Audited Financial Statements for the year ended 31st December 2020

TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

Table of Contents Page

Abbreviations 12

Company Information 2-33-4

Directors’ Report 4-145-15

Declaration of Chief Finance Officer 1516

Auditors’ Report 16-1817-19

Statement of Profit or Loss and Comprehensive Income 1920

Statement of Financial Position 2021

Statement of Changes in Equity 2122

Statement of Cash Flows 2223

Significant Accounting Policies 23-3424-35

Notes to the Financial Statements 35-6636-67

1

ii

TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

Abbreviations

AA R Accouti ce terprise Resource i A o Aric i td o i D etr Depositor o ecurities ie ecutie icer ie ice icer A pit rets d ecurities Autorit ie pertios icer otrctu erice ri D Dr es toc ce c irst ousi ice o td ir ue trou ter opreesie coe A tertio Accouti tdrd R tertio ici Reporti tdrd D i Director R orte Reice ortio ste ediu er ote tio ousi orportio tio oci ecurit ud rir orte eder uic erice esio ud uic erice oci ecurit ud D is d Deeopet e RA i Reeue Autorit i ii A ue Added orers opestio ud

2

1

TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

BOARD OF DIRECTORS

S/N Name Representing Position Qualification Age Nationality

r eod i D ir ceors o ciece i i ieeri Associtio o rtered ertiied Accoutt A r res Ai ice ir sters o Arts cooics i tee r Aduid D RD eer A tertio i i see d ice r odre D D eer Master’s in Business i d Adiistrtio A A

s ii ss Director o eer A ice i i ed uds r i o D cA eer o Accouti A i

r Did us ie eer Re Master’s in Business i pertios Appoited t Adiistrtio A – Ris icer i erur eet r Adre D eter eer A tertio ice ie ipod Ariue r iert ie Reti eer Appoited Master’s in Business i poi Ari i t rc Adiistrtio A A Dr uid D eer c c D i i ciities i d eet r uc Director eer Appoited usiess ecutie ouder i t o Aric Ris surce erices iited AR r osep D A eer Resied ductio Accouti e t Apri tetics

3

2

TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

COMPANY SECRETARY Mr Ms uenia a ea unse

CHIEF OFFICERS Mr sar Maa ie eutie ier Mr sa rassa ie inane ier Mr aani Mane ie eratins ier

REGISTERED OFFICE t r en uiee ers i treet B ar es aaa anania

INDEPENDENT AUDITORS uita nternatina er t r aren enuei treet B ar es aaa anania

PRINCIPAL BANKERS i Ban anania iite i er ana enue B ar es aaa anania

4

3 TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

REPORT OF THE DIRECTORS

e iretrs resent tis rert an te auite inania stateents r te inania ear ene st eeer i isse te state aairs te an INCORPORATION e an as inrrate n t anuar uner te anania anies t an ean its enin eratins in eer COMPANY'S VISION ee te reerre senar aret intereiar r rtae inanin in anania COMPANY'S MISSION TMRC’s mission is to expand home ownership in Tanzania by providing long term financing to riar rtae eners

PRINCIPAL ACTIVITIES e rinia atiit te an is t rie n ter sure uns t ans r te urse rtae enin

DIRECTORS e iretrs e ie urin te ear an at te ate tis rert are sn n ae n arane it te ans rties ssiatin n iretr is ue r retireent rtatin

CORPORATE GOVERNANCE

e Bar M nsists iretrs art r te ie eutie ier n ter iretrs eeutie sitins in te an e Bar taes era resnsiiit r te an inuin resnsiiit r ientiin e ris areas nsierin an nitrin siniiant inestent eisins nsierin siniiant inania atters an reiein te errane anaeent usiness ans an uets e Bar is as resnsie r ensurin tat a reensie sste interna ntr iies an reures is eratie an r iane it sun rrate ernane rinies e Bar is reuire t eet at east ur ties a ear e Bar eeates te a t a anaeent usiness t te ie eutie ier assiste senir anaeent enir anaeent is inite t atten a Bar eetins an aiitates te eetie ntr a te Company’s operational activities, acting as a medium of communication and coordination between all te arius usiness units e an is itte t te rinies eetie rrate ernane e iretrs as renie te irtane interit transaren an auntaiit

5

4

TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

REPORT OF THE DIRECTORS (CONTINUED)

Board Committees uring the year, TMRC had three oard ubcommittees whose role is to ensure a high standard of corporate governance throughout the Company These Committees were oard udit and Ris Committee RC oard Credit Committee CC and oard uman Resources and overnance Committee RC The activities of these Committees are governed by the respective Committee Charters which are approved by the oard The three Committees report to the oard of irectors

Board Audit and Risk Committee Board Audit and Risk Committee Purpose and Responsibilities The oard udit and Ris Committee reviews significant accounting policies and financial reporting systems to ensure that they are adeuate and are complied with at all times t reviews adeuacy of internal control systems and monitors implementation of actions to address issues raised by nternal and xternal auditors and regulators

The Committee assists the oard in evaluation and selection of external auditors at least annually t also recommends termination of existing auditors whenever it is found that the performance is not in line with the assigned duties and responsibilities andor there is no independence for the auditors to discharge their duties in a professional manner The nternal udit Manager reports directly to the oard udit and Ris Committee

Board Audit and Risk Committee Composition

Name Detail Position Nationality

Mr avid usala C, M an Chairman Reappointed th Tanzanian ebruary, Mr bdulmaid seela C, CR an Member Tanzanian

Ms ilian Mbassy irector of Member Tanzanian Managed unds, T Mr Charles tembe M, zania an Member Reappointed th ugust, Tanzanian Mr ndrew C, helter Member imbabwean Chimphondah friue

The oard udit and Ris Committee met five times during the year

6

5

TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

REPORT OF THE DIRECTORS (CONTINUED)

