KENYA POST OFFICE SAVINGS BANK
NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31st DECEMBER 2008
1.
(a)
(b)
(c)
(d)
SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The accounts are prepared under the historical cost convention as modified by the revaluation
of certain fixed assets.
Revenue Recognition
Income from investments and rent is recognised on accrual basis.
Investments
Investments are stated at the lower of cost and net realisable value.
Fixed Assets and Depreciation
Leasehold properties for which the lease has 99 years or more to run are stated at cost or
valuation and are not depreciated.
Postbank House, other buildings and other fixed assets are stated at a professional valuation
done in year 2002 by professional valuers. The basis of valuation was open market value.
Depreciation is calculated on the straight-line basis, at rates estimated to write off the assets
over their expected useful lives.
The following depreciation rates are used:
Postbank buildings
Show stands
Motor vehicles
Furniture and fittings
Electronic office equipment
Non-electronic office equipment
Computer hardware
Computer software
(e)
(f)
(g)
(h)
(i)
2.5 % p.a.
20.0 % p.a.
25.0 % p.a.
12.5 % p.a.
20.0 % p.a
12.5 % p.a
20.0 % p.a
20.0 % p.a
Stocks
Stocks comprise of stationery and drugs which are valued at cost.
Foreign Currency Transactions
Foreign currency transactions during the year were converted into Kenya shilling equivalent at
rates ruling at the transaction date. Assets and liabilities at the Balance Sheet date which are
expressed in foreign currency are translated into Kenya shillings at the rates ruling at the
transaction date. The resulting differences from conversion and translation are dealt with in
the profit and loss account in the year in which they arise.
Retirement Benefit Costs
The contributions made by the Bank to the defined scheme and to the provident fund are
charged to the profit and loss account in the year of contribution.
Provision for Doubtful Debts
Provision is made on debtors that are considered to be doubtful. Bad debts are written off
when all reasonable steps to recover them have been taken without success.
Depreciation Policy
Fixed Assets are depreciated from the date of purchase.
Page 1 of 12
KENYA POST OFFICE SAVINGS BANK
NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31st DECEMBER 2008(continued)
2. INVESTMENT IN TREASURY BILLS & BONDS
East African Development Bank Bonds
Barclays Bank of Kenya medium term note
Government Bonds and Treasury Bills
2008
Kshs.
66,000,000
38,100,000
8,675,483,803
8,779,583,803
3. FUNDS ON CALL AND SHORT NOTICE
2008
Kshs.
Funds on call and short notice
284,100,000
2007
Kshs.
77,000,000
10,703,300,001
10,780,300,001
2007
Kshs.
59,100,000
Funds on call and short notice represent short term deposits with commercial banks and financial
institutions while interest on deposits held in non performing banks and financial institutions has been
suspended as follows:-
4.
2008
Kshs.
2,055,637
13,540,000
27,390,225
42,985,862
2007
Kshs.
2,055,637
13,540,000
27,390,225
42,985,862
Less: Provision for diminution in
market value of quoted /unquoted investments 13,356,388
29,629,474
13,174,013
29,811,849
OTHER INVESTMENTS
Quoted investments
Unquoted investment
Investment in property
(i)
The quoted investments were valued at Kshs.885,250 (2007 Kshs. 1,067,625) using the stock
market price for the same category. Thus a diminution in market value of Kshs.182,375.
(ii)
The unquoted investment represents 80% of deposits in City Finance Bank converted into
shares following the restructuring of the Bank in year 2000. However, 90% of the unquoted
investment i.e Ksh.12,186,000 was provided for in year 2003 to reflect the market value of
these shares.
(iii)
The investment in property represents a piece of land with a building taken over by the Bank
from Thabiti Finance Ltd which was holding deposits for the Bank but failed to pay the same
on maturity. Title to the property is in dispute. The current occupant of the premises is
claiming allotees interest absolutely. The case is in court and the Bank expects a favourable
outcome since it has a vesting right in the property and is holding it with an intention of
selling.
Page 2 of 12
KENYA POST OFFICE SAVINGS BANK
NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31st DECEMBER 2008(continued)
5.
