CENTENARY RURAL DEVELOPMENT
BANK LIMITED
DIRECTORS' REPORT
AND
31 DECEMBER 2003
CENTENARY RURAL DEVELOPMENT BANK LTD
DIRECTORS’ REPORT AND FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2003
GLOSSARY OF TERMS
PAPSCA
-
Programme for the Alleviation of Poverty and Social Costs of Adjustment
UNCDF
-
United Nations Capital Development Fund
DANIDA
-
Danish Agency for International Development
DFID
-
Department for International Development of the United Kingdom
NSSF
-
National Social Security Fund
BOU
-
Bank of Uganda
CENTENARY RURAL DEVELOPMENT BANK LTD
DIRECTORS’ REPORT AND FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2003
CONTENTS
Bank Information
Report of the Directors
PAGE
1
2-3
Statement of Directors' Responsibilities
4
Report of the Independent Auditors
5
Balance Sheet
6
Profit and Loss Account
7
Statement of Changes in Equity
8
Cash Flow Statement
9
Notes to the Financial Statements
10-23
Detailed Profit and Loss Account
Schedule A
Operating Expenses
Schedule B
CENTENARY RURAL DEVELOPMENT BANK LTD
BANK INFORMATION
YEAR ENDED 31 DECEMBER 2003
PRINCIPAL PLACE OF BUSINESS AND REGISTERED OFFICE
Talenta House
Plot 7, Entebbe Road
P.O. Box 1892
Kampala
Website http;//www.centenarybank.co.ug
SOLICITORS
Kawanga & Kasule
Kizito Towers
Plot 29, Luwum Street
P.O. Box 216
Kampala
SECRETARY
Peninnah Tibagwa Kasule
P.O. Box 1892
Kampala
AUDITORS
Ernst & Young
Ernst & Young House
Shimoni Office Village
18 Clement Hill Road
P.O. Box 7215
Kampala
1
CENTENARY RURAL DEVELOPMENT BANK LTD
REPORT OF THE DIRECTORS
YEAR ENDED 31 DECEMBER 2003
The directors submit their report together with the audited financial statements for the year ended 31
December 2003, which discloses the state of affairs of the bank.
1.
PRINCIPAL ACTIVITIES
The bank takes deposits from the public and various institutions and provides advances to
customers.
2.
RESULTS
The results for the year are set out on page 7.
3.
EXPIRY OF TAX HOLIDAY
The bank’s certificate of incentives from the Uganda Investment Authority, which exempted it
from 100% corporation taxation, expired on 31 December 2002. Effective 1 January 2003, the
bank is liable to pay corporation tax and Ushs 1.8 billion has been paid in respect of corporation
tax for the year ended 31 December 2003.
4.
DIVIDENDS
The Directors recommend dividend payments for the year of Ushs 616,473,000 at 15% for
both ordinary and preference share holders (2002 – Ushs 616,005,000).
5.
RESERVES
The reserves of the bank are set out on page 8.
6.
DIRECTORS
The Directors who served during the year and to the date of this report were: Dr. John Ddumba Ssentamu
Rt. Rev. Paul Bakyenga
Ms. Silvia Cornacchia
Mr. Rene Ehrmann
Dr. Simon M.S. Kagugube
Hon. John B. Kawanga
Mr. Emmanuel Lule
Rt. Rev. Cyprian K. Lwanga
Mr. Fulgence Mungereza
Mr. Willie Ogule
Hon. Fred Jachan Omach
Mr. Gabriel Opio
Mr. Brian Riley
Mr. Frank Streppel
Mr. Kimanthi Mutua
-
Chairman
Member
Member
Alternate Member to Ms.Cornacchia
Member
Member
Member (ceased 24 October 2003)
Member
Member
Member (ceased 12th April 2003)
Member
Member
Member (ceased 12th April 2003)
Member
Member (appointed 12 April 2003)
2
CENTENARY RURAL DEVELOPMENT BANK LTD
REPORT OF THE DIRECTORS (Cont’d)
YEAR ENDED 31 DECEMBER 2003
7.
CAPITAL ADEQUACY
The bank monitors the adequacy of its capital using ratios established by the Bank of Uganda
(BOU). These ratios measure capital adequacy by comparing the bank’s eligible capital with
its balance sheet assets, off balance sheet commitments and other risk positions at a weighted
amount to reflect their relative risk.
Tier 1 capital consists of shareholders’ equity. Tier 2 capital includes the bank’s eligible
long-term debt and general provisions. Minimum capital adequacy ratios per Bank of
Uganda guidelines are 8% for Tier 1 capital and 12% for Tier 1 + Tier 2 capital.
Balance Sheet/
Nominal Amount
2003
2002
Ushs ‘000 Ushs ‘000
Balance sheet assets
Notes, coins, & other cash assets
Balances with Bank of Uganda
Uganda Government securities
Balances with other banks
Advances to customers
Property and equipment
Other accounts receivable
Credit related commitments
Letters of Credit
Performance bonds
Guarantees
Risk Weighted
Amount
2003
2002
Ushs ‘000
Ushs ‘000
5,667,812 4,143,520
0%
10,250,286 11,572,949
0%
35,209,349 36,808,336
0%
7,478,574 3,913,057
1,495,714
66,357,667 42,773,544 66,357,667
8,424,670 7,451,217
8,424,670
12,145,497 8,654,219 12,145,497
183,413
74,046
1,202,932
12,682
366,611
Total risk weighted assets
0%
0%
0%
782,611
42,773,544
7,451,217
8,654,219
91,706
74,046
360,880
14,774
256,628
88,589,300
60,293,873
Capital adequacy ratios
Capital
Tier 1 capital
Tier 1 + Tier 2 capital
8.