Board Credit Committee Board Credit Committee Purpose and Responsibilities The main function of the oard Credit Committee is to monitor performance and uality of the credit portfolio, appraise and approve within its credit approval limit and to recommend to the oard for approval of facilities beyond its limit The Committee reviews Credit olicy at least once a year and ensures that it contains sound fundamental principles that facilitate identification, measurement, monitoring and control of credit ris as well as having appropriate plans and strategies for credit ris management

Board Credit Committee Composition Name Detail Position Nationality

r Maulid anyani , C Chairman Tanzanian Mr ilbert Mponzi Chief Retail Tanzanian gri aning, Member ppointed th March, M Mr mani ohn M, ancC Member Tanzanian Mr oseph ha M, Member Resigned th pril, enyan Mr odfrey dalahwa M, C Member Tanzanian

The oard Credit Committee met four times during the year

The oard accepts final responsibility for the ris management and internal control systems of the Company t is the tas of management to ensure that adeuate internal financial and operational control systems are developed and maintained on an ongoing basis in order to provide reasonable assurance regarding

● The effectiveness and efficiency of operations; ● The safeguarding of the Company’s assets; ● Compliance with applicable laws and regulations; ● The reliability of accounting records; ● Business sustainability under normal as well as adverse conditions and ● Responsible behaviour towards all stakeholders.

The efficiency of any internal control system is dependent on the strict observance of prescribed measures There is always a ris of noncompliance of such measures by staff hilst no system, of internal control can provide absolute assurance against misstatement or losses, the Company system is designed to provide the oard with reasonable assurance that the procedures in place are operating effectively

7

6

TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

REPORT OF THE DIRECTORS (CONTINUED) Board Governance and Human Resources Committee The main function of this Committee is to develop, review and enhance the company approach to corporate governance and human resources management practices The committee ensures that there is a succession plan for executives and other ey positions within the company t is also responsible for reviewing and recommending reward strategy ad annual compensation for the oard, senior management and other employees of the company The Committee maes general recommendations to the oard on corporate governance, including directorship practices, recruitment and retirement policies for the executives of the group, issue arising from nnual eneral Meeting, the function and duties of the committees of the oard and any changesissues that the Committee believes to be desirable in the matter to be covered by the oard or any of its committees

Board Governance and Human Resources Committee Composition

Name Detail Position Nationality

Mr ilbert Mponzi Chief Retail gri Chairman ppointed on th Tanzanian aning, M ugust, Mr anay ucha irector, Member ppointed on th Tanzanian ugust, Mr mani ohn M, ancC Member ppointed on th Tanzanian ugust, Mr odfrey dalahwa M, C Member ppointed on th Tanzanian ugust,

The oard uman Resource and overnance Committee met once during the year

RISK MANAGEMENT AND INTERNAL CONTROL The oard assessed the internal control systems throughout the financial year ended st ecember, and is of the opinion that they met accepted criteria The oard carries out ris and internal control assessment throughout the year

SHARE CAPITAL STRUCTURE uring the year issued and paid up ordinary share capital of the company remained at T billion for ,, ordinary shares T billion for ,, ordinary shares

8

7

TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

REPORT OF THE DIRECTORS (CONTINUED) Share Capital Structure (Continued) The distribution of share capital of the Company is as follows 2020 2019 Number of Number of % % Name of Shareholder TZS '000 shares TZS '000 shares held holding holding held CR an lc ,, ,, ,, ,, zania an imited ,, ,, ,, ,, helter friue ,, ,, ,, ,, nternational inance ,, ,, ,, ,, Corporation C M an lc ,, ,, ,, ,, T evelopment an imited ,, ,, ,, ,, ational an of Commerce ,, ,, ,, ,, imited xim an Tanzania imited ,, ,, ,, ,, ational ousing Corporation ,, ,, ,, ,, C Commercial an lc ,, ,, ,, ,, ancC Tanzania imited ,, ,, ,, ,, an of frica Tanzania ,, ,, ,, ,, imited irst ousing inance Co td ,, ,, ,, ,, eoples an of anzibar , , , , imited M an T imited , , , , C an Tanzania imited , , , , Mombozi Commercial an lc , , , , 23,061,292 100.00% 25,374,721 23,061,292 100.00% 25,374,721

MANAGEMENT The Management of the Company is under the Chief xecutive fficer and is organized in the following departments ● nternal udit epartment ● Ris and Compliance epartment ● perations and nformation Technology epartment ● inance and Treasury epartment ● egal epartment ● uman Resources and Corporate Communication

9

8

TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

REPORT OF THE DIRECTORS (CONTINUED) Management (Continued) Management Committees Management of TMRC has three Committees playing various roles in overseeing the operations of the Company and implementation of strategies and policies These were sset iabilities Management Committee C, Management Credit Committee MCC and Management nvestment Committee MC The activities of the Committees are governed by the respective policies which are approved by the oard

Asset Liability Management Committee

The Committee is composed of Chief xecutive fficer, Chief inance fficer, Chief perations fficer, enior inance Manager, ead of Ris and Compliance, enior Credit Manager and Treasury and nvestment Manager The Committee meets at least monthly The Committee is responsible for

i Managing the balance sheet to ensure proper allocation of resources to achieve performance targets ii Reviewing the current and prospective liuidity positions and monitoring alternative funding sources to ensure adeuate liuidity is maintained at all times Reviewing the current and prospective capital levels ris based to determine its adeuacy in relation to expected growth and asset uality iii Reviewing the monthly performance against established targetsproections and budgets and analysing the reasons for any variances for timely actions iv Measuring and monitoring investment ris of the company on an ongoing basis and ensuring uality portfolio of assets is maintained within the limits set by the oard and an of Tanzania regulations

Credit Committee

The Committee is composed of Chief xecutive fficer, Chief inance fficer, Chief peration fficer, ead of Ris and Compliance, enior Credit Manager and ead of egal and Company ecretary The Committee meets when there is business to transact The Committee is responsible for

i Recommends M limits to the oard Credit Committee ii ssist the oard Credit Committee in managing credit ris by ensuring sufficient oversight of lending iii pprove credit facilities within oard approved credit and investment limits iv pprove exemptions within oard approved credit and investment limits subect to final approval by an of Tanzania T v pprove extensions and grace periods up to days subect to final approval by T where reuired vi pprove temporary breaches on TMRC eligibility criteria compliance based on reasonable grounds provided by the M andor TMRC management assessment