DEBTORS, PREPAYMENTS AND OTHER ASSETS
2008
Kshs.
PCK
KP&TC
Accrued interest
Directors loans
Staff loans
Trade debtors – Personal Development Loan
Staff Imprest
Visa Card debtors
MTS Trade Debtors
Stocks of stationery & drugs
ATM settlement Account receivables
Fixed deposits in ailing financial institutions
GoK Pension Reserve Fund
Commission Receivable
Pension Receivable from GoK
Prepaid GoK Pension – Payroll
Citibank GoK Pension Cheques Receivable
Premium on Treasury Bonds (Prepaid)
Other Debtors and Prepayments
Provision for bad and doubtful debts:
Trade
Amounts due from subsidiary and deposits
in ailing financial institutions
2007
Kshs.
1,050,421,672
405,238,134
460,258,272
16,999,166
396,888,435
166,286,092
4,446,863
130,723,672
-37,720,338
32,460,002
-1,381,759
540,409,141
-630,052,450
63,163,800
222,479,227
712,772,228
159,079,364
99,698,574
539,160,805
4,961,376,846
1,066,145,187
405,231,359
418,315,248
17,341,942
362,178,311
126,215,728
3,075,831
122,662,283
30,421,712
24,433,946
0
540,409,141
222,479,227
63,706,800
0
990,911,629
6,684,738
103,365,240
362,944,540
4,866,522,862
-537,512,406
-646,955,445
-668,252,820
-668,252,820
3,755,611,619
3,551,314,597
The ailing financial institutions refer to those institutions placed under statutory management
of CBK (receivership and in liquidation).
Accrual of interest on KP&TC excess deposits was suspended with effect from July 2005.
6.
DEFERRED ASSET
2008
Kshs.
Balance brought forward
Receipts from Treasury
Balance carried forward
153,998
0
153,998
2007
Kshs.
153,998
0
153,998
This amount represent accumulated losses which by virtue of section 13 (1) of the Kenya Post
Office Savings Bank Act Cap 493B are recoverable from the Central Government
Consolidated Fund.
7.
CAPITAL WORK IN PROGRESS
2008
2007
Kshs.
Kshs.
Capital Work in Progress
9,420,832
16,693,342
The amount represents cost of computer software and renovation of branches.
Page 3 of 12
KENYA POST OFFICE SAVINGS BANK
NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31ST DECEMBER 2008 (Continued)
8. FIXED ASSETS
Cost or Valuation
LAND
BUILDINGS
At 1 Jan. 2008
143,000,000.00
679,734,193.15
3,100,000.00
44,763,936.00
163,321,644.99
115,113,487.45
56,225,296.37
-
25,853,505.65
-
-
8,020,830.03
3,927,676.50
910,495.12
-
-
-
-
133,854.20
147,478.99
143,000,000.00
705,587,698.80
3,100,000.00
44,763,936.00
171,208,620.82
DEPRE.31.12.07
-
100,215,839.21
3,100,000.00
41,119,862.00
CHARGED
31.12.2008
-
17,208,800.71
-
3,644,074.00
DISPOSALS
-
-
-
DEPRE.31.12.08
-
117,424.639.92
3,100,000.00
44,963,936.00
NBV 31.12.2008
143,000,000.00
588,163,058.88
-
-
ADDITIONS
DISPOSALS
COST 31.12.2008
LEASEHOLD
BUILDINGS
MOTOR
VEHICLES
FURNITURE
& FITTINGS
ELECTRONIC
OFFICE EQPMT
NON ELECTRONIC
OFFICE EQPMT
COMPUTER
HARDWARE
318,001,390.39
28,073,338.22
COMPUTER
SOFTWARE
TOTAL
316,579,792.37
16,706,703.12
1,839,838,740.72
83,492,548.64
897,000.00
7,500.00
-
1,185,833.19
118,893,684.96
56,238,791.49
346,066,228.61
333,286,495.49
1,922,145,456.17
61,167,972.78
43,212,643.05
33,235,135.54
171,348,592.92
236,156,862.69
689,556,908.19
20,742,162.72
18,981,732.22
6,674,059.73
52,666,971.32
30,065,376.58
149,983,177.28
147,478.99
782,500.00
7,500.00
-
1,038,727.56
81,808,886.93
62,046,896.28
39,126,695.27
224,008,064.24
266,222,239.27
838,501,357.91
89,399,733.89
56,846,788.68
17,112,096.22
122,058,164.37
67,064,256.22
1,083,644,098.26
DEPRECIATION
NBV 31.12.2007
143,000,000.20
579,518,353.94
-
-
3,644,074.00
101,248.57
102,153,672.21
71,900,844.40
23,051,060.83
146,652,797.47
80,422.929.68
1,150,343,732.53
Disclosure Note.