2003
2002
18,151,042
19,614,877
15,087,468
15,478,929
Capital Adequacy (%)
2003
2002
20.5
22.1
25.0
25.7
AUDITORS
The auditors, Ernst & Young, have expressed their willingness to continue in office in accordance
with Section 159 (2) of the Companies Act.
By Order of the Board
Peninnah Tibagwa Kasule
Secretary
3
CENTENARY RURAL DEVELOPMENT BANK LTD
STATEMENT OF DIRECTORS' RESPONSIBILITIES
YEAR ENDED 31 DECEMBER 2003
The Companies Act requires the directors to prepare financial statements for each financial year,
which give a true and fair view of the state of affairs of the bank as at the end of the financial year
and of its operating results for that year. It also requires the directors to ensure the bank keeps proper
accounting records, which disclose with reasonable accuracy, at any time, the financial position of
the bank. They are also responsible for safeguarding of the assets of the bank.
The directors accept responsibility for the annual financial statements, which have been prepared
using appropriate accounting policies supported by reasonable and prudent judgments and estimates,
in conformity with International Financial Reporting Standards and in the manner required by the
Financial Institutions Statute, 1993 and the Companies Act. The directors are of the opinion that the
financial statements give a true and fair view of the state of the financial affairs of the bank and of its
operating results. The directors further accept responsibility for the maintenance of accounting
records, which may be relied upon in the preparation of financial statements, as well as adequate
systems of internal financial control.
Nothing has come to the attention of the directors to indicate that the bank will not remain a going
concern for at least the next twelve months from the date of this statement.
……………………….
Director
……………………….
Date
……………………….
Director
……………………….
Date
………………………..
Director
………………………..
Date
4
REPORT OF THE INDEPENDENT AUDITORS
to the members of
CENTENARY RURAL DEVELOPMENT BANK LTD.
We have audited the financial statements on pages 6 to 23 which have been prepared on the basis of
accounting policies set out on pages 10 and 11. We obtained all the information and explanations,
which we considered necessary for our audit.
RESPECTIVE RESPONSIBILITIES OF THE DIRECTORS AND THE INDEPENDENT
AUDITORS
As stated on page 4, the directors are responsible for the preparation of financial statements which
give a true and fair view of the state of the affairs and of the operating results of the bank. Our
responsibility is to express an independent opinion on the financial statements based on our audit
and to report our opinion to you.
BASIS OF OPINION
We conducted our audit in accordance with International Standards on Auditing. Those standards
require that we plan and perform the audit to obtain reasonable assurance that the financial
statements are free from material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. It also includes
assessing the accounting principles used and significant estimates made by the directors, as well as
evaluating the overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
OPINION
In our opinion, proper books of account have been kept and the financial statements, which are in
agreement therewith, give a true and fair view of the state of the financial affairs of the bank at 31
December 2003 and the profit and cash flows for the year then ended and comply with International
Financial Reporting Standards, the Companies Act and the Financial Institutions Statute, 1993.
Kampala
2004
5
CENTENARY RURAL DEVELOPMENT BANK LTD
BALANCE SHEET
AS AT 31 DECEMBER 2003
Note
2003
Ushs ‘000
2002
Ushs ‘000
2
3
4
5
6
7
8
15,918,100
3,385,673
39,302,250
66,357,667
10,869,028
1,372,467
8,424,670
15,716,469
3,359,557
37,511,837
42,773,544
8,331,654
268,565
7,451,217
145,629,855
115,412,843
115,053,861
647,677
1,759,844
8,276,295
170,806
146,206
91,580,037
638,142
1,179,305
6,536,429
-
126,054,689
99,933,913
4,109,821
1,110,087
160,000
647,650
616,473
12,931,135
4,106,700
1,110,087
170,000
859,112
616,005
8,617,026
19,575,166
15,478,930
145,629,855
115,412,843
ASSETS
Cash and balances at Bank of Uganda
Balances with other financial institutions
Investments
Loans and advances to customers
Other accounts receivable
Deferred expenses
Property, plant and equipment
TOTAL ASSETS
LIABILITIES
Customer deposits
Managed funds
Retirement benefit obligations
Other accounts payable
Corporation tax payable
Deferred tax liability
9
10
11
12
19
19
TOTAL LIABILITIES
CAPITAL AND RESERVES
Share capital
Share premium
Capital reserves
Capital grants
Proposed dividends
Profit and loss
13
14
15
16
21
TOTAL SHAREHOLDERS’ EQUITY
TOTAL SHAREHOLDERS’ EQUITY AND
LIABILITIES
The financial statements were approved by the Board of Directors on………………...………. 2004
and signed on its behalf by: …..…………………………….. Director
..……………………………….. Director
..………………………………Director
6
CENTENARY RURAL DEVELOPMENT BANK LTD
PROFIT AND LOSS ACCOUNT
YEAR ENDED 31 DECEMBER 2003
Note
2003
Ushs ‘000
