http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/RSS.ashxAfrican Annual Reports PagesThu, 04 Jun 2009 13:18:08 +0200http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=1http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=1M LP I C O IMITED Annual Report 20082009-06-04T13:18:08+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=2http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=22 Annual Report 2008 MPICO2009-06-04T13:18:08+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=3http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=3Contents The Chairman’s Statement Corporate Governance Report of the Directors Statement of Directors’ Responsibilities Report of the Independent Auditors Balance Sheets Income Statements Statements of Changes in Equity Cash Flow Statements Notes to the Financial Statements Appendix 1 Detailed Income Statement (Company only) 46 - 47 4-7 8 11 - 12 13 14 15 16 17 - 19 20 21 - 45 The seven storey Gemini House in Lilongwe remains the largest single property in MPICO’s portfolio Annual Report 2008 3 MPICO2009-06-04T13:18:08+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=4http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=4MPICO The Chairman’s Statement During the year under review, management spent a significant amount of time realigning the business to the majority shareholder’s Old Mutual’s - philosophy. This involved audits of the company’s operations and the introduction of risk management. This new way of doing business has already started to have a positive impact on MPICO. The Reserve Bank rate remained at 15% in the year. The exchange rate also remains almost unchanged against the US dollar. Inflation during the second quarter of 2008 increased slightly to 8.2% from 8.00% in the preceding quarter. The increase was influenced by non-food inflation which rose from 9.4% to 10.4% in the first quarter of 2008. Inflation continued to rise to 9.9% as of December 2008. Annual Report 2008 THE NATIONAL PROPERTY MARKET The growth in property prices in Blantyre during the year is estimated to be between 10 -12% and 15 – 20% for Lilongwe. This is because vacant properties are a little higher in number in Blantyre than they are in Lilongwe. In the long term, property is expected to remain an attractive investment option in Malawi because, in spite of the modest growth rates, these are nonetheless above the rate of inflation. Globally, the property business has not been as resilient. It is not expected that this negative global trend will immediately affect the local property market in terms of income streams. Having said this, the global credit crunch has THE ECONOMY IN GENERAL The economy performed well in the year under review with GDP estimated to grow by 7.4%, marginally less than the growth registered in 2006 and 2007 of 7.9%. Strong growth is expected from housing and quarrying, manufacturing, information and communication, electricity and water supply, wholesale and retail trade, accommodation and food service sectors. negatively impacted the performance of the company’s shares on the Malawi Stock Exchange. The company’s share price declined from MK4.70 to MK4.30 at the close of the year. The reduction of the number of shareholders from 7,557 to 6,500 during the year is seen as the usual consolidation following an initial public offering. 42009-06-04T13:18:08+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=5http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=5Continued infrastructural development in Malawi’s major cities has helped boost urban property values. This is a view of the soon-to-be-completed highway linking Blantyre with its major Limbe suburb GROUP PERFORMANCE Turnover remained almost level at MK2.0 billion in 2008 as opposed to MK2.03 billion in 2007. As a result of the refurbishment programme, aimed at upgrading the company’s properties, total expenditure increased, albeit marginally, to MK385.1 million in 2008 from MK369.7 million in 2007. The group profit, before fair value adjustment and tax, increased by 38% over the previous year. The overall profit before tax but including fair value adjustment is MK1.581 billion. in office space, has been leased to the Malawi Government Tikwere House in Lilongwe, offering nearly 3000m2 Annual Report 2008 5 MPICO2009-06-04T13:18:08+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=6http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=6MPICO Annual Report 2008 OPERATIONS The company continued with its rehabilitation work on a number of its buildings and this is expected to continue well into the forthcoming year. The lifts in Tikwere and Gemini houses were completely overhauled during the year just ended. accounts and facilities management department are undertaking professional courses by long distance to upgrade themselves. The organisation outsources most of its non-core work and this has resulted in a leaner staff structure of only 22 members of staff. However, as the company plans to improve its