The Bank had a fleet of thirty (30) motor vehicles whose book value was nil as at 31/12/2008. They have not been re-valued since most of them have outlived their useful economic value and are in
the process of being replaced. Valuation will be carried out for purposes of disposal.
Page 4 of 12
KENYA POST OFFICE SAVINGS BANK
NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31st DECEMBER 2008 (continued)
8. (b) LAND AND BUILDING (continued)
2008
COST OR VALUATION
Land
Buildings Show Stand Total
Kshs.
Kshs.
Kshs.
Kshs.
Long-term leasehold 122,000,000 634,700,000
756,700,000
Short-term leasehold 21,000,000
32,900,000 3,100,000
57,000,000
143,000,000 667,600,000 3,100,000
810,600,000
2007
Total
Kshs.
756,700,000
57,000,000
810,600,000
Included in short-term leasehold land and building is a property purchased in Mombasa. It is valued at
Kshs.45 million subject to extension of lease period by another 45 years from the current 10 years.
Procedures towards extension of the lease are in progress.
The figures used in the fixed assets schedule relate to 2002 valuation report carried out by professional
valuers. In the valuation report, freehold and long-term leasehold is combined as the Bank does not possess
freehold land and buildings.
9
CREDITORS
Trade creditors
PCK Services rendered- OSS
PCK Encashed Warrants Payable
Transitorial Accounts - Postbank
Transitorial Accounts - Pension Warrants (PCK)
Transitorial Accounts - GoK Payroll (PCK)
Other creditors and accrued charges
2008
2007
Kshs.
Kshs.
129,596,873
459,320,479
462,078,751
435,145,912
170,953,266
927,712,883
525,216,280
3,110,024,446
74,522,674
364,626,194
462,078,751
700,483,642
170,953,266
1,079,948,373
530,744,613
3,383,357,532
PCK Services rendered- GoK Pension refers to amount claimable by Postal Corporation of Kenya
on disbursement of pension to pensioners. This has now been transferred to PCK Encashed Warrants
Payable. Transitorial account is a holding account for money held by the Bank and PCK on behalf
of third party pending disbursement.
10
CUSTOMER SAVINGS AND DEPOSIT ACCOUNTS
2008
Postbank Savings Scheme
Bidii Savings Account
STEP Account
Pension accounts (BST)
Premium Savings Scheme
Fixed Deposit Scheme
Save-As-You-Earn
Page 5 of 12
2007
Kshs.
Kshs.
6,067,238,131
1,225,595,585
53,187,223
799,547,385
854,271,169
207,162,864
274,444,106
7,796,809,361
1,976,384,870
18,178,745
153,661,440
666,654,164
229,469,379
247,823,856
KENYA POST OFFICE SAVINGS BANK
NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31st DECEMBER 2008(continued)
Staff Salary Account
Postbank Junior Account
Salary Account
Non Scheme Account
Bidii Plus Account
Premium Plus Account
Bidii Junior Account
11.
2008
2007
Kshs.
Kshs.
50,890,819
14,837,674
29,491,757
-2,859,735
1,480,308
76,340,603
604,350
9,652,232,239
BEARER BONDS
0
1,060
-56,911
0
0
0
0
11,088,925,963
2008
2007
Kshs.
Kshs.