10

9

TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

REPORT OF THE DIRECTORS (CONTINUED) Management (Continued) Investment Committee Management nvestment Committee is composed of Chief xecutive fficer, Chief inance fficer, Chief peration fficer, enior inance Manager, and Treasury and nvestment Manager The Committee meets on demand The main responsibilities of the Committee are

i Developing the TMRC’s investment objectives including developing, selecting, managing and monitoring the TMRC’s investment strategies ii Maximizing returns while managing riss within acceptable levels iii Maintaining adeuate liuidity to meet day to day liuidity reuirements

STOCK EXCHANGE INFORMATION

The Company is not listed on the stoc exchange

BUSINESS ENVIRONMENT AND PERFOMANCE BUSINESS ENVIRONMENT uring the year, mortgage maret grew by T billion The total mortgage portfolio balances amongst bans stood at T billion as at the end of the year of representing , properties compared to T billion outstanding balance for financing , properties that was reported in the previous year This signifies an annual increase of in outstanding value of Mortgage loans while a number of mortgages increased by The above data indicates that mortgage maret as percentage of ross omestic roduct decreased to from recorded in This ratio is one of the lowest in the ast frican region

BUSINESS PERFORMANCE

uring , TMRC managed to record a commanding profit before tax on account of maintain a good investment portfolio and effective cost management The Company recorded a profit before tax of T billion T billion, an increase of compared to previous year The increase was mainly attributed by creation of good investment portfolio as well as effective cost management by TMRC management

uring the year, interest income increased from T billion in the prior year to T billion, an increase of n the other hand, the interest expenses also increased from T billion in the prior year to T billion, an increase of

TMRC balance sheet size declined during the year to T billion from T billion recorded in , a decline of n increase of as the same as net loans declined by to T billion from T billion

11

10

TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

REPORT OF THE DIRECTORS (CONTINUED)

Reslts or the ear smmar

2020 2019 TZS '000 TZS '000 roit beore ta Ta harge Profit for the year 2,025,868 594,674

DIVIDEND

The Diretors have postpone the elaration o a ivien or the ear e to the introtion o a ne T Reglation isse in anar limiting pament o ivien or bans an inanial instittions ith ostinome ration eeeing T per share amonting to T million as reommene an pai

FUTURE DEVELOPMENT PLANS

ine ommening its operations in TMRC has been spporting rimar Mortgage eners M b proviing mortgage reinane an preinane to the tne o T billion b the en o ear T billion TMRC portolio eline ring the ear b T billion e to prepament b Ms e to M’s ailre to meet TMRC mortgage riteria Crrentl TMRC has a total o Ms hih have aesse the above ns Diretors believe that or TMRC trategi lan to eliver vale the olloing are e trategi lan Drivers have been evelope i Cost of Funding and Pricing – ell prie ning or TMRC ill ontribte to the antiipate alane heet groth TMRC trategi lan is geare to aress this hallenge

ii Effective demand –orabilit is an important ator in etermining the eetive eman or mortgage loans To inrease aorabilit TMRC ill or toars lengthening the matrit o loans etene to Ms as ell as oring toars ree lening rates arising rom onessionar ns

iii Housing supply – TMRC ill or ith other hosing staeholers in a rive or the availabilit o aorable hosing nits hih is ritial or the origination o mortgages to mile an lo inome grops TMRC ill in as to have some impat in promoting this sppl segment

12

11

TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

s s s ss s s s s s

s s ss ss ss s s s s ss s s

s s s s s

s s ss s ss s s s s s s ss s s s s s

s s s s s

ss staff training in order to improve employee’s technical skills an ss s s s s s s ss

s s s s s s ss s

13

12

TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

he ompany has a strong health and safety program hich ensre that a strong cltre of safety prevails at all times safe orking environment is ensred for all employees and contractors y providing adeate and proper personal protective eipment training and spervision as necessary

oans are availale to all confirmed employees depending on the assessment of and the discretion of management as to the need and circmstances

pplications for employment y disaled persons are alays considered earing in mind the aptitdes of the applicant concerned n the event of memers of staff ecoming disaled every effort is made to ensre that their employment ith the ompany contines and appropriate training is arranged t is the policy of the ompany that training career development and promotion of disaled persons shold as far as possile e identical to that of other employees

he ompany pays contritions to a plicly administered pension plan on mandatory asis hich alifies to e a defined contrition plan

he average nmer of employees dring the year as

he ompany had employees ot of hich ere female and ere male female and male

ll related party transactions and alances are disclosed in ote of these financial statements

he ompanys aditor dita nternational has epressed illingness to contine in office in accordance ith the anania ompanies ct

……………………….

14

13

TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

STATEMENT OF DIRECTORS’ RESPONSIBILITY FOR TE FINANCIAL STATEMENTS

he irectors are reired in terms of the anania ompanies ct to maintain adeate acconting records and are responsile for the contents and integrity of the financial statements and related financial information inclded in this report t is their responsiility to ensre that the financial statements fairly present the state of affairs of the ompany as at the end of the financial year and the reslts of its operations and cash flos for the year then ended in conformity ith nternational inancial eporting tandards and the reirements of the anania ompanies ct he eternal aditors are engaged to epress an independent opinion on the financial statements he financial statements are prepared in accordance ith nternational inancial eporting tandards and the reirements of the anania ompanies ct and are ased pon appropriate acconting policies consistently applied and spported y reasonale and prdent dgements and estimates

he irectors acknoledge that they are ltimately responsile for the system of internal financial control estalished y the ompany and place considerale importance on maintaining a strong control environment o enale the directors to meet these responsiilities the oard sets standards for internal control aimed at redcing the risk of error or loss in a cost effective manner he standards inclde the proper delegation of responsiilities ithin a clearly defined frameork effective acconting procedres and adeate segregation of dties to ensre an acceptale level of risk hese controls are monitored throghot the ompany and all employees are reired to maintain the highest ethical standards in ensuring the Company’s business is conducted in a manner that in all reasonale circmstances is aove reproach he focs of risk management in the ompany is on identifying assessing managing and monitoring all knon forms of risk across the ompany hile operating risk cannot e flly eliminated the ompany endeavors to minimie it y ensring that appropriate infrastrctres control systems and ethical ehavior are applied and managed ithin predetermined procedres and constraints

he irectors are of the opinion ased on the information and eplanations given y management that the system of internal control provides reasonale assrance that the financial records may e relied on for preparation of the financial statements oever any system of internal financial control can provide only reasonale and not asolte assrance against material misstatement or loss