2002
Ushs ‘000
Interest income
Interest expense
22,110,847
(1,479,158)
15,487,168
(1,179,086)
Net interest income
Other operating income
20,631,689
9,317,135
14,308,082
6,586,549
29,948,824
20,894,631
(22,295,014)
(825,239)
(16,643,334)
(416,926)
(23,120,253)
(17,060,260)
3,834,371
INCOME
EXPENSES
Operating expenses
Loan loss provisions
5
PROFIT FROM OPERATIONS BEFORE
TAXATION AND EXCEPTIONAL ITEM
17
6,828,571
EXCEPTIONAL ITEM
18
6,828,571
TAXATION
19
NET PROFIT FOR THE YEAR
(2,119,451)
(690,282)
3,144,089
-
4,709,120
3,144,089
PROPOSED DIVIDENDS
21
616,473
616,005
Basic earnings per share
20
Ushs 1,173
Ushs 919
Dividends per share
21
Ushs 150
Ushs 176
7
CENTENARY RURAL DEVELOPMENT BANK LTD
STATEMENT OF CHANGES IN EQUITY
YEAR ENDED 31 DECEMBER 2003
Note
At 1 January 2002
Net profit for the year
Share
Capital
Ushs ’000
Share
Premium
Ushs ’000
Capital
Reserves
Ushs ’000
Capital
Grants
Ushs ’000
Profit and
Loss
Ushs ’000
Proposed
Dividends
Ushs ‘000
Total
Equity
Ushs ’000
3,441,606
826,147
180,000
1,070,574
6,363,580
-
11,881,907
-
-
-
-
3,144,089
-
3,144,089
-
-
(616,005)
616,005
-
-
10,000
-
-
211,462
-
-
-
-
283,940
-
-
Proposed dividends
21
-
-
Transfer from capital
reserves
15
-
-
Transfer from capital
grants
16
-
-
-
-
283,940
-
-
Share premium
(10,000)
(211,462)
Bonus issue
14
496,100
-
-
-
(496,100)
Shares paid up
14
168,994
-
-
-
-
-
168,994
At 31 December 2002
4,106,700
1,110,087
170,000
859,112
8,617,026
616,005
15,478,930
At 1 January 2003
4,106,700
1,110,087
170,000
859,112
8,617,026
616,005
15,478,930
Dividends paid
-
-
-
-
-
Net profit for the year
-
-
-
-
4,709,120
-
-
(616,473)
-
(616,005)
(616,005)
-
4,709,120
616,473
-
10,000
-
-
211,462
-
-
Proposed dividends
21
-
-
Transfer from capital
reserves
15
-
-
Transfer from capital
grants
16
-
-
-
Shares paid up
14
3,121
-
-
-
-
-
3,121
4,109,821
1,110,087
160,000
647,650
12,931,135
616,473
19,575,166
At 31 December 2003
(10,000)
8
(211,462)
CENTENARY RURAL DEVELOPMENT BANK LTD
CASHFLOW STATEMENT
YEAR ENDED 31 DECEMBER 2003
2003
Ushs ‘000
2002
Ushs ‘000
Profit before taxation and after exceptional item
6,828,571
3,144,089
Adjustments for:
Depreciation
Asset write offs
Net gain on asset disposal
Exceptional item
2,754,281
168,908
(15,010)
-
2,762,859
47,944
(10,080)
690,282
Operating profit before working capital changes
9,736,750
6,635,094
(1,790,413)
(23,584,123)
(3,641,276)
23,473,824
9,535
580,539
1,739,867
2,384,070
(18,920,621)
(3,683,989)
23,113,245
8,720
556,412
810,840
6,524,703
10,903,771
CASHFLOWS FROM OPERATING ACTIVITIES
(Increase)/decrease in investments
Increase in loans and advances to customers
Increase in other accounts receivable and deferred expenses
Increase in customer deposits
Increase in managed funds
Increase in retirement benefit obligations
Increase in other accounts payable
Cash generated from operating activities
Tax paid
(1,802,440)
-
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment
Proceeds from asset disposals
(3,932,148)
50,516
(5,421,087)
12,980
Net cash used in investing activities
(3,881,632)
(5,408,107)
Net cash inflows before financing activities
840,631
5,495,664
CASHFLOWS FROM FINANCING ACTIVITIES
Dividends paid
Share capital paid up
Share premium
Capital grants received
(616,005)
3,121
-
(348,742)
168,994
283,940
-
Net cash inflows from financing activities
(612,884)
104,192
Increase in cash and cash equivalents
CASH AND CASH EQUIVALENTS AT THE
BEGINNING OF THE YEAR
CASH AND CASH EQUIVALENTS AT THE
END OF THE YEAR
9
227,747
5,599,856
22
19,076,026
13,476,170
22
19,303,773
19,076,026
CENTENARY RURAL DEVELOPMENT BANK LTD
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2003
1.
ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of these financial statements are
set out below:
(a)
Basis of Accounting
The financial statements are prepared under the historical cost convention as modified
by the revaluation of some property.
(b)
Income
Interest income, commissions, fees and other types of income are recognised in the
profit and loss account on an accruals basis. Interest income is suspended when loans
are overdue by more than 90 days and is excluded from interest income until received.
(c)
Property and Equipment and Depreciation
Property and equipment are stated in the balance sheet at their cost or valuation less
accumulated depreciation.
Depreciation is calculated to write off the cost of the assets on a straight-line basis over
their expected useful lives. The annual rates used are as follows: Buildings
Motor vehicles and motor cycles
Furniture and fixtures
Office equipment
Computer equipment and accessories
4.0%
25.0%
10.0% to 20.0%
12.5%
33.3%
Where the carrying amount of an asset is greater than its estimated recoverable amount, it
is written down immediately to its recoverable amount. Gains and losses on disposal of
property and equipment are determined by reference to their carrying amount and are
taken into account in determining operating profit. Major renovations are charged to
deferred expenses and amortized over a maximum of 10 years.