220,002,615
220,002,615
These were collections from the public for sales of Bearer Bonds on behalf of Central Bank of Kenya
(CBK). The funds were banked in Postbank Credit Limited (PCL) for onward transmission to the
CBK.
PCL was closed and put under liquidation by the CBK before the money was paid over to the latter.
The amount will be paid over to the CBK once these are received from the Liquidator.
12.
RESERVES
Balance brought forward
Profit/(Loss) for the year
Balance carried forward
Capital
Reserves
Kshs.
471,403,491
Revenue
Reserves
Kshs.
1,473,050,528
71,065,514
471,403,491
1,544,116,042
TOTALS
2008
Kshs.
1,944,454,019
71,065,514
2,015,519,533
TOTALS
2007
Kshs.
1,581,863,174
190,862,180
1,944,454,019
Capital reserve arose out of revaluation of land and buildings done in 2002 (see note 8a).
13.
FEES & COMMISSIONS
2008
Account maintenance fees/Ledger fees
Salary crediting fees
Continuation fees
Premature withdrawal fees
Maintenance fees
Withdrawal fees
Visa fees
Card fees
MTS- Inbound & Intrabound commission
Statement Charge
Closure Fee
Upcountry Cheque Deposit Charge
Postage Fee
Commission from Higher Education Loans Board
Page 6 of 12
2007
Kshs.
Kshs.
237,459,286
38,602,458
3,334,661
17,126,910
116,445,342
38,877,651
15,406,451
36,061,234
97,485,560
491,193
4,364,064
7,569,857
2,558,405
2,074,680
457,996,337
49,670,416
11,196,163
20,252,041
177,998,611
40,923,411
13,954,689
33,936,620
133,931,668
669,018
5,172,816
12,330,114
4,681,558
4,471,920
KENYA POST OFFICE SAVINGS BANK
NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31st DECEMBER 2008 (continued)
2008
Kshs.
Citibank commission
Pension commission
Miscellaneous fees & commission (others)
14.
5,450,490
105,260,250
58,405,826
786,980,319
Kshs.
Rental income- notional
Dividend income
Write back on Provision
Interest on bank accounts
Bonus from Western Union
Realised gain/loss on sale of Forex
Consultancy fees
Agency based commission
Tender fees
Appreciation/Diminution in value of quoted investments
Write back on Dormant Account
Loss/Gain on call deposit
Others
16.
1,204,005
106,372,950
47,654,518
1,122,416,857
OTHER LOSSES/ INCOME
2008
15.
2007
Kshs.
DIRECT EXPENSES
Interest on:Postbank Savings Accounts
Bidii Savings Account
Premium Savings Account
Fixed Deposit Savings Account
Save As You Earn Account
Step Account
Pension Account
Customer Salary Account
Postbank Junior Account
Premium Plus Account
20,563,770
37,500
5,084,110
1,194,479
38,986,760
32,671,072
673,634
325,673
177,000
-182,375
426,900
0
3,222,329
103,382,786
2008
Kshs.
82,702,791
29,040,832
15,953,126
6,292,856
2,486,200
0
0
0
0
0
136,475,805
2,348,999
1,267,255,157
13,786,444
74,674
63,855,752
5,582,110
14,427,119
Page 7 of 12
2007
Kshs.
Kshs.
Directors fees
Staff costs
Printing and stationery
Debt collections
Postage, telephone and telegram
Computer charges
Motor Vehicle Expenses
Kshs.
20,563,770
1,047,808
4,330,910
561,386
12,290,252
-7,828,009
580,626
1,152,472
1,959,620
-61,500
889,035
-7,876,128
2,335,781
29,946,022
69,460,973
28,668,157
24,335,617
4,975,610
6,823,732
198,817
28,852
63,931
38,339
257,874
134,851,903
2008
ADMINISTRATION EXPENSES
2007
2007
Kshs.
2,871,231
1,242,434,768
11,402,300
196,065
48,418,869
7,406,327
10,131,056
KENYA POST OFFICE SAVINGS BANK
NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 ST DECEMBER 2008 (continued)
2008
2007
Kshs.