The Directors have reviewed the Company’s cash flow forecast for the year to 31st December, 20 and in the light of this revie and the crrent financial position they are satisfied that the ompany has access to adeate resorces to contine in operational eistence for the foreseeale ftre

he financial statements set ot on pages to hich have een prepared on going concern asis ere athoried and approved y the oard on F and signed on its ehalf y

…………………………………………………. ……………………………………… M T S M C I C D

15

14

TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

DECLARATION OF TMRC CIEF FINANCE OFFICER

The ational oard of ccountants and uditors according to the power conferred under the uditors and ccountants egistration ct o. 33 of 12, as amended by ct o. 2 of 1 it is reuired financial statements to be accompanied with a declaration issued by the Chief inance fficer responsible for the preparation of financial statements of the entity concerned.

t is the duty of Chief finance fficer to assist the oard of Directors to discharge the responsibility of preparing TMRC’s financial statements showing true and fair view of TMRC’s financial position and performance in accordance with the nternational ccounting tandards and the Companies ct, 2002. ull responsibility for the preparation of financial statements rests with the TC oard of Directors as under Directors esponsibilities stated on page 1.

, swald artin rassa, being the Chief inance fficer of TC hereby acnowledge my responsibility of ensuring that TMRC’s financial statements for the year ended 31st December, 2020 have been prepared in compliance with the nternational inancial eporting tandards and the Companies ct, 2002.

I thus confirm that TMRC’s financial statements give a true and fair view position as on that date and that they have been prepared based on properly maintained financial records.

S ……………………………………………….

P Chief inance fficer

NBAA M N C 3

D ……………………………

16

15

REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF TANZANIA MORTGAGE REFINANCE COMPANY LIMITED

Opinion

We have audited the financial statements of Tanzania Mortgage Refinance Company Limited, set out on pages 20 to 67, which comprise the statement of financial position as at 31 December 2020, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion the financial statements of Tanzania Mortgage Refinance Company Ltd present fairly, in all material respects, the financial position of Tanzania Mortgage Refinance Company Limited as at 31st December, 2020 and its financial performance and its cash flows for the year then ended in accordance with the International Financial Reporting Standards (IFRS), the Banking and Financial Institution Act, 2006 and the Companies Act, 2002 of Tanzania.

Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the International Ethics Standards Board for Accountants ‘Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Tanzania, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. The basis for opinion is detailed in the following paragraphs;

Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. There were no key audit matters to report during the year ended 31 December 2020.

17

16

REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF TANZANIA MORTGAGE REFINANCE COMPANY LIMITED (CONTINUED)

Other Information included in the Company’s Annual Report The other information comprises the Company Information, Director’s Report, Statement of Directors’ Responsibilities and Declaration by Head of Finance. The other information does not include the financial statements and our auditor’s report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance thereon. In connection with our audit of financial statements, our responsibility is to read the other information and in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is material misstatement of this other information; we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRSs, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Entity’s ability to continue as a going concern, disclosing, as applicable, matters related to going Concern and using the going concern basis of accounting unless management either intends to liquidate the Entity or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Entity’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

18

17

REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF TANZANIA MORTGAGE REFINANCE COMPANY LIMITED (CONTINUED)

Report on Other Legal and Regulatory Requirements In our opinion, the accounting and other records required by the Companies Act, 2002 to be kept by the Entity have not been properly kept in accordance with the provisions of the Companies Act. The engagement partner on the audit resulting in this independent auditor’s report is Straton Makundi.

Auditax International Certified Public Accountants , Tanzania

Signed by: Straton Makundi (FCCA) Date…………………………2021 Registration No: ACPA 1747

19

18 TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

STATEMENT OF PROFIT OR LOSS AND OTER COMPREENSIE INCOME

N TS TS

Interest income 1 1 1333 Interest epense 1 11

N

inancial Instruments Impairment charges 131 N F I I

ther income 3 11 11 T

perating epenses 3313 3

P

Ta charge 3 13 P

O Change in CI financial assets 1 1 T

D inal dividends

The financial statements on pages to were authorised and approved for issue by the oard of irectors on F and were signed on its behalf by

………………………………….. …………………………….…….. M T S M C I C D

T

20

19 TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

………………………………….. …………………………………….. . .

.

21

20

…………………………………….. . …………………………………….. .

22 22

LIMITED

LIMITED

. .

COMPANY COMPANY

20 20

DECEMBER, 20 DECEMBER, DECEMBER, 20 DECEMBER,

ST ST

D 31 D 31

……..

……..

TANZANIA MORTGAGE REFINANCE TANZANIA FINANCIAL AUDITED STATEMENTS THE FOR YEAR ENDE AUDITED FINANCIAL FINANCIAL AUDITED STATEMENTS THE FOR YEAR ENDE TANZANIA MORTGAGE REFINANCE TANZANIA

…………………………… . …………………………… .

21 TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

………………………………….. …………………………………….. . .

.

23

22 TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

. .

. . . . . . .

. . . .. . .

• .

• .. .. .

24

23 TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

• . .

. • – . • . • . • . • . • .

. . . . .

