ANNUAL REPORT 2013 Centenary Bank Won the Silver Award - Financial Reporting in Uganda ANNUAL REPORT 2013 Table of Contents Page

ANNUAL REPORT 2013 Centenary Bank won the Silver Award - Financial Reporting in Uganda ANNUAL REPORT 2013 Table of Contents Page List of Acronyms 5 Vision, Mission, Strategy and Ownership 7 Board of Directors 10 Corporate Governance 13 Financial Definitions 22 Performance Against Financial Objectives 23 Financial Highlights 24 Operational and Financial Review 25 Directors’ Report 33 Directors’ Responsibility for Financial Reporting 35 Chairman’s Statement 36 Report of Independent Auditors 38 Financial Statements Statement of comprehensive income 40 Statement of financial position 41 Statement of changes in equity 42 Statement of cash flows 44 Notes to the financial statements 44-103 Sustainability Report 105 Bank Contact Information 130 Executive Management 131 Branch Network 132 4 Centenary Bank Annual Report 2013 List of Acronyms ABI aBi Finance Ltd ACF Agricultural Credit Facility ALCO Asset and Liability Committee ATM Automated Teller Machines BOU Bank Of Uganda CBS Core Banking System EaR Earnings at Risk EIB EAC MF Loan European Investment Bank East African Community Microfinance Loan EIB PEF European Investment Bank Private Enterprise Finance Facility IAS International Accounting Standards ICT Information and Communication Technology IFRS International Financial Reporting Standards KCCA Kampala City Council Authority N.S.S.F National Social Security Fund NPAT Net Profit After Tax P.A.Y.E Pay As You Earn ROA Return on Assets ROE Return on Equity RSA Interest Rate Sensitive Assets RSL Interest Rate Sensitive Liabilities SIDI Solidarite’ Internationale pour le Development et l’ investissement SOCI Statement of Comprehensive Income SOFP Statement of Financial Position Centenary Bank 5 Annual Report 2013 Centenary Bank was voted as the Best Ugandan Bank at the People’s Choice Quality Awards Vision, Mission, Strategy and Ownership Our Vision: “To be the best provider of Financial Services, especially Microfinance in Uganda.” Our Mission Statement: “To provide appropriate financial services especially microfinance to all people in Uganda, particularly in rural areas, in a sustainable manner and in accordance with the law.” Our Values: • Superior customer service • Integrity • Teamwork • Professionalism • Leadership • Excellence • Competence Centenary Bank 7 Annual Report 2013 Strategy Centenary Bank (the Bank) has continued its growth momentum in terms of profitability and total assets. This has been reached through its continued focus on strategy execution. The Bank has continued to live up to its purpose through the provision of microfinance services and this will remain the focus for the coming 3-5years. However, to reduce business risks, the Bank diversified its activities to include lending to small, medium size enterprises and large corporations to reach the middle and higher-end markets in order to provide services to sectors that are complimentary to its target markets and customers. The Bank has in place the infrastructure and systems that promote efficiency and improve customer service. The bank opened several delivery channels including CenteMobile. In the period under review and as per the plans, the Bank opened eight new service channels (four service centers and four offsite ATMs); thus increasing its footprint in the country. Mapeera House continues to increase the Bank’s brand visibility with a wing catering for high end customers who are served at the Platinum and more services accessed at Lugogo Branch. The Bank continues to improve on its processes to reduce on Turnaround Time through process refining. In 2013 the Bank increased its growth in deposits and loans. The Bank continues to participate in the Government’s poverty alleviation programmes to help improve the living conditions of the rural poor through loan products such as Home Improvement Loans and Salary Loans as well as through various savings schemes to promote the saving culture. The Bank will continue to find ways to serve rural customers in a better and more efficient manner and will also continue to strive to reinforce its number one position in rural banking and microfinance services. During the same year, the Bank embarked on a key process of replacing its core banking system which will support new products and improve on service delivery. Communication remains a key component in strategy execution supported with existing structures and systems and there is an increasing unity of staff through centefusion and an electronic information SharePoint that is available to all staff, in addition to the use of email. Staff are motivated to achieve the objectives in the strategic plan through shared values. In summary, the Bank will continue to pursue its strategic objectives under a global and local operat- ing environment. 