(d)
Foreign Currency Transactions
Foreign currency transactions during the year are converted into Uganda shillings at the
rates ruling at the transaction dates. Monetary assets and liabilities denominated in foreign
currencies are translated into Uganda shillings at exchange rates ruling at the balance sheet
date. The resulting gains and losses are dealt with in the profit and loss account in the year
in which they arise.
10
CENTENARY RURAL DEVELOPMENT BANK LTD
NOTES TO THE FINANCIAL STATEMENTS (Continued)
31 DECEMBER 2003
(e)
Provisions
Provisions are recognized when the bank has a present legal or contractual obligation as a
result of past events, it is probable that an outflow of resources embodying economic
benefits will be required to settle the obligations, and a reliable estimate of the amount of
the obligation can be made.
Employee entitlements to annual leave and long service award are recognized when they
accrue to employees.
(f)
Bad and Doubtful Debts
Specific provision is made against all doubtful advances in accordance with Bank policies
as stated below:
Commercial
Micro
 Standard
0-89 days
1-30 days
1%
 Sub-standard
90-179 days
31-90 days
20%
 Doubtful
180-364 days
91-180 days
50%
 Loss
>365 days
>180 days
100%
There has been a change in policy and provisions for bad debts are computed on loans
classified into commercial and micro as outlined above.
The more strict policy adopted by the bank is in compliance with Bank Of Uganda
guidelines. Bad debts are written off when all reasonable steps towards recovery have
failed. Subsequent recoveries are credited to the profit and loss account if previously
written off.
(g)
Capital and Revenue Grants
Revenue grants are credited to revenue in the year in which they are received. Capital grants
are credited to a special reserve and recognised in the profit and loss account over the useful
lives of the assets financed by the capital grants.
(h)
Taxation
Taxation is provided in the profit and loss account on the basis of the results included
therein adjusted in accordance with the provisions of the Income Tax Act 1997.
Deferred taxation is provided using the liability method for all temporary differences arising
between the tax bases of assets and liabilities and their carrying values for financial
reporting purposes. Deferred tax assets are recognized for all deductible temporary
differences, carry forward of unused tax losses and unused tax credits to the extent that it is
probable that future taxable profit will be available against which the deductible temporary
differences, unused tax losses and the unused tax credits can be utilized.
(i)
Retirement Benefit Obligation
The bank has established a benefit scheme for its staff and has set aside funds from its own
resources for the scheme.
The bank also contributes to the statutory National Social Security Fund. This is a
defined contribution scheme registered under the National Social Security Act, 1985. The
company’s obligations under the scheme are limited to specific contributions legislated
from time to time and are currently 10% of the employees’ gross salary.
The bank’s contributions to the scheme are charged to the profit and loss account in the
period in which they are made.
(j) Cash and Cash Equivalents
Cash and cash equivalents comprise cash in hand, balances with Bank of Uganda and other
financial institutions.
11
CENTENARY RURAL DEVELOPMENT BANK LTD
NOTES TO THE FINANCIAL STATEMENTS (Continued)
31 DECEMBER 2003
2.
2003
Ushs ‘000
2002
Ushs ‘000
5,667,813
4,143,520
10,250,287
11,572,949
15,918,100
15,716,469
CASH AND BALANCES AT BANK OF UGANDA
Cash in hand
Balances with Bank of Uganda
Balances with Bank of Uganda include mandatory reserve deposits of Ushs 10,094 million
(2002- Ushs 7,982 million).
3.
BALANCES WITH OTHER FINANCIAL INSTITUTIONS
Balances with local banks
Balances with foreign banks
4.
INVESTMENTS
Due within one year
Treasury bills
PTA Bonds
Fixed deposits
Due after one year
PTA Bonds
37,471
3,348,202
543,602
2,815,955
3,385,673
3,359,557
35,209,350
50,000
4,042,900
36,808,337
653,500
39,302,250
37,461,837
-
50,000
39,302,250
37,511,837
Treasury bills are debt securities issued by the Government of Uganda for a term of three
months, six months, nine months or a year.
5.
LOANS AND ADVANCES TO CUSTOMERS
Overdrafts
Commercial & Micro finance loans
3,193,215
64,351,290
137,872
43,276,736
Gross loans and advances
67,544,505
43,414,608
Specific provisions for impairment
General provision for impairment
(530,653)
(656,185)
66,357,667
(212,870)
(428,194)
42,773,544
(a) Movement in provisions for loan loss is as follows:
Specific provisions
Balance brought forward
Provisions for the year
Write offs
Reductions due to improved status
212,870
754,956
(279,462)
(157,711)
Balance at 31 December
General provision
Balance brought forward
Provisions for the year
Reductions due to improved status
Balance at 31 December
12
42,856
1,120,508
(58,998)
(891,496)
530,653
212,870
428,194
636,562
(408,571)
656,185
240,280
890,435
(702,521)
428,194
CENTENARY RURAL DEVELOPMENT BANK LTD
NOTES TO THE FINANCIAL STATEMENTS (Continued)
31 DECEMBER 2003
Profit and loss
Provisions for the year
Reductions due to improved status
2003
Ushs ‘000
2002
Ushs ‘000
1,391,521
(566,282)
2,010,943
(1,594,017)
825,239
416,926
Customer advances amounting to Ushs 2,035 million (2002: Ushs 1,355 million) are
classified as non-performing. Unrecognized interest related to such loans amounted to
Ushs 83,432,000 (2002: Ushs 84,531,000). All loans have been stated at their
recoverable amount.