25

24 TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

26

25 TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

primary economic environment in which the entity operates (‘the functional currency’), which is

Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as

27

26 TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

epreciation is calculated on a straight line basis, to write down the cost of each asset, to its residual value over its estimated useful life using the following annual rates easehold improvements omputers equipment ffice equipment ffice furniture otor vehicle

he assets residual values and useful lives are reviewed, and adusted if appropriate, at each statement of financial position date An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount ains and losses on disposal of equipment are determined by comparing the proceeds with the carrying amount and are taen into account in determining profit before ta

omputer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software hese costs are amortised over their estimated useful lives which are estimated to be three () years

t the end of each reporting period, the ompany reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss f any such indication eists, the recoverable amount of the asset is estimated in order to determine the etent of the impairment loss (if any)

An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use or the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cashgenerating units)

onfinancial assets that suffered impairment are reviewed for possible reversal of the impairment at each statement of financial position date

28

27 TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

. inancial assets and liabilities are recognised when the ompany becomes a party to the contractual provisions of the instrument. anagement determines all classifications of financial assets at initial recognition.

The ompanys financial assets which include mortgage refinance loans government securities investment securities and other receivables fall into the following categories

- inancial assets with fixed or determinable payments that are not uoted in an active maret. uch assets are classified as current assets where maturities are within months of the statement of financial position date. All assets with maturities greater than months after the statement of financial position date are classified as noncurrent assets. uch assets are carried at amortied cost using the effective interest rate method. hanges in the carrying amount are recognied in the statement of profit or loss and comprehensive income.

- Amortied cost is an investment classification category and accounting method which reuires financial assets classified under this method to be reported on balance sheet at their amortied cost which euals their initial acuisition amount less principal repayment plusminus amortiation of discountpremium if any plusminus foreign exchange differences if any less impairment losses if any.

- inancial assets that are held for collection of contractual cash flows and for selling the assets, where the assets’ cash flows represent solely payments of principal and interest and are not designated at are measured at fair value through other comprehensive income . ovements in the carrying amount taen through except for the recognition of impairment gains or losses interest revenue and foreign exchange gains and losses on the instrument’s amortized cost which are recognied in profit or loss. hen the financial asset is derecognied the cumulative gain or loss previously recognized in OCI is reclassified from equity to profit or loss and recognized in ‘Net nvestment Income’.

urchases and sales of financial assets are recognised on the trade date i.e. the date on which the ompany commits to purchase or sell the asset.

inancial assets are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. inancial assets carried at fair value through profit or loss are initially recognised at fair value and transaction costs are expensed in the statement of profit or loss and comprehensive income.

29

28 TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

. inancial assets are derecognised when the rights to receive cash flows from the assets have epired or have een transferred and the Company has transferred sustantially all riss and rewards of ownership.

financial asset is impaired if its carrying amount is greater than its estimated recoverale amount. Impairment of financial assets is recognised in the income statement under administrative epenses when there is oective evidence that the Company will not e ale to collect all amounts due per the original terms of the contract. ignificant financial difficulties of the issuer, proaility that the issuer will enter anruptcy or financial reorganisation, default in payments and a prolonged decline in fair value of the asset are considered indicators that the asset is impaired.

usequent recoveries of amounts previously written offimpaired are credited to the statement of profit or loss and comprehensive incomestatement of changes in equity in the year in which they occur.

ains and losses on disposal of assets whose changes in fair value were initially recognised in the income statement are determined y reference to their carrying amount and are taen into account in determining operating profit loss. On disposal of assets whose changes in fair value were initially recognised in equity, the gainslosses are recognised in the reserve, where the fair values were initially recognised. ny resultant surplusdeficit after the transfer of the gainslosses are transferred to retained earnings.

Changes in fair value for availaleforsale financial assets are recognised in other comprehensive income, ecept for impairment losses measured as the difference etween the acquisition cost and the current fair value, less any impairment loss on that asset previously recognised in profit or loss, which are recognised in the statement of comprehensive income. In the year of sale, the cumulative gain or loss recognised in other comprehensive income is recognised in the statement of profit or loss and comprehensive income as a reclassification adustment

anagement classifies financial assets as follows he Company classifies its financial assets in the following measurement categories • hose to e measured susequently at fair value either through OCI or through profit or loss, and • hose to e measured at amortized cost.

The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the cash flows.

30

29 TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

. o assets easued at fai alue ains and losses ill eithe be ecoded in pofit o loss o o inestents in euity instuents that ae not held fo tadin this ill depend on hethe the oup has ade an ieocable election at the tie of initial econition to account fo the euity inestent at fai alue thouh othe copehensie incoe The opany eclassifies debt inestents hen and only hen its business odel fo anain those assets chanes

oenent secuities ae cateoied in to oups • as the opany has the intention and ability to hold these to atuity These ae caied at aotied cost • as the opany has the intention fo both to hold financial assets in ode to collect contactual cash flo and sell

nestent secuities othe eceiables and otae efinance loans ae classified as loans and eceiables and ae caied at aotied cost

. The opanys financial liabilities hich include loans and booins and tade and othe payables fall into the folloin cateoy

These include tade and othe payables and loans and booins These ae initially easued at fai alue and subseuently easued at aotied cost usin the effectie inteest ate ethod

ny diffeence beteen the poceeds net of tansaction costs and the edeption alue is econied as inteest epense in the stateent of pofit o loss and copehensie incoe unde finance costs usin the effectie inteest ate ethod ooins ae initially econied at fai alue net of tansaction costs incued and ae subseuently stated at aotied cost ny diffeence beteen the poceeds net of tansaction costs and the edeption alue is econied as inteest epense in the stateent of pofit o loss and copehensie incoe unde finance costs

ees associated ith the acuisition of booin facilities ae econied as tansaction costs of the booin to the etent that it is pobable that soe o all of the facilities ill be acuied n this case the fees ae defeed until the dan don occus f it is not pobable that soe o all of the facilities ill be acuied the fees ae accounted fo as pepayents unde tade and othe eceiables and aotied oe the peiod of the facility