2014 remains positive and the Bank is confident that it will maintain and increase its market share through opening up new strategic delivery channels, rolling out more electronic products, getting on agency banking and ensuring that customer service is upheld. 2014 is a year of increasing productivity and efficiency through increased automation and outsourcing non-core business activities and that will translate into better customer experience. The Bank will lev- erage on Telecom platforms that will see us increase financial inclusion of the rural poor, thus achieving the Bank’s dream of being “the bank for all Ugandans”. Outlook for the Year 2014 and beyond The Bank anticipates a stable macroeconomic environment. Inflation is forecast to remain under con- trol due to expected favorable conditions. The exchange rates are expected to be more stable due to increasing efforts by government to encourage export of more goods and services. The Bank plans to achieve operational excellence by optimizing the allocation of the Bank’s scarce human and financial resources through improved efficiencies. The Bank plans to optimize costs in order 8 Centenary Bank Annual Report 2013 to achieve better cost income ratio and to simplify and refine processes for better turnaround time. The Bank expects to increase its revenue through the growth of non-funded income and its loan base by a combination of increased deposit growth and external borrowing. Going forward the Bank is determined to improve customer satisfaction through customer segmen- tation and improved service delivery and new products. The Bank aims to increase its market share especially in the micro finance sector through linkage banking initiatives and strategic partnerships. The Bank will continue to empower its employees to drive the Bank`s business through training, better employee relationship programmes, effective methods of internal communication and the development of a culture of execution and accountability. The Bank is set to renew its core banking software as well as deliver an efficient IT platform for its customer service. Ownership The Catholic Dioceses of Uganda 38.5% The Registered Trustees of the Uganda Episcopal Conference 31.3% SIDI 11.6% Stichting Hivos-Triodos Fonds 18.3% Individuals 0.3% Total 100% 18.6% 0.3% 38.5% 11.6% Catholic Dioceses The Registered Trustees of the Uganda Episcopal Conference SIDI Stichting Hivos Triodos 31.3% Shareholders • The Catholic Dioceses, which are all independent legal personalities as Registered Trusteeships, are: Arua, Fort Portal, Gulu, Hoima, Jinja, Kabale, Kasana-Luwero, Lugazi, Kampala, Kasese, Koti- do, Lira, Masaka, Mbarara, Mityana, Moroto, Nebbi, Soroti, and Tororo. • Registered Trustees of the Uganda Episcopal Conference. • SIDI-Solidarite’ Internationale pour le Development et l’Investissement (International Solidarity for Development and Investment) based in France. • STICHTING HIVOS-TRIODOS FONDS. An investment fund, specializing in investing in microfinance and trade finance, managed by Triodos Investment Management in the Netherlands. • Individual shareholders (4 individuals). Centenary Bank 9 Annual Report 2013 Board of Directors The Directors who held office during the year were as follows: - Prof. John Ddumba Ssentamu - Board Chairman Mr. Fabian Kasi - Managing Director Dr. Simon M.S. Kagugube - Executive Director Mr. Jacco Minnaar - Member (Chairman ALCO Committee) Mr. Kimanthi Mutua - Member (Chairman Risk & ICT Strategy Committee) Dr. Peter Ngategize - Member (Chairman Credit Committee) Mr. Henry Kibirige - Member (Chairman Audit Committee) Mr. Andrew Obol - Member (Chairman Compensation and Human Resources Committee) Mt. Rev. Dr. Cyprian K. Lwanga - Member Mt. Rev. Paul Bakyenga - Member Mr. Rene Ehrmann - Member 10 Centenary Bank Annual Report 2013 The Executive Management Mr. Fabian Kasi Dr. Simon M. S. Kagugube Mrs. Peninnah Kasule Mr. Godfrey By ekwaso Managing Director Executive Director Company Secretary General Manager - Finance Mr. Joseph Kimbowa Mrs. Beatrice Lugalambi Mr. Joseph Lutwama Mr.s. Florence Mawejje General Manager - Operations General Manager - Business General Manager - Credit General Manager-Human Development & Marketing Resource Mr. Denis Echeru Mr. Arnold Byansi Mr. George K. Thogo General Manager - Risk General Manager-Coperate Mr. Micheal Nyago General Manager - Business Management & Compliance Services General Manager - Audit Technology Centenary Bank 11 Annual Report 2013 Centenary Bank won the Best Banking Services accolade in the Kampala City Traders Association (KACITA) Quality Awards for the second time 12 Centenary Bank Annual Report 2013 Corporate Governance Approach The philosophy of the Bank is that best corporate governance should be engrained and intrinsic

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