Audit fees
Donations and subscriptions
Legal and professional fees
Electricity and water
Cleaning and Sanitation
Special Projects Launching
Newspapers and Periodicals
Procurement Costs
Transportation Costs
Symbols Implementation
Miscellaneous expenses
17.
Kshs.
2,000,000
2,762,267
4,319,311
18,854,966
9,798,276
353,903
557,523
0
59,000
27,645
512
1,406,063,661
3,500,000
3,173,363
3,782,247
11,425,262
7,735,265
2,989,502
664,761
1,828,793
0
0
0
1,357,959,810
2008
ESTABLISHMENT EXPENSES
Kshs.
Security and Escort
Insurances
Office rent
Land rent and rates
Repairs and maintenance
Service charge
Agency fees - PCK/Others
Licences
Flower maintenance
18.
81,010,851
12,215,893
93,189,947
1,347,606
64,694,823
12,348,625
-46,691,502
29,728,831
49,370
247,894,444
SELLING EXPENSES
2008
Kshs.
Publicity and advertising
ASK show expenses
19.
47,094,506
1,578,459
48,672,945
FINANCIAL EXPENSES
2008
Bank charges
Interest on overdraft
Interest on borrowed funds (EADB)
20.
BAD AND DOUBTFUL DEBTS - PROVISIONS
2007
Kshs.
37,144,939
1,149,371
38,294,310
2007
Kshs.
37,579,756
2,825,088
0
40,404,844
29,255,667
870,439
5,946,150
36,072,255
2008
3,050,369
0
38,963,271
42,013,640
Page 8 of 12
Kshs.
57,844,619
30,394,252
69,530,717
1,200,000
49,922,340
12,284,426
123,859,649
37,785,693
13,370
382,835,067
Kshs.
Kshs.
Visa card debtors
PCK debt
General
2007
2007
Kshs.
3,187,979
31,750,000
53,133,406
88,071,385
KENYA POST OFFICE SAVINGS BANK
NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31ST DECEMBER 2008(continued)
21.
PROFIT/(LOSS) FOR THE YEAR
The profit for the year is stated after charging
Directors fees
Audit fees
Depreciation
Provident fund contribution
Pension scheme contribution
Diminution in value of quoted investments
and after crediting: Dividends
22.
CASH AND CASH EQUIVALENTS
2008
2007
Kshs.
Kshs.
2,349,000
2,000,000
149,845,083
3,235,627
99,468,135
182,375
2,871,231
3,500,000
134,447,788
3,518,524
111,397,356
61,500
37,500
1,047,807
2008
2007
Kshs.
Bank and cash balances (net)
Deposits in banks and Financial Institutions
Treasury Bills and Bonds
1,361,306,002
284,100,000
8,263,477,362
9,909,883,364
Kshs.
1,056,973,813
59,100,000
10,541,082,081
11,734,155,844
For the purposes of the cash flow statement, cash and cash equivalents refer to: 1.
2.
3.
23.
Bank and cash balances net of bank overdraft.
Deposits in banks and financial institutions less amounts not likely to be received within
12 months of the balance sheet date, and
Treasury Bills and bonds including EADB bonds as at the balance sheet date.
CONTINGENT LIABILITIES
(i)
Kenya Post Office Savings Bank Employees Pension Trust Fund.
An actuarial valuation of the Bank’s funded Pension Trust Fund as at 31st December 2006 was
carried out by Alexander Forbes Financial Services (EA) Limited. The report by the actuaries
revealed a past service deficit of Kshs.467.9 million as at 31st December 2006.
Though the Bank has converted to a defined contribution scheme, the defined benefit scheme
has not been closed until the above deficit has been paid in full.
Page 9 of 12
KENYA POST OFFICE SAVINGS BANK
NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31ST DECEMBER 2008 (continued)
(ii)
KP &TC Charges for Services Rendered
The KP&TC was claiming Kshs.35,240,661.18 owing as at 30th June 1999 (at the time it split
into Telkom (K) Ltd, Communication Commission of Kenya and Postal Corporation of Kenya.