31

30 TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

. ll financial liabilities ae classified as cuent liabilities unless the opany has an unconditional iht to defe settleent of the liability fo at least onths afte the stateent of financial position date inancial liabilities ae deeconied hen and only hen the opanys obliations ae dischaed cancelled o epied inancial assets and liabilities ae offset and the net aount pesented in the stateent of financial position hen thee is a leally enfoceable iht to offset the aounts and thee is an intention to settle on a net basis o ealie the asset and settle the liability siultaneously The opany assesses on a foad looin basis the epected cedit losses associated ith its debt instuents caied at aotised cost and The ipaient ethodoloy applied depends on hethe thee has been a sinificant incease in cedit is The ta epense fo the yea copises of cuent and defeed ta Ta is econied in stateent of pofit o loss and copehensie incoe ecept hen it elates to ites econised in euity n this case the ta is also econised in euity uent ta is poided on the esults fo the yea adusted in accodance ith ta leislation efeed ta is poided usin the liability ethod fo all tepoay diffeences aisin beteen the ta bases of assets and liabilities and thei cayin alues fo financial epotin puposes uently enacted ta ates ae used to deteine defeed ta efeed ta assets ae econised only to the etent that it is pobable that futue taable pofits ill be aailable aainst hich tepoay tiin diffeences can be utilied eases as issued in anuay and applies to annual peiods beinnin on o afte anuay The standad eplaces eases especially the classification of leases into peatin leases and inance leases nde this standad thee is no distinction beteen opeatin and finance leases and a copletely ne lease accountin odel is intoduced that euies lessees to econie all leases on balance sheet ecept fo shot te leases and leases of lo alue assets

32

31 TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

When the is the lessee under Finance lease, the ‘Right of Use Asset’ and the lease liability should initially be easured at the resent alue of the iniu lease ayents he discount rate used to deterine resent alue should be the rate of interest ilicit in the lease, or if cannot be deterined, the increental borroing rate shall be alied Right of Use Asset ould also include • Any ayent ade to lessor at, or before, the coenceent date of the lease, less any lease • Any initial direct costs incurred by the Bank • An estiate of any costs to be incurred by the lessee in disantling and reoing the underlying asset, or restoring the site on hich it is located he Right of use asset ill be subseuently dereciated oer the shorter of the useful life of asset and the lease ter, unless the title to the asset transfers at the end of the lease ter, in hich case dereciation is oer the useful life n the other hand, the lease liability is effectiely treated as financial liability hich is easured at aortied cost, using the rate of interest ilicit in the lease or increental borroing rate as the effectie interest rate he oany and its eloyees contribute to the ublic erice ocial ecurity Fund F and ational ocial ecurity Fund F, statutory defined contribution schees he oanys contributions to this defined contribution schee are charged to the stateent of rofit or loss and corehensie incoe in the year to hich they relate rdinary shares are classified as euity uity instruents are easured at the fair alue of the cash or other resources receied or receiable, net of the direct costs of issuing the euity instruents loyee entitleents to gratuity and long ter serice aards are recognied hen they accrue to eloyees A roision is ade for the estiated liability for such entitleents as a result of serices rendered by eloyees u to the stateent of financial osition date he estiated onetary liability for eloyees accrued annual leae entitleent at the stateent of financial osition date is recognied as an eense accrual Funds fro the World Bank and oernent funds are reorted as oernent grants and recognied hen there is reasonable assurance that the oany ill coly ith the conditions attached to the and the grants ill be receied in order to coly ith the disclosure reuireents of nternational Accounting tandard A

33

32 TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

erating grants are recognied in the stateent of rofit or loss and corehensie incoe on a systeatic basis oer the eriods in hich the entity recognies as eenses the related costs for hich the grants are intended to coensate his relates to a resere set aside by the oany fro retained earnings aroed by Board of irectors in to coer the oany fro arious risks and unforeseen losses iidends on ordinary shares are recognied as a liability in the year in hich they are declared roosed diidends are accounted for as a searate coonent of euity until they hae been declared at an annual general eeting i A court disutes for coensation of illion has been filed by a forer eloyee of the oany for an alleged breach of contract and rongful terination of eloyent Although the outcoe of these atter cannot be redicted ith certainty, and ight be resulted unfaourably to the oany, anageent has no reason to beliee that the disosition ill hae a aterially aderse effect on the financial osition of the oany ii An alication for ta anesty in relation to A enalty and interest for reious years financial year to as subitted to RA during anesty eriod on th oeber, o date RA is yet to grant R ith a aier reuested anageent is still folloing u closely ith RA to close this ta disute anageent is confident that the anesty ill be granted as it as subitted in tie he liability is due to nonfiling of A returns by R here alication for deregistration had been subitted by the coany as it as erroneously registered for A hile financial institutions ere not A registered agent by then he aount of ta anesty on A enalty and interest alied is illion Where necessary, coaratie figures hae been adusted to confor to changes in resentation in the current year

ear itnessed oid outbreak hich led to reduced business actiities in the financial sector as and financial institutions took a caution oe in their lending actiities including ortgage lending here is inadeuate data on the iact of oid on financial institutions but coany initial assessent indicates the andeic does not hae a direct iact on the financial osition of the coany as at eceber As a result, no adustents hae been ade in the financial stateents

34

33 TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

oeer, gien the uncertainty oer hen the andeic ill be oer, it is eected that significant iact on the econoy ill be eerienced orldide including businesses hich hae been financed by the coany As such, anageent in consultation ith the Board of irectors, has ut in lace strategies aied at iniiing the iact of the andeic ey challenges of oid eected in the ortgage arket and R business erforance include otential decline of the s oerall loan book decline of the ortgage book increase in onerforing loans of the total loan book increase in for ortgage and delays in origination of ne loans ther otential iacts include R business slo don as a result of reduced caital arket actiities hich ill iact R ability to issue bonds R ostoned its third tranche issuance delays in discussion with DFI’s and to access new concessionary line of credit; reduced demand for R funding and reduced aetite by s on lending to ortgage roduct he aboe challenges are eected to result in slo or absence of R groth and stagnation reduction in R rofitability

35

34 TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

.