(b) Economic sector risk concentrations within the customer loan portfolio were as follows:
Agriculture
Manufacturing
Trade and commerce
Transport and utilities
Building and construction
Government
Mining and quarrying
Other services
6.
2003
Ushs ‘000
2003
%
2002 2002
Ushs ‘000
%
6,480,202
7,003,900
21,762,194
4,605,108
5,663,729
22,029,372
10
10
32
7
8
33
4,241,438
2,267,218
14,265,615
1,924,002
981,717
13,444
5,545
19,715,629
10
5
33
4
2
<1
<1
45
67,544,505
100
43,414,608
100
OTHER ACCOUNTS RECEIVABLE
Interbranch account
# Cheques in transit
Stationery
Staff advances
Interest receivable
Prepaid expenses
Bills receivable
* Western Union suspense
Outward clearing
Other accounts receivable
Less: provision for long outstanding items
Note 18
122,958
3,617,777
257,048
153,214
1,979,851
336,617
1,774,488
2,026,685
600,390
858,260
2,330,004
359,259
1,201,302
2,741,202
493,450
44,072
994,387
10,869,028
9,021,936
-
(690,282)
10,869,028
8,331,654
# Cheques in transit relate to inward/outward clearing cheques and Bank of Uganda deposits
not yet cleared as at 31 December 2003.
* Western Union suspense and Outward clearing relate to amounts due from Western Union
and other financial institutions respectively, that had not yet cleared at the balance sheet
date.
7. DEFERRED EXPENSES
Deferred expenses
1,372,467
268,565
These relate to expenses incurred on major renovations whose benefit is estimated to spread over
more than one year. They are amortised over a maximum of 10 years.
13
CENTENARY RURAL DEVELOPMENT BANK LTD
NOTES TO THE FINANCIAL STATEMENTS (Continued)
31 DECEMBER 2003
8.
PROPERTY PLANT AND EQUIPMENT
Freehold
Land and
Buildings
Ushs ‘000
COST
At 1 January 2003
2,610,206
Additions
Disposals
* Write offs
(58,351)
Motor
Vehicles
Ushs ‘000
Computer
Equipment
& Accessories
Ushs ‘000
Computer
Software
Ushs ‘000
Furniture
Fixtures &
Equipment
Ushs ‘000
Total
Ushs ‘000
1,491,308
341,110
(121,511)
(606,269)
5,050,153
2,668,052
(2,484,499)
2,032,261
198,157
(39,141)
3,593,556
724,829
(34,089)
(282,387)
14,777,484
3,932,148
(155,600)
(3,470,647)
1,104,638
5,233,706
2,191,277
4,001,909
15,083,385
460,744
60,477
(7,939)
1,055,442
224,452
(95,838)
(580,752)
3,582,078
1,342,465
(2,418,886)
1,609,440
485,520
(24,256)
(260,934)
7,326,267
2,754,281
(120,094)
(3,301,739)
513,282
603,304
2,505,657
1,226,702
1,809,770
6,658,715
At 31 December 2003
2,038,573
501,334
2,728,049
964,575
2,192,139
8,424,670
At 31 December 2002
2,149,462
435,866
1,468,075
1,413,698
1,984,116
7,451,217
At 31 December 2003
DEPRECIATION
At 1 January 2003
Charge for the year
On disposals
* Write offs
At 31 December 2003
2,551,855
618,563
641,367
(33,228)
NET BOOK VALUE
Land and buildings at Masaka with a carrying value of Ushs 17.8 million are stated at revalued amounts. The revaluation surplus was credited to capital reserves.
* Write-offs relate to amounts removed from the books of account during the process of streamlining the bank’s fixed assets register
14
CENTENARY RURAL DEVELOPMENT BANK LTD
NOTES TO THE FINANCIAL STATEMENTS (Continued)
31 DECEMBER 2003
9.
2002
Ushs ‘000
31,017,748
74,425,554
4,349,511
5,261,048
23,389,546
61,570,936
4,348,543
2,271,012
115,053,861
91,580,037
CUSTOMER DEPOSITS
Current accounts
Savings accounts
Time deposits
Foreign currency deposits
10.
2003
Ushs ‘000
MANAGED FUNDS
This relates to funds from other organisations, disbursed to the bank for onward lending to its
customers.
PAPSCA
56,000
56,000
UNCDF
31,091
31,091
DANIDA
560,586
551,051
647,677
638,142
The funds from DANIDA are administered by the bank for onward lending to the people of
Rakai through the Reorganised Rakai Rural Credit Scheme.
The grant funds under the PAPSCA programme were disbursed by Experiment in International
Living to develop small-scale rural productive enterprises in the districts of Jinja, Iganga,
Mukono and Mpigi.
The revolving facility from UNCDF is used to increase the availability of savings and credit
services to people engaged in micro and small economic activities in the West Nile region.
11. RETIREMENT BENEFIT OBLIGATIONS
At beginning of the year
Staff pension contribution
Contributions paid
1,179,305
734,351
(153,812)
At end of the year
1,759,844
622,893
592,844
(36,432)
1,179,305
The bank established a benefit scheme covering all of its employees and sets aside funds from
its own resources for the scheme. The contributions to the scheme are invested with Citibank
New York.
15
CENTENARY RURAL DEVELOPMENT BANK LTD
NOTES TO THE FINANCIAL STATEMENTS (Continued)
31 DECEMBER 2003
12.