property mix to include newer properties in almost all sectors of the economy, this will affect the number of its staff in the forthcoming year as the company seeks to implement new projects as well as put in place succession plans. HUMAN RESOURCES The company remains committed to training staff to improve performance. Accordingly, staff in the Nyumba Yanu, a medium density secure housing development, at Maone Park in Limbe, is a pioneering initiative in this sector 62009-06-04T13:18:08+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=7http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=7It is anticipated that there will continue to be real growth in rental income as demand for office space continues to rise. As intimated above, the company is also looking at several commercial projects including a shopping mall in Lilongwe. This awaits the results of a feasibility study. DYE MAWINDO Chairman The PTC chain leases this prime site for their main Blantyre (Peoples) shop at the southern end of Victoria Avenue Annual Report 2008 7 PROSPECTS MPICO2009-06-04T13:18:08+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=8http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=8MPICO Corporate Governance MPICO endorses the code of corporate practices and conduct recommended in the King report on Corporate Governance (‘King II Report’), and the directors are committed to the implementation of the practices contained in this report. times in 2008 to review quarterly and annual financial statements including accounting policies as well as monitoring the effectiveness of internal controls. They also assessed the risks facing the business and considered reports from auditors to the company. The auditors have unrestricted access to this committee. The members are:• StewartMalata Chairman • AndrewBarron Member • OsmanKarim Member Annual Report 2008 BOARD OF DIRECTORS The Board of directors is responsible for guiding and monitoring Malawi Property Investment Company Limited on behalf of the shareholders. In terms of the Memorandum and Articles of Association of the company, the Board consisted of six directors as at 31st December, 2008. No director has had any material interest, directly or indirectly, in any contract reviewed or approved by the Board in the year under review. The board is assisted in its duties by the following committees:• AuditCommittee • AppointmentsandRemunerationCommittee APPOINTMENTS AND REMUNERATION COMMITTEE This committee is responsible for making recommendations to the Board on the company framework of remuneration for all staff. The committee also makes recommendations to the board regarding the appointment of senior management. They met three times during the year to consider the current conditions of service and to make appropriate recommendations for change. The members are:- AUDIT COMMITTEE • AndrewBarron The committee has defined terms of reference and authority granted to it by the Board. They met four • DyeMawindo • OsmanKarim Chairman Member Member Residential property values in the main urban centres have soared in the past two years 82009-06-04T13:18:08+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=9http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=9is invested within the Capital City area, a reflection of its key, historic, role in the development of Lilongwe as Malawi’s capital Annual Report 2008 9 Nearly 50% of MPICO’s portfolio MPICO2009-06-04T13:18:08+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=10http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=10MPICO Annual Report 2008 10 Of MPICO’s properties, nearly a tenth of the total let area is leased to retail businesses in the main urban centres2009-06-04T13:18:08+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=11http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=11Report of the Directors For the year ended 31st December 2008 The directors have pleasure in presenting the consolidated Financial Statements of Malawi Property Investment Company (MPICO) Limited and its subsidiary companies for the year ended 31 December 2008. INCORPORATION AND REGISTERED OFFICE MPICO Limited is a company incorporated in Malawi under the Malawi Companies Act, 1984. It was listed on the Malawi Stock Exchange in November 2007. The address of its registered office is: Old Mutual House Robert Mugabe Crescent P.O. Box 30459, Lilongwe 3 AREAS OF OPERATION The company has 35 investment properties in the country, mainly in Lilongwe and Blantyre, which it rents out to the Government and the Private Sector. SHARE CAPITAL The authorised share capital of the company is MK60 million (2007: MK60 million) divided into 1,200,000,000 Ordinary Shares of 5 tambala each (2007: 1,200,000,000 ordinary shares of 5 tambala each). The issued capital is MK57.451 million (2007: MK57.451 million) divided into 1,149,023,730 ordinary shares of 5 tambala each (2007: 1,149,023,730 ordinary shares of 5 tambala each), fully paid. The shareholders and their respective