Interest income on mortae refinance and refinance loans Interest income on oernment securities ote Interest income on inestment securities Interest income on staff loans .

Interest eense on T ororate Bond Interest eense on loan from Bank of Tanzania . oan facilitation fees ainoss from assets disosal aital rants amortization ote eenue rants amortization taff costs ote Trael eenses eal costs udit fees Bank chares and commissions Brokerae commission Forein echane loss Dereciation on euiment ote a Dereciation chare of rihtofuse assets ote mortisation of intanile assets ote ffice rent Telehone and fa Insurance arketin and communication onsultancy fees IT license fees emershi fees Finance ost on ease ther oeratin eenses chedule

36

35 TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

alaries and waes ocial security costs defined contriutions roision for ratuity kills and Deeloment ey D orkers omensation Fund F eae eense taff elfare Trainin eenses edical eenses

. urrent ta urrent year rior eriod IF Deferred ta chare ote

The ta on the comanys rofit efore ta differs from the theoretical amount that would arise usin the asic rate as follows rofit efore ta Ta calculated at a ta rate of Ta effect of dustment IF ermanently disallowed eenditure Deferred ta release on ualifyin caital eenditure

The normal rocedure for areein final income ta liaility in Tanzania inoles the comany filin its final income ta returns with the Tanzania eenue uthority T followed y T erformin their own reiew of the comanys sumissions and issuin their notice of income ta assessments to the comany The final income ta liaility as determined y T after their reiew may differ from the liaility determined y the comany and rocedures are in lace for the comany to oect and aeal aainst such assessments It is common that a timeframe from the comanys own sumission of its final ta returns and for T erformin their reiew and issuin of notice of final ta assessment may take seeral months or years

37

36 TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

.

ash in hand ash at ank

For the urose of the statement of cash flows the yearend cash and cash euialents comrise the followin;

Financial assets with maturity of less than days ote ess Imairment loss allowance note

The comany is minimally eosed to credit risk on cash and ank alances as these are held with sound financial institutions

The carryin amounts of the comanys cash and cash euialents are denominated in Tanzania hillins and dollar

. oernment ecurities at armortized costs oernment ecurities at FI ccrued interest ess Imairment loss allowance note

aturin within a year aturin within years aturin within years aturin within years aturin within years aturin after years

38

37 TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

.

Inestment in oernment securities is made u of oernment ecurities at amortized costs and oernment ecurities at FI eistin as at year end and accrued interest as at Decemer comuted usin effectie interest rate for ecurities at amortized costs and market alue for securities at FI These inestments are denominated in Tanzanian hillins and attracted a weihted aerae on yield interest rate of er annum durin the year t start of year dditions edemtions Interest earned ote Interest receied t end of year

Deosits with financial institutions at cost ccrued interest ess Imairment loss allowance note

lacements with other anks are made u of inestments in fied deosits made with anks durin the year ccrued interest comrises of interest earned ut not receied as at the year end The fied deosit inestments denominated in Tanzania hillins attracted a weihted aerae interest rate of er annum durin the year

t start of year dditions edemtions

t end of year ote ii

s at year end lacement with other anks are denominated in the followin currencies Tanzania hillin

There were no ains or losses arisin from the disosal of financial assets durin the year ended Decemer as all these were disosed off at their redemtion dates

39

38 TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

.

In the oinion of the directors the carryin amounts of oernment securities at amortized cost aroimate to their fair alue

oernment securities at armortised cost can e analysed as follows aturity within days aturity after days

one of the financial assets classified as is either ast due or imaired

oement in oernment securities at amortised cost with maturities after days

t the start of the year et of additions and redemtions durin the year

t the end of the year

redit risk rimarily arises from chanes in the market alue and financial staility of resectie anks The directors are of the oinion that the comanys eosure is limited ecause the det is held with sound financial institutions and it is widely held

anaement monitors the credit uality of financial assets y

● discussions at management and Board meetings; ● reference to external historical information available; and ● discussions with the company`s investment advisors.

The maimum eosure to credit risk as at the reortin date is the carryin alue of the financial assets as disclosed aoe

T eulation reuires T to not inest more than of its financial resources in Treasury onds and fied deosits s at year end the total inestment in treasury onds and fied deosits was

40

39 TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

. Tanzania ortae efinance omany imited T offers two roducts namely refinance and re finance loans to its memer anks which are rimary ortae enders

i efinancin loans are secured aainst first ranked fied chare deentures and a first ranked floatin charge specific debenture in favour of TMRC over specified member bank’s mortae loan ortfolios to coer for no less than of alue of the refinance loans

ii refinancin loans are secured on a ortfolio of Treasury Bonds with coerae ratio of and minimum remainin tenor loner than the maturity of the resectie Treasury Bonds years from disursement date are reuired to effect leal transfer of the Treasury Bonds leded to T as collateral to T D account The transfer must e effected rior to disursement of funds must maintain an onoin coerae ratio of

ortae refinance refinance loans ccrued Interest ess Imairment loss allowance note

41

40 TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

. The compan has issued mortgage refinance and prefinance oans to the fooing banks as at ear end

ania ank imited – refinance ania ank imited prefinance ank of frica Tanania imited refinance ank of frica Tanania imited prefinance im ank Tanania imited refinance im ank Tanania imited prefinance C Commercia ank c refinance ancC imited – refinance ancC imited prefinance CR ank c refinance CR ank c prefinance M ank T imited refinance M ank T imited prefinance C ank T imited –refinance C ank T imited prefinance M ank c – refinance M ank c prefinance arcas ank T imited refinance arcas ank T imited prefinance Commercia ank of frica imited refinance Commercia ank of frica imited prefinance C ank Tanania imited prefinance irst ationa ank Tanania imited refinance The eopes ank of anibar imited prefinance Mkomboi Commercia ank c prefinance tanbic ank Tanania imited refinance irst ousing inance Compan ccrued interest ess mpairments

42

41 TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

. .