2003
Ushs ‘000
2002
Ushs ‘000
113,251
1,917,803
266,535
2,000,000
3,978,706
84,531
111,321
1,202,932
2,000,000
3,137,645
8,276,295
6,536,429
OTHER ACCOUNTS PAYABLE
Interest in suspense
Bills payable
Clearing suspense
Letter of credit cover account
# Other provisions
Other accounts payable
# Other provisions relate to uninsured claims payable as workmen compensation to the family
of the late Chief Executive of the bank. Settlement of this amount awaits the passing of a
statutory instrument providing the maximum amount payable under the Workers
Compensation Act 2000.
13.
SHARE CAPITAL
Authorized and Issued
4,550,000 ordinary shares of Ushs 1,000 each
100,000 preference shares of Ushs 1,000 each
Fully Paid
4,014,433 ordinary shares of
Ushs 1,000 each
95,388 (2002 – 92,267) preference shares of Ushs 1,000 each
14.
4,550,000
100,000
4,550,000
100,000
4,650,000
4,650,000
4,014,433
95,388
4,014,433
92,267
4,109,821
4,106,700
SHARE PREMIUM
Number of Shares
Preference
Ordinary
Share Premium
Ushs ‘000
At 1 January 2002
Bonus issue
Shares paid up
91,627
640
3,349,979
496,100
168,354
826,147
283,940
At 31 December 2002
92,267
4,014,433
1,110,087
At 1 January 2003
Shares paid up
92,267
3,121
4,014,433
-
1,110,087
-
At 31 December 2003
95,388
4,014,433
1,110,087
16
CENTENARY RURAL DEVELOPMENT BANK LTD
NOTES TO THE FINANCIAL STATEMENTS (Continued)
31 DECEMBER 2003
2003
Ushs ‘000
15.
2002
Ushs ‘000
CAPITAL RESERVES
At the beginning of the year
Transfers to profit and loss account
170,000
(10,000)
180,000
(10,000)
At the end of the year
160,000
170,000
This is the amortization of the amount considered as the excess of the valuation of the land and
building in Masaka given to the bank as share contribution by Masaka Diocese.
16.
CAPITAL GRANTS
At the beginning of the year
Transfers to profit and loss account
At the end of the year
859,112
(211,462)
1,070,574
(211,462)
647,650
859,112
These are amounts advanced to the bank by PL 480, CGAAP and UNCDF for specific
purposes, which include construction of Arua branch, purchase of motorcycles and staff
training.
17. PROFITS FROM OPERATIONS BEFORE TAXATION AND EXCEPTIONAL ITEM
Profit before taxation and exceptional item is stated after charging: Depreciation
Auditors' remuneration
Employees’ retirement benefit scheme:
Internal scheme
NSSF
Directors' emoluments:
As directors
For management
Foreign exchange gain
18.
2,754,281
45,000
2,762,859
40,000
820,514
520,917
777,366
541,663
130,118
251,400
546,047
59,002
3,759
229,042
-
51,205
639,077
-
690,282
EXCEPTIONAL ITEM
Bills payable
Clearance suspense
This exceptional item relates to provision for long outstanding items in bills payable and
clearance suspense accounts accumulated over the years now provided for pending further
investigations. Write off of the provision was approved on 24 October 2003.
17
CENTENARY RURAL DEVELOPMENT BANK LTD
NOTES TO THE FINANCIAL STATEMENTS (Continued)
31 DECEMBER 2003
2003
Ushs ‘000
19.
2002
Ushs ‘000
TAXATION
Balance Sheet
Balance brought forward
Current tax
Provisional tax paid
1,973,245
(1,802,440)
-
Balance carried forward
170,805
-
Deferred tax liability
146,206
-
1,973,245
146,206
-
2,119,451
-
Profit and Loss Account
Corporation tax
Deferred tax charge
Effective 2003, the Bank has started paying corporation tax.
20.
EARNINGS PER SHARE
Basic earnings per share are calculated by dividing the net profit attributable to shareholders by
the weighted average number of ordinary shares in issue during the year. Diluted earnings per
share for both years are the same as basic earnings per share.
Net profit attributable to shareholders
Weighted average number of ordinary shares
Basic earnings per share (Ushs)
21.
4,709,120
4,014,433
3,144,089
3,419,380
1,173
919
14,308
602,165
13,840
602,165
616,473
616,005
150
176
DIVIDENDS PER SHARE
Preference 15% (2002:15%)
Ordinary 15% (2002:15%)
Dividends per share (Ushs)
The dividends per share are calculated by dividing the ordinary dividend attributable to
shareholders by the weighted average number of ordinary shares in issue during the year.
22.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents included in the cash flow statement comprise the following balance
sheet amounts:
Cash in hand
Balances with other financial institutions
Balances at Bank of Uganda
18
5,667,813
3,385,673
10,250,287
4,143,520
3,359,557
11,572,949
19,303,773
19,076,026
CENTENARY RURAL DEVELOPMENT BANK LTD
NOTES TO THE FINANCIAL STATEMENTS (Continued)
31 DECEMBER 2003
2003
Ushs ‘000
23.
2002
Ushs ‘000
CONTINGENT LIABILITIES AND COMMITMENTS
 Contingent liabilities - There were no contingent liabilities arising in the ordinary course
of business from which it is anticipated that any material liabilities will arise at 31
December 2003.
 Guarantees, performance bonds and Letters of Credit
Guarantees
Performance bonds
Bid security
Letters of Credit
183,413
74,046
-
366,611
21,105
1,202,932
Guarantees, performance bonds and bid securities are adequately secured by deposits with
the bank and debentures over the beneficiaries’ assets.