shareholdings as at year-end were: 2008 % Old Mutual Limited General Public Lincoln Investments Limited 55.0 35.0 10.0 2007 % 55.0 33.5 11.5 PROFITS AND DIVIDENDS The directors report a net profit for the year of MK1,006 million (2007 : MK1,195 million). Final Dividend for 2007 of MK149.4 million, representing 13 tambala per share was declared and paid during the year. An interim dividend of MK80.4 million representing 7 tambala per share (2007: MK0.612 million) was declared and paid in October, 2008. Annual Report 2008 11 MPICO2009-06-04T13:18:08+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=12http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=12MPICO Annual Report 2008 DIRECTORS The following directors, appointed in terms of the company’s Articles of Association, served in office during the year: Mr S. Malata Mr O. Karim Mr J.A. Regout Mr A. Barron Mr. D. Mawindo Mr G. A. Nthinda All year All year All year All year All year All Year DIRECTORS’ INTERESTS The directors noted below hold the following ordinary shares in the company at the year-end. Mr. D. Mawindo Mr. S. Malata Mr. G. Nthinda Mr. O. Karim : : : : 43,471 shares 235, 689 shares 6,503,000 shares 38,193 shares ACTIVITIES MPICO is in the business of development, rental and management of property. It has subsidiary companies as follows: Subsidiaries of MPICO Limited Capital Developments Limited New Capital Properties Limited Capital Investments Limited Frontline Investments Limited Percentage of Control 100% 100% 50.75% 69.5% Nature of operations Development and rental of property Development and rental of property Development and rental of property Development and rental of property AUDITORS The company auditors, Deloitte, have indicated their willingness to continue in office. BY ORDER OF THE BOARD Cosmas Katulukira Company Secretary 31 December 2008 122009-06-04T13:18:08+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=13http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=13Statement of Directors’ Responsibilities The Companies Act, 1984, requires the directors to prepare financial statements for each financial year, which give a true and fair view of the state of affairs of the company and the group as at the end of the financial year and of the operating results for that year. The Act also requires the directors to ensure that the company and the group keep proper accounting records which disclose with reasonable accuracy at any time the financial position of the company and the group and enable them to ensure that the financial statements comply with the Companies Act, 1984. In preparing the financial statements the directors accept responsibility for the following: • Maintenanceofproperaccountingrecords; • Selectionofsuitableaccountingpoliciesandapplyingthemconsistently; • Makingjudgementsandestimatesthatarereasonableandprudent; • Compliancewithapplicableaccountingstandards,whenpreparingfinancialstatements;and • Preparationoffinancialstatementsonagoingconcernbasisunlessitisinappropriatetopresumethat the company and the group will continue in business. The directors also accept responsibility for taking such steps as are reasonably open to them to safeguard the assets of the company and the group and to maintain adequate systems of internal controls to prevent and detect fraud and other irregularities. The directors are of the opinion that the consolidated financial statements give a true and fair view of the state of the financial affairs of the company and of its operating results. Director Director Annual Report 2008 13 MPICO2009-06-04T13:18:08+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=14http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=14MPICO Report of the Independent Auditors For the year ended 31 December 2008 P.O Box 30364 Capital City Lilongwe 3 Malawi Public Accountants Deloitte Second Floor Old Mutual House Robert Mugabe Crescent Tel : +265 (0)1 773 699 Fax : +265 (0)1 772 276 Email : lldeloitte@deloitte.co.mw www.deloitte.com Consolidated Financial Statements 2008 TO THE MEMBERS OF MALAWI PROPERTY INVESTMENT COMPANY LIMITED We have audited the financial statements and the consolidated financial statements of Malawi Property Investment Company Limited as set out on pages 15 to 45 which comprise the balance sheet as at 31 December 2008, and the income statement, statement of changes in equity and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory notes. Management’s Responsibility for the Financial Statements Management is responsible for preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whetherduetofraudorerror;selectingandapplyingappropriateaccountingpolicies;andmakingaccountingestimates that are reasonable in the circumstances Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements give a true and fair view of the financial position of Malawi Property Investment Company Limited and of the group as of 31 December 2008, and of their financial performance and their cash flows for the year then ended in accordance with International Financial Reporting Standards and the Malawi Companies Act, 1984, so far as concerns the members of the company. 