not differ materially from its fair value at the balance sheet date. If an item is revalued, the entire class of assets to which that asset belongs should be revalued. Revalued assets are depreciated in the same way as under the cost model. If a revaluation results in an increase in value, it should be credited to other comprehensive income and accumulated in equity under the heading ""revaluation surplus"" unless it represents the reversal of a revaluation decrease of the same asset previously recognised as an expense, in which case it should be recognised in profit or loss. A decrease arising as a result of a revaluation should be recognised as an expense to the extent that it exceeds any amount previously credited to the revaluation surplus relating to the same asset.
When a revalued asset is disposed of, any revaluation surplus may be transferred directly to retained earnings, or it may be left in equity under the heading revaluation surplus. The transfer to retained earnings should not be made through profit or loss. The Microfinance Bank revalued the Land and Buildings as at 30 June 2022 and 31 December 2022. The revalution exercise was done by an independent valuer on both dates. - Derecognition
The carrying amount of an item of equipment is derecognised on disposal or when no future economic benefits are expected from its use or disposal.
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Revaluation
- Investment properties
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Recognition criteria
Investment properties are those properties held for earning rental income and/or for capital appreciation. None of these properties are occupied by the Microfinance Bank for its business activities. In the case where property will be partly used for business and partly leased out under an operating lease, the property will be split according to its use if the properties can be sold separately. If the properties cannot be sold separately, the property is investment property only if an insignificant portion is held for use in the production or supply of goods or services or for administrative purposes.
Investment property is initially measured at cost. The cost includes purchase price and any directly related cost such as (professional or legal charges, property transfer taxes & any other transaction costs).
Subsequent to initial recognition, investment properties are stated at fair value, based on valuations performed by independent professional valuers. Valuations should be carried out at least at each reporting date. Fair value gain or losses are recorded through profit or loss . Where the fair value of the investment property cannot be measured reliably, it is then measured at cost until the fair value becomes determinable. - Transfers to and from investment properties
Transfers are made to or from investment property only when there is a change in use and a revaluation is done first before the transfer. If a significant portion of investment property becomes owner occupied where split is not possible, it is reclassified as property and equipment in accordance with IAS 16 (Property, plant and equipment) and its fair value at the date of its classification becomes its cost for subsequent accounting as property and equipment under IAS 16. - Derecognition
Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognised in profit or loss in the period of derecognition.
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Recognition criteria
- Current income and deferred tax
Current income tax assets and liabilities
The income tax expense for the year comprises current income and deferred tax. Income tax is recognised in the statement of profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the statement of financial position date in Zimbabwe. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes liabilities where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred tax is recognised, using the liability method, on temporary differences arising between assets and liabilities and their carrying amounts in the financial statements. However, the deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss.
Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the reporting date and are expected to apply when the related deferred income tax asset is realised or the deferred tax liability is settled. Deferred tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Microfinance Bank and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis. - Share capital
Ordinary shares and Share Premium
Ordinary shares are classified as equity. Share premium is the difference between the nominal value and issue price paid for shares on subscription by shareholders.
Registered deposit taking microfinance institution | Directors: Dr. R. Mbire (Board Chairman), E. Chavora* (Managing Director), W. Chigumbu* (Chief Finance Officer), M. Madamombe* (Chief Operating Officer), |
w w w. ge t b u ck s . c o m | J. Machiva, P. Soko, T. Munowenyu, S. Chibaya. *Executive | Registered Office: 24 Princess Drive, Newlands, Harare, Zimbabwe. |
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