24.
FINANCIAL INSTRUMENTS
The bank is exposed to market risk including primarily changes in interest rates and currency
exchange rates; however, the bank does not hold or issue derivative financial instruments for
trading purposes.
25. COMPARATIVES
Where necessary, comparative figures have been adjusted to conform to changes in
presentation in the current year.
26.
CREDIT RISK
Geographical concentrations of assets, liabilities and off balance sheet items
The bank operates wholly in Uganda and its assets and liabilities are managed in Uganda.
Credit risk
As one of the largest Ugandan banks, the bank accounts for a significant share of credit
exposure to many sectors of the economy. However, the bank’s credit risk is well spread over a
diversity of personal and commercial customers.
19
CENTENARY RURAL DEVELOPMENT BANK LTD
NOTES TO THE FINANCIAL STATEMENTS (Continued)
31 DECEMBER 2003
27.
CURRENCY RISK
Concentrations of Assets, Liabilities and off Balance Sheet Items
The Bank had the following significant currency positions as at 31 December 2003.
ASSETS
GBP
(Ushs’000)
Cash and balances at Central Bank
Due from other banks
93,936
Investments
Loans and advances to customers
Other accounts receivable
Property and equipment
Total assets
93,936
USD
USHS
(Ushs’000)
(‘000)
15,918,100
3,254,266
37,471
3,292,900
36,009,350
66,357,667
105,119
12,136,310
8,424,670
6,652,285 138,883,568
Other
Total
(Ushs’000) (Ushs’000)
15,918,100
3,385,673
39,302,250
66,357,667
66
12,241,495
8,424,670
66 145,629,855
LIABILITIES
Customer deposits
Managed fund
Retirement benefit obligations
Other accounts payable
27,237
-
5,069,304
86,149
1,005
109,792,813
647,677
1,673,695
9,208,775
164,507
-
115,053,861
647,677
1,759,844
9,209,780
4,109,821
1,110,087
160,000
647,650
12,931,135
145,629,855
Share capital
Share premium
Capital reserves
Capital grants
Profit and loss
Total liabilities
27,237
5,156,458
4,109,821
1,110,087
160,000
647,650
12,931,135
140,281,653
164,507
Net currency position
66,699
1,495,827
(1,398,085)
(164,441)
20
-
CENTENARY RURAL DEVELOPMENT BANK LTD
NOTES TO THE FINANCIAL STATEMENTS (Continued)
31 DECEMBER 2003
28.
LIQUIDITY RISK
Maturities of assets and liabilities
The table below analyses assets and liabilities of the Bank into relevant maturity groupings based on
the remaining period at balance sheet date to the contractual maturity date.
The matching and controlled mismatching of the maturities and interest rates of assets and liabilities
is fundamental to the management of the bank. It is unusual for banks ever to be completely
matched since business transacted is often of different types. An unmatched position potentially
enhances profitability, but can also increase the risk of losses.
The maturity of assets and liabilities and the ability to replace, at an acceptable cost, interest-bearing
liabilities as they mature, are important factors in assessing the liquidity of the bank and its
exposure to changes in interest rates and exchange rates.
As at 31 December 2003
Up to 1
Month
1-12
Months
Ushs’000
Ushs’000
1-5
Years
Over 5
Years
Total
Ushs’000 Ushs’000
Ushs’000
Cash and balances at central Bank
Due from other banks
Investments
Loans and advances to customers
Other accounts receivable
Property and equipment
15,918,100
- 3,385,673
4,042,900 35,259,350
- 47,508,065 18,849,602
- 12,241,495
- 6,386,097 2,038,573
15,918,100
3,385,673
39,302,250
66,357,667
12,241,495
8,424,670
Total assets
19,961,000 98,394,583 25,235,699 2,038,573 145,629,855
ASSETS
LIABILITIES
Customer deposits
Managed funds
Retirement benefit obligations
Other accounts payable
110,704,350
588,436
4,241,511
8,004,871
108,000
1,759,844
-
- 115,053,861
647,677
647,677
1,759,844
8,593,307
Total liabilities
111,292,786
12,246,382
1,867,844
647,677 126,054,689
Net liquidity gap
(91,331,786) 86,148,201 23,367,855 1,390,896
21
19,575,166
CENTENARY RURAL DEVELOPMENT BANK LTD
NOTES TO THE FINANCIAL STATEMENTS (Continued)
31 DECEMBER 2003
29. INTEREST RATE RISK
The bank is exposed to various risks associated with the effects of fluctuations in the prevailing levels of market interest rates on its financial position
and cash flows. The table below summarizes the exposure to interest rate risks. Included in the table are the bank's assets and liabilities at carrying
amounts, categorized by the earlier of contractual repricing or maturity dates. The bank does not bear interest rate risk on off balance sheet items.