43

42 TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

. .

44

43 TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

. .

45

44 TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

.

46

45 TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

. .

47

46 TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

.

48

47 TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

.

49

48

50

LIMITED

COMPANY

20

DECEMBER, 20 DECEMBER,

ST

D 31

AUDITED FINANCIAL FINANCIAL AUDITED STATEMENTS THE FOR YEAR ENDE TANZANIA MORTGAGE REFINANCE TANZANIA

.

49

51

LIMITED

COMPANY

20

DECEMBER, 20 DECEMBER,

ST

D 31

TANZANIA MORTGAGE REFINANCE TANZANIA AUDITED FINANCIAL FINANCIAL AUDITED STATEMENTS THE FOR YEAR ENDE

.

50 TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

.

52

51 TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

.

.

.

53

52 TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

.

54

53 TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

.

55

54 TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

.

.

56

55 TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

. .

57

56 TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

.

58

57 TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

.

59

58 TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

. .

.

60

59 TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

.

.

61

60 TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

.

Interest income derived from member banks (Note 1)

.

.

62

61 TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

. The Company’s activities expose it to a variety of financial risks: market risk (including interest rate risk), credit risk and liuidity risk. The Company’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company’s financial performance. isk management is carried out by the management under policies approved by the oard of directors. anagement identifies, evaluates and hedges financial risks in close cooperation ith various departmental heads. The board provides ritten principles for overall risk management as ell as ritten policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk and investment of excess liuidity.

Credit risk arises from cash and cash euivalents, derivative financial instruments and deposits ith banks and financial institutions, as ell as credit exposures to customers, including outstanding receivables. anagement assesses the credit uality of the customer, taking into account their financial position, past experience, loan securities and other factors. one of the financial assets that are fully performing has been renegotiated in the year. xposure to this risk has been uantified in each financial asset note in the financial statements along ith any concentration of risk.

The Company is not exposed to interest rate risk as the financial instruments are at fixed interest rate. The Company is exposed to foreign currency risk on its investment in nited tates ollar fixed deposits only. The net impact on the movement in exchange rates ould not be significant to the Company.

Cash flo forecasting is performed by the finance department of the Company by monitoring the Companys liuidity reuirements to ensure it has sufficient cash to meet operational needs hile maintaining sufficient headroom on its undran committed facilities at all times so that the Company does not breach the borroing limits or covenants on any of its borroing facilities. rudent liuidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adeuate amount of committed credit facilities and the ability to closeout market positions. ue to the dynamic nature of the underlying business, the Companys management maintains flexibility in funding by maintaining availability under committed credit lines.

63

62 TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

. The Companys obectives hen managing capital are: To provide an adeuate return to shareholders by pricing products and services commensurate ith the level of risk

To safeguard the entity’s ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders To maintain a strong asset base to support the development of business and To maintain an optimal capital structure to reduce the cost of capital.

The Company sets the amount of capital in proportion to risk. The Company manages the capital structure and makes adustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. n order to maintain or adust the capital structure, the Company may adust the amount of dividends paid to shareholders, return capital to shareholders, issue ne shares, or sell assets to reduce debt. The Company monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by capital. et debt is calculated as total debt (as shon in the statement of financial position) less cash and cash euivalents. Capital comprises all components of euity (i.e. share capital and retained earnings).

The gearing ratios as at st ecember, and ere as follos:

Total borroings (ote ) ,, ,, ess: cash and cash euivalents (ote ) , ,, et debt ,, ,, Total euity ,, ,,

The Companys borroings are composed of interest bearing loans from ank of Tanzania and TC Corporate bond. Total euity is made of member banks and nonbanks contributions to capital adusted by profit for the year.

64

63 TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

.

T T egulations reuires the opany to aintain at all ties a iniu core capital of not less than T billion or such higher aount as T ay deterine s at year end, the core capital of the opany as T billion T billion

The egulations further reuire T to aintain at all ties a iniu core capital to the value of its riseighted assets and off balance sheet eposures of not less than and a iniu ratio of total capital to the value of its riseighted assets and off balance sheet eposures of not less than The respective ratios at the stateent of financial position date ere each each respectively

. Tanania ortgage efinance opany iited T as incorporated in Tanania under the Tanania opanies ct, as a private liited liability opany and is doiciled in Tanania

. uring the year ended st eceber, the copany revised ipairent tool calculator hich ipacted the opening balance of the ipairent losses recognised in financial stateent aounting to T illion ote The deferred incoe ta adustents includes the provisioning of reversed ipairent loss for and the correction of error on coputation of ight of se on lease aounting to T illion ote b

harge for the year , , eversal of revious ears pairents , ver epensed lease finance cost , , ,

65

64 TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

.

evaluation urplus ight of se , , ease iability , , rovisions , , ,

epreciation charge for the year , , dditions , , , eversal of easehold proveents , ,

dd, et arrying ount , , dd, , , ess nitial ecognition , , ess ccuulated epreciation to , , ess epreciation for on , , dd epreciation , , ,

66

65 TANZANIA MORTGAGE REFINANCE COMPANY LIMITED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2020

taff costs ote b ,, ,, Travel epenses , , egal costs , , udit fees , , epreciation on euipent ote a , , epreciation charge for the year ote b , , ortisation on intangible assets ote , ,

ourier and postages , ail and ebsite developent epair and aintenance of otor vehicles , epair and aintenance of office euipent , , ondolences and burial epenses , , tationeries and consuables , , ehicle running epenses lectricity epenses , , uel epenses , , ffice cleaning epenses espaper and publications , , ffice security services , , T uipents aintenance , , epair and aintenance of office furniture aring ees , ffice sundry and snacs , , usiness license fees and returns ther oard eeting epenses , , ecruitent costs , Transport epenses , , nternet epenses , , ifts and donations , ubscriptions ees , , tatutory levy and fees , , ccounting oftare icense ees , ,

67

66 67