Annual Report 2014 CENTENARY RURAL DEVELOPMENT BANK LTD
Total Page：16
File Type：pdf, Size：1020Kb
CENTENARY RURAL DEVELOPMENT BANK LTD FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2014 CENTENARY RURAL DEVELOPMENT BANK LTD FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2014 2 Centenary Bank Annual Report 2014 CENTENARY RURAL DEVELOPMENT BANK LTD FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2014 We aim to provide appropriate financial services especially microfinance to all the people of Uganda particularly in rural areas. We are therefore at the forefront of increasing financial inclusion and reaching out to the unbanked population. Read our Chaiman’s Statement on page 8 Centenary Bank 3 Annual Report 2014 CENTENARY RURAL DEVELOPMENT BANK LTD FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2014 TABLE OF CONTENTS List of Acronyms 5 Vision, Mission and Ownership 6 Chairman’s Statement 8 Board of Directors 10 Managing Director’s Review 11 The Executive Management 13 Corporate Governance 14 Operational and financial review 23 Directors’ Report 30 Directors’ Responsibility For Financial Reporting 31 Report of Independent Auditors 32 Financial Statements 33 Statement of Comprehensive Income 33 Statement of Financial Position 34 Statement of Changes In Equity 35 Statement of Cash Flows 35 Notes To The Financial Statements 36 Sustainability Report 81 Bank Contact Information 98 4 Centenary Bank Annual Report 2014 CENTENARY RURAL DEVELOPMENT BANK LTD FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2014 LIST OF ACRONYMS ABI aBi Finance Ltd ACF Agricultural Credit Facility ALCO Asset and Liability Committee ATM Automated Teller Machines BCP Business Continuity Plan BCMT Business Continuity Management Team 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 Rate Sensitive Assets RSL Rate Sensitive Liabilities SIDI Solidarite’ Internationale pour le Development et l’ investissement SOCI Statement of Comprehensive Income SOFP Statement of Financial Position VSLA Village Savings and Loan Association Centenary Bank 5 Annual Report 2014 CENTENARY RURAL DEVELOPMENT BANK LTD FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2014 VISION, MISSION 01 AND OWNERSHIP Our Vision Shareholders “To be the best provider of Financial Services, espe- • The Catholic Dioceses, which are all independ- ent legal personalities as Registered Trusteeships, cially Microfinance in Uganda.” are: Arua, Fort Portal, Gulu, Hoima, Jinja, Ka- bale, Kasana-Luwero, Lugazi, Kampala, Kasese, Our Mission Statement Kotido, Lira, Masaka, Mbarara, Mityana, Moroto, Nebbi, Soroti, and Tororo. “To provide appropriate financial services especially mi- crofinance to all people in Uganda, particularly in rural • Registered Trustees of the Uganda Episcopal areas, in a sustainable manner and in accordance with Conference. the law.” • SIDI-Solidarite’ Internationale pour le Develop- ment et l’Investissement (International Solidar- Our Values ity for Development and Investment) based in France. • Superior customer service • STICHTING HIVOS-TRIODOS FONDS. An in- • Integrity vestment fund, specializing in investing in micro- • Teamwork finance and trade finance, managed by Triodos • Professionalism Investment Management in the Netherlands. • Leadership • Excellence • Competence • Individual shareholders (4 individuals). 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 Individuals 31.3% 6 Centenary Bank Annual Report 2014 CENTENARY RURAL DEVELOPMENT BANK LTD FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2014 Centenary Bank won the Bronze Award, Overall Achievement at the 2014 Financial Reporting Awards Centenary Bank 7 Annual Report 2014 CENTENARY RURAL DEVELOPMENT BANK LTD FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2014 CHAIRMAN’S denominated operating costs have been affected by the weakening shilling. The depreciation of the shilling also STATEMENT led to an increase in the Bank’s capital expenditure. The market place continues to be associated with in- creasing competition from other players and the tel- ecommunication sector. Centenary Bank is however leveraging on the platforms of telecoms to deliver its mobile Banking services through our telephone Bank- ing platform called CenteMobile. The Bank continues to enhance its e- Banking platforms. Interest rates continued to rise especially in quarter four of 2014 particularly on short tenors. The overnight rate closed the year at 10.7% while the 364 day rate