0 to 3
4 to 6
6 Months
1 to 5
Over 5
Non-interest
Total
Months
Months
To 1 Year
Years
Years
Bearing
Dec. 2003
Ushs'000
Ushs'000
Ushs'000
Ushs'000
Ushs'000
Ushs'000
Ushs'000
Cash on hand and balance at BOU
Government securities
Other Investments
Balance with other banks
Loans and advances
Other accounts receivables
Property and equipment
Customer deposits
Dividends payable
Managed fund
Other accounts payable
Share premium
Share capital
Capital and other reserves
Retained profits
Interest sensitivity gap
Cumulative gap
15,918,100
13,401,038
4,042,900
3,385,673
2,649,167
9,883,573
11,924,739
50,000
2,614,194
42,244,704
15,918,100
35,209,350
4,092,900
3,385,673
66,357,667
12,241,495
8,424,670
145,629,855
18,849,602
23,478,778
12,497,767
54,219,443
18,849,602
112,343,197
1,101,032
1,501,632
108,000
12,241,495
8,424,670
36,584,265
115,053,861
616,473
647,677
10,353,151
1,110,087
4,109,821
807,650
12,931,135
145,629,855
-
616,473
647,677
112,343,197
(88,864,419)
(88,864,419)
1,101,032
11,396,735
(77,467,684)
1,501,632
52,717,811
(24,749,873)
22
108,000
18,741,602
(6,008,271)
647,677
(647,677)
(6,655,948) )
10,353,151
1,110,087
4,109,821
807,650
12,931,135
29,928,317
6,655,948
-
CENTENARY RURAL DEVELOPMENT BANK LTD.
NOTES TO THE FINANCIAL STATEMENTS (Continued)
YEAR ENDED 31 DECEMBER 2003
30.
EMPLOYEES
The average number of employees for the bank during the year was 642 (2002:523).
31.
INCORPORATION
The bank is incorporated in Uganda under the Companies Act.
32.
CURRENCY
These financial statements are presented in thousands of Uganda shillings (Ushs’000).
23
CENTENARY RURAL DEVELOPMENT BANK LTD.
DETAILED PROFIT AND LOSS ACCOUNT
YEAR ENDED 31 DECEMBER 2003
Schedule
MANAGEMENT
INFORMATION
SCHEDULE A
2003
Ushs '000
2002
Ushs '000
INTEREST INCOME
Loans
Overdrafts
Placements with other banks
Treasury bills investments
16,926,672
316,738
111,957
4,755,480
10,431,598
1,765
164,105
4,889,700
22,110,847
15,487,168
1,258,866
194,918
15,490
9,884
1,479,158
939,407
208,752
19,917
11,010
1,179,086
20,631,689
14,308,082
6,931,988
559,648
905,520
10,809
40,304
201,970
546,047
120,849
4,931,543
395,306
710,202
18,090
40,984
218,954
229,042
42,428
9,317,135
6,586,549
INTEREST EXPENSE
Savings accounts
Time deposit accounts
Foreign currency accounts
Managed funds
Net interest income
OTHER INCOME
Commissions and fees
Bank charges
Stationery income
Rental income
Grants
Recoveries on advances written off
Exchange gains
Other income
EXPENDITURE
Financial expenses
Administrative costs
Staff expenses
Other charges and expenses
Loan loss provision
PROFIT FROM OPERATIONS BEFORE
TAXATION AND EXCEPTIONAL ITEM
B
B
B
B
84,205
8,066,304
11,034,518
3,109,987
825,239
50,827
5,320,659
8,074,465
3,197,383
416,926
22,295,014
17,060,260
6,828,571
3,834,371
CENTENARY RURAL DEVELOPMENT BANK LTD.
OPERATING EXPENSES
YEAR ENDED 31 DECEMBER 2003
MANAGEMENT
INFORMATION
SCHEDULE B
2003
Ushs '000
2002
Ushs '000
FINANCIAL EXPENSES
Commission on drafts
Ledger fees
Cheque clearing charges
Commission on foreign cheques
Fines
13,177
64,657
6,371
-
7,667
10,665
16,045
16,072
378
84,205
50,827
853,188
2,275,139
2,062
453,875
1,030,637
562,621
172,815
72,482
534,596
355,222
22,336
382,852
38,539
476,520
5,761
34,256
19,948
15,174
20,255
115,928
216,506
15,461
77,408
110,282
176,134
26,251
56
411,223
1,636,048
3,036
436,019
627,060
429,268
89,245
86,505
413,013
315,008
14,537
228,565
19,521
202,349
7,378
21,398
10,775
4,894
6,066
85,145
3,000
10,756
64,999
74,556
112,929
7,236
130
8,066,304
5,320,659
ADMINISTRATION COSTS
Rent and rates for office premises
Office expenses
Commission to parish agents
Motor vehicle running and maintenance
Telephones and other communication expenses
Transport and travel
Legal and consultancy fees
Audit fees and expenses
Insurance
Security
General entertainment costs
Staff training
Seminars and conferences
Advertising and publicity
Newspapers journals and periodicals
Subscriptions
Donations
Annual general meeting expenses
Recruitment costs
Transportation of cash
Licenses
Uniforms
Cashier allowances
Settlements
Staff welfare
Fraud and defalcations
Staff houses maintenance
CENTENARY RURAL DEVELOPMENT BANK LTD.
OPERATING EXPENSES (Continued)
YEAR ENDED 31 DECEMBER 2003
MANAGEMENT
INFORMATION
SCHEDULE B
2003
Ushs ‘000
2002
Ushs ‘000
8,981,712
412,397
777,366
820,514
42,529
6,513,612
427,055
541,663
520,917
71,218
11,034,518
8,074,465
Depreciation
Directors expenses
Diocesan advisory committee expenses
Other loan provisions
Shortages
2,754,282
130,118
11,482
213,902
203
3,109,987
2,762,859
62,761
12,487
357,713
1,563
3,197,383
TOTAL OPERATING EXPENSES
22,295,014
16,643,334
STAFF EXPENSES
Salaries
Staff allowances
NSSF
Retirement scheme
Other staff expenses
OTHER CHARGES & EXPENSES