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MKOMBOZI COMMERCIAL BANK PLC ANNUAL REPORT AND AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 MKOMBOZI COMMERCIAL BANK PLC ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 TABLE OF CONTENTS PAGE NUMBER Bank Information 1 Report of the Directors 2 - 10 Statement of Directors’ Responsibilities 11 Declaration by the Head of Finance 12 Report of the Independent Auditor 13 - 19 Financial statements: Statement of profit or loss and other comprehensive income 20 Statement of financial position 21 Statement of changes in equity 22 Statement of cash flows 23 Notes to the financial statements 24 - 78 MKOMBOZI COMMERCIAL BANK PLC BANK INFORMATION FOR THE YEAR ENDED 31 DECEMBER 2019 BANK INFORMATION Registered Office: Plot Number 40 Mansfield Street P.O. Box 38448 Dar es Salaam, Tanzania Main Bankers: BHF BANK Frankfurt am Main German 60302 Bockenheimer Landstrabe10 Pax-BANK eG P.O. Box 50670 Von-Werth-Street Koln, German Bank’s Lawyers: Galati Law Chambers, Plot No. 21 block k Kenyatta Road 3rd Floor, Exim bank Building Mwanza, Tanzania Maleta & Ndumbaro Advocates P.O. Box 79944 Tancot House, Ground Floor Dar es Salaam, Tanzania Bank’s Secretary: Baltazar Mbilinyi Auditor: Ernst & Young Certified Public Accountants P.O. Box 2475, 4th Floor, Tanhouse Tower Plot 34/1, Ursino South New Bagamoyo Road Dar es Salaam, Tanzania 1 MKOMBOZI COMMERCIAL BANK PLC REPORT OF THE DIRECTORS FOR THE YEAR ENDED 31 DECEMBER 2019 1. INTRODUCTION The directors submit their report together with the audited financial statements for the year ended 31 December 2019, which disclose the state of affairs of Mkombozi Commercial Bank Public Limited Company (‘’Mkombozi Commercial Bank Plc’’ or the ‘’Bank’’). 2. INCORPORATION The Bank was incorporated as a public limited liability company in Tanzania in 2007 under the Companies Act, CAP 212 of 2002. 3. VISION To be a leading Bank in addressing the growth needs of small and medium size enterprises through delivery of high quality and integrity banking services to a wide micro customer base and corporate enterprises. 4. MISSION To be a Bank that will provide high quality financial services to all sectors of the economy in a sustainable and socially responsible manner to meet stakeholders’ expectations. 5. PRINCIPAL ACTIVITIES The principal activity of the Bank is the provision of banking and related services stipulated in the Banking and Financial Institutions Act, 2006 of Tanzania. There has been no change in the principal activities of the Bank during the financial year. 6. SHARE CAPITAL STRUCTURE The Bank’s share capital structure for the year under review is shown below: - Authorized share capital TZS 50,000,000,000 comprising 50,000,000 ordinary shares of TZS 1,000 each. Called up and fully paid up share capital TZS 20,615,272,000 comprising 20,615,272 ordinary shares of TZS 1,000 each. 7. SHAREHOLDING STRUCTURE As at 31 December 2019, the shares of the Bank were held as follows: Category No of Value of shares % of shares (TZS) holding Church dioceses and affiliated institutions 5,777,708 5,777,708,000 28.0% Other institutions 2,125,907 2,125,907,000 10.3% Tanzania Episcopal Conference (TEC) 4,133,995 4,133,995,000 20.1% Individuals 8,577,662 8,577,662,000 41.6% Total 20,615,272 20,615,272,000 100.0% As at 31 December 2018, the shares of the Bank were held as follows: Name No of Value of shares % of shares (TZS) holding Church dioceses and affiliated institutions 5,486,179 5,486,179,000 26.6% Other institutions 1,795,120 1,795,120,000 8.7% Tanzania Episcopal Conference (TEC) 4,469,784 4,469,784,000 21.7% Individuals 8,864,189 8,864,189,000 43.0% Total 20,615,272 20,615,272,000 100.0% 2 MKOMBOZI COMMERCIAL BANK PLC REPORT OF THE DIRECTORS (Continued) FOR THE YEAR ENDED 31 DECEMBER 2015 8. DIRECTORS The directors of the Bank who held office during the year and to the date of this report were: Name Position Age Profession/Qualification Nationality Date appointed/ Resigned Prof. Chairperson 65 Associate Professor UDSM Tanzanian Appointed on Marcellina years Business School 31 August Mvula Holds B. Com in Accounting, 2013 Chijoriga MBA in Finance, PhD in Economics and Finance George Managing 44 Advanced Diploma in Tanzanian Appointed on Rwezaura Director years International Tax (ADIT), Post 18 Nov 2017 Shumbusho Graduate Diploma in Resigned on 1 Financial Management (IFM) May 2019 and MBA (ESAMI/MsM) Thomas Acting 36 Certified Public Accountant Tanzanian Appointed on Enock Managing years Holds Bachelor of Commerce 1 May 2019 Director (Accounting) Resigned on 17 January 2020 Respige Managing 46 Holds B. Com in Finance, Tanzanian Appointed on Kimati Director MSc in Finance 18 January 2020 Most Rev. Director 63 Arch Bishop of Dodoma Tanzanian Reappointed Beatus years Diocese on 30 May Kinyaiya Holds MA in History, BA in 2015 