The provision in the accounts then was Kshs.14,868,291.35. No provision has been made in
these accounts for the difference (Kshs.20,372,370.45) as discussions are in progress to
resolve the dispute, and the directors are of the opinion that the Bank will obtain a favourable
result.
24.
CAPITAL COMMITMENTS
Authorised and contracted for
Authorised but not contracted for
2008
Kshs
28,675,742
0
28,675,742
2007
Kshs
24,669,525
0
24,669,525
Capital Commitments relate to computer hardware, software, ATM sites and new branches.
Page 10 of 12
KENYA POST OFFICE SAVINGS BANK
NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31st DECEMBER 2008 (Continued)
25.
LIQUIDITY RISK
The table below analyses assets and liabilities into relevant maturity groupings based in the remaining period as at 31 December 2008 to the contractual maturity date.
A. Assets
Bank and Cash Balances
Matured
Matured in less
than a month
1 months less
than 3 months
1,361,306,002
-
Investment in T/bills + Bonds
-
-
Funds on call and short notice
-
284,100,000
Other Investment
-
3 months less
than 6 months
1 year less than 3
years
3 years less than 5 years
over 5 years
Total
-
-
-
-
-
1,361,306,002
110,000,000
905,000,000
375,725,000
3,104,200,000
2,903,850,000
8,720,825,271
-
-
-
-
-
-
284,100,000
-
-
-
-
-
-
29,629,474
29,629,474
373,076,199
203,336,844
57,961,269
132,718,911
287,876,406
146,341,619
343,766,585
2,210,533,786
3,755,611,619
Deferred Assets
-
-
-
-
-
-
-
153,998
153,998
Capital W.I.P
-
-
-
-
9,420,832
-
-
-
9,420,832
Fixed Assets
-
-
-
-
-
-
-
1,083,644,098
1,083,644,098
Total Assets
1,734,382,201
487,436,844
1,380,011,540
242,718,911
1,202,297,238
522,066,619
3,447,966,585
6,227,811,356
15,244,691,294
1,630,811,570
896,332,035
346,124,205
236,756,636
-
-
-
-
3,110,024,446
7,889,300
-
-
-
-
-
-
-
7,889,300
7,550,173,498
805,698,506
401,609,112
371,205,923
233,491,343
290,053,857
-
-
9,652,232,239
Bearer Bonds
-
-
-
-
220,002,615
-
-
-
220,002,615
Reserves
-
-
-
-
-
-
-
471,403,491
471,403,491
Retained profits
-
-
-
-
-
-
-
1,544,116,042
1,544,116,042
9,427,897,529
1,702,030,541
747,733,317
607,962,559
453,493,958
290,053,857
-
2,015,519,533
15,244,691,294
(7,693,515,328)
(1,214,593,697)
632,278,223
(365,243,648)
748,803,280
232,012,762
3,447,966,585
4,212,291,823
-
Debtors, Prepayments and other Assets
-
6 months less than
1 year
1,322,050,271
B. Liabilities and Reserves
Creditors
Premium Bonds
Customer Savings and Deposit accounts
Total Liabilities and Reserves
A - B Liquidity GAP
Customers Savings and deposits accounts relate to Savings and fixed account balances. Although classified under this band, previous experience has shown these to be stable and of long term in nature.
Page 11 of 12
KENYA POST OFFICE SAVINGS BANK
NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31st DECEMBER 2008 (Continued)
26.
CONSOLIDATION
Consolidated Accounts are not prepared as the bank’s wholly owned subsidiary, Postbank Credit Limited, is
under liquidation.
27.
TAXATION
Kenya Post Office Savings Bank is exempt from Corporation Tax under Income Tax Act Cap 470 of the laws
of Kenya.
28.
COMPARATIVES
Where necessary, comparative figures have been adjusted to conform to reporting under International
Accounting Standards.
29.
EMPLOYEES
The average number of employees during the year was 1,180 (2007 -1,210).
30.
INCORPORATION
The bank is incorporated under the Kenya Post Office Savings Bank Act (Cap 493 B) of the laws of Kenya.
31.
CURRENCY
The accounts are presented in Kenya Shillings (Kshs.)
Page 12 of 12