closed at 13.9%. The rise in the rates was attributed to a depreciation of the shilling against other hard cur- rencies. To some extent, changes in the investor senti- ment as well as expectations on forward trends had an impact. We expect upward pressure on interest rates to continue in 2015. The increase in interest rates had an impact on our funding costs hence a decrease in the I am delighted to present the Bank’s annual re- Bank’s interest margin as reflected in the financial re- port for the year ended 31st December 2014. sults. It has been another year of strong results in the face of increasing competition and im- Return to Shareholders proved macro-economic conditions. Cente- The Bank’s basic earnings per ordinary share have in- nary Bank is a Tier–I financial institution with creased to Shs 2,952 from Shs 2,319 the previous year, a network of service delivery channels spread while return on equity (ROE) increased from 25.3% to 25.9% which is above the Industry ROE of 16.1%. across Uganda. We aim to provide appropri- Despite stiff competition in the sector, the strong per- ate financial services especially microfinance formance posted by the Bank once again demonstrates to all the people of Uganda particularly in ru- our ability to deliver substantial and sustained value for ral areas. We are therefore at the forefront of our shareholders and other stakeholders. The Bank is increasing financial inclusion and reaching out still adequately capitalized and meets all the statutory capital requirements. to the unBanked population The Bank’s Tier II capital adequacy ratio as at 31 De- The Operating Environment cember 2014 was 29.5% (2013: 28.7%) compared The Board and Management keep abreast of happenings with 12% required by Bank of Uganda and this was in the environment because the Bank’s growth entirely above the industry average of 22.2%. The Bank’s good depends on it, especially the forces of macro-economic performance and growth momentum have been driven conditions. On a positive note, 2014 headline inflation by the continued focus on microfinance, convenience declined to 1.8% from 6.7% in 2013. The main driver and affordability of the Bank’s products. of inflation in 2014 was the fall in food prices attributed to increased food supply in the domestic market. This is reflected in the modest increase in the Bank’s operating expenses. THE NUMBERS For the year under review The Uganda shilling weakened by about 9% against Return on equity Earnings per ordinary share the dollar in 2014 with much of the depreciation oc- curring in the second half of the year on the back of strong import demand coupled with low export levels, 25.9% Shs2,952 instability in some neighboring countries, low foreign direct investment and reduced remittances from the diaspora. The Bank’s balance sheet which is predomi- nantly denominated in Uganda shillings and the dollar 8 Centenary Bank Annual Report 2014 CHAIRMAN’S STATEMENT CENTENARY RURAL DEVELOPMENT BANK LTD FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2014 THE NUMBERS Corporate Social Investment Over Over Supported Education 12,500,000 Health 2,500,000 Environment 125 people benefited from the financial people were reached in the bank’s initiatives to raise Church projects and community literacy initiatives. awareness on breast, cervical and prostate cancer initiatives including construction, women programs and nutrition Corporate Social Investment spend in the energy and transport sectors, increased Centenary Bank believes in sustainability of lives and agricultural output, rebound in private sector credit the environment in which we work, so 1% of the pre- and increased foreign direct investment. 2016 is an vious year’s net profit was devoted to Corporate Social election year and it is common for uncertainties in Investment. In 2014, the Bank focused on health, edu- growth patterns to set in. cation, environment, supporting the social mission of the Church and supporting other community causes. With this macro-economic operating environment, Under education, people benefited from the financial Centenary Bank is set to continue with its growth literacy initiatives. In health, the Bank continued to drive, putting in place adequate structures and systems raise awareness on breast, cervical and prostate can- that will continue to improve customer service. We cer by contributing towards the completion of the can- will continue to consolidate the Bank’s position in the cer