Geography, BA in Spiritual Theology Mr. Ayoub Director 49 Advocate of the High Court of Tanzanian Appointed on Mtafya years Tanzania and Tax Consultant 26 October Partner at Nex Law 2016 Advocates Holds LLB and LLM Mr. Robert Director 47 ICT Specialist Tanzanian Appointed on Mtendamema years Holds B. Computer Science 8 August 2018 and Master of Science in Data Communications Networks and Distributed Systems Ms Uphoo Director 48 Certified Public Accountant Tanzanian Appointed on Swai years Holds Advanced Diploma in 8 August 2018 Accountancy and Master of Business Administration Mr. Benedict Director 52 Certified Public Accountant Tanzanian Appointed on Warisianga years Holds Advanced Diploma in 9 May 2019 Sudi Accountancy Fr. Dr. Director 55 Holds Bachelor of Arts in Tanzanian Appointed on Charles years Theology, Licentiate in Canon 2 January Kitima Law and Doctorate in Laws 2019 3 MKOMBOZI COMMERCIAL BANK PLC REPORT OF THE DIRECTORS (Continued) FOR THE YEAR ENDED 31 DECEMBER 2015 8. DIRECTORS (Continued) The following directors held shares in the Bank as at the respective year-ends: Number of Name of the director shares held 2019 2018 Mr. Method Anatoli Kashonda1 N/A 4,500 Most Rev. Beatus Kinyaiya 13,574 13,574 Prof. Marcellina Mvula Chijoriga 17,000 17,000 George Rwezaura Shumbusho1 N/A 6,575 Mr. Ayoub Mtafya 6,250 - Mr. Robert Mtendamema 1,190 1,190 Mr. Marcelino Xavier Kayombo1 N/A 2,622 Total shares held by directors 38,014 45,461 1Not a director as at 31 December 2019. No director owned more than 0.3% of total issued share capital of the Bank. 9. COMPANY SECRETARY The Bank’s Secretary as at 31 December 2019 was Mr. Baltazar Mbilinyi. 10. CORPORATE GOVERNANCE The Board of Directors (the ‘’Board’’) consists of eight directors including the Managing Director. Other than the Managing Director, no director holds an executive position in the Bank. The Board has overall responsibility for the Bank, including responsibility for identifying key risk areas, considering and monitoring investment decisions, considering significant financial matters, and reviewing performance by management against business plans and budgets. The Board is also responsible for ensuring that a comprehensive system of internal control policies and procedures, which is compliant with sound corporate governance principles, is operative. The Board is required to meet at least four times a year. The Board delegates the day to day management of the business to the Managing Director who is assisted by the Bank’s Management Team. The Management Team is invited to attend Board meetings and facilitates the effective control of the Bank’s operational activities, acting as a medium of communication and coordination between the various business units. During the year, the Board held four ordinary meetings and twelve extraordinary meetings due to special activities that necessitated the Board’s deliberations. The Board meetings held during the year are as summarized below: No. Name of the director Position Total Meetings % meetings attended 1. Prof. Marcellina Chijoriga Board Chairperson 16 16 100% 2. Most Rev. Beatus Kinyaiya Director 16 15 93.8% 3. Mr. Ayoub Mtafya Director 16 14 87.5% 4. Mr. Robert Mtendamema Director 16 15 93.8% 5. Ms. Uphoo Swai Director 16 12 75.0% 6. Fr. Dr. Charles Kitima Director 16 11 68.8% 1 7. Mr. Sudi Warisianga Director 16 08 50.0% 1Was appointed on 9 May 2019 and was hence not yet a director when some of the meetings were held. 4 MKOMBOZI COMMERCIAL BANK PLC REPORT OF THE DIRECTORS (Continued) FOR THE YEAR ENDED 31 DECEMBER 2019 10. CORPORATE GOVERNANCE (Continued) The Board has three committees, that is, the Board Audit, Risk and Compliance Committee, the Board Human Resources and Operations Committee and the Board Credit Committee. Each committee has a charter to govern its roles and responsibilities as well as facilitate efficiency and effectiveness of the Board’s performance. The Bank is committed to the principles of effective corporate governance, especially recognising the importance of integrity, transparency and accountability. The Board exercised close oversight over the Bank’s operations and ensured high standards of corporate governance through its committees as shown below: The Board Audit, Risk and Compliance Committee (BARCC) is composed of the following: No. Name of director Position Total Meetings % meetings attended 1. Ms. Uphoo Swai Chairperson 10 08 80% 2. Most Rev. Beatus Kinyaiya Director 10 09 90% 3. Mr. Benedict Warisianga Sudi1 Director 10 05 50% 1Was appointed on 9 May 2019 and was hence not yet a director when some of the meetings were held. The Board Credit Committee (BCC) is composed of the following: No. Name of director Position Total Meetings % meetings attended 1. Mr. Robert Mtendamema Chairperson 23 22 95.7% 2.

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