21 January 2009 Audit • Tax • Consulting • Financial Advisory • Resident Partners: N.T Uka J.S. Melrose L.L. Katandula V.W. Beza A member firm of Deloitte Touche Tohmatsu 142009-06-04T13:18:08+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=15http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=15Balance Sheets 31 December 2008 Group Notes ASSETS NON-CURRENT ASSETS Investment properties Property, plant and equipment Capital work in progress Subsidiary companies Secured staff loans Total non-current assets CURRENT ASSETS Nyumba Yanu receivable Receivables Tax recoverable Amounts due from subsidiaries Dividends receivable from subsidiaries Short-term investment Funds at call and on deposit Bank balances and cash Total current assets TOTAL ASSETS EQUITY AND LIABILITIES SHAREHOLDERS’ EQUITY Share capital Distributable reserves Non-distributable reserves Equity attributable to equity holders of the parent Minority interest Total equity NON-CURRENT LIABILITIES Severance pay provision Deferred taxation Total non-current liabilities CURRENT LIABILITIES Payables Tax payable Bank overdraft Total current liabilities TOTAL EQUITY AND LIABILITIES 2008 MK’000 2007 MK’000 Company 2008 2007 MK’000 MK’000 5&6 7 8 6,336,287 127,839 11,419 26,925 6,502,470 5,208,336 59,964 53,532 25,980 5,347,812 3,428,395 60,991 3,899 72,810 26,925 3,593,020 2,656,234 55,207 72,810 25,980 2,810,231 9 10 11 48,393 179,509 11,292 104,673 44,048 387,915 6,890,385 117,445 82,506 21,308 80,218 4,023 305,500 5,653,312 83,477 38,261 5,000 23,483 24,480 174,701 3,767,721 72,506 33,182 50,000 34,860 28,078 3,483 222,109 3,032,340 11 57,451 652,456 3,550,387 4,260,294 603,319 4,863,613 57,451 660,078 2,871,178 3,588,707 533,925 4,122,632 57,451 347,108 2,262,217 2,666,776 2,666,776 57,451 441,358 1,722,535 2,221,344 2,221,344 12 13 114,684 1,722,652 1,837,336 103,277 1,294,578 1,397,855 114,684 858,102 972,786 103,277 601,703 704,980 14 112,794 76,642 189,436 6,890,385 123,132 9,693 132,825 5,653,312 54,414 73,745 128,159 3,767,721 68,395 29,064 8,557 106,016 3,032,340 The financial statements were authorised for issue by the Board of Directors on 21 January 2009 and were signed on its behalf by: DIRECTOR DIRECTOR Consolidated Financial Statements 2008 15 MPICO2009-06-04T13:18:08+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=16http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=16MPICO Income Statements For the year ended 31 December 2008 Group Notes INCOME Rental income Increase in fair value of investment properties Profit on disposal of assets Interest receivable Dividends receivable from subsidiaries Other income Total income EXPENDITURE Property and administration expenses Provision for doubtful receivables Interest payable Total expenditure PROFIT BEFORE TAXATION TAXATION PROFIT FOR THE YEAR APPROPRIATION OF PROFIT FOR THE YEAR Distributable reserves Non-distributable reserves Amounts attributable to members of the company Amounts attributable to minority interest 901,393 105,044 1,006,437 Basic earnings per share (MK) Analysed as: - Distributable (MK) - Non-distributable (MK) 0.19 0.59 0.23 0.66 19 0.78 1,022,395 172,128 1,194,523 0.89 675,237 675,237 877,316 877,316 16 222,184 679,209 267,160 755,235 135,555 539,682 385,246 492,070 17 18 10 360,947 17,324 6,832 385,103 1,581,439 575,002 1,006,437 353,768 12,354 3,536 369,658 1,659,485 464,962 1,194,523 293,358 15,033 6,497 314,888 1,032,466 357,229 675,237 320,580 8,419 96 329,095 1,142,335 265,019 877,316 16 1,120,635 1,288 65,110 32,124 1,966,542 1,324,804 22,096 16,249 32,871 2,029,143 772,161 1,288 27,335 79,350 119,674 1,347,354 702,958 22,096 17,967 147,400 280,656 1,471,430 5 747,385 633,123 347,546 300,353 2008 MK’000 2007 MK’000 Company 2008 MK’000 2007 MK’000 Consolidated Financial Statements 2008 162009-06-04T13:18:08+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=17http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=17Statements of Changes in Equity For the year ended 31 December 2008 Attributable NonShare capital MK’000 Group For the year ended 31 December 2007 At the beginning of the year Bonus issue and scrip dividend Transfer on disposal of revalued assets Related deferred tax on disposal of revalued assets Distributable profit for the year Non-distributable profit for the year Dividends declared – Final 2006 Dividends declared – Interim 2007 At the end of the year For the year ended 31 December 2008 At the beginning of the year Distributable profit for the year Non-distributable profit for the year Dividends declared – Final 2007 Dividends declared – Interim 2008 At the end of the year 57,451 57,451 660,078 222,183 (149,373) (80,432) 652,456 2,871,178 679,209 3,550,387 3,588,707 222,183 679,209 (149,373) (80,432) 4,260,294 533,925 48,755 56,289 (17,825) (17,825) 603,319 4,122,632 270,938 735,498 (167,198) (98,257) 4,863,613 3,795 53,656 57,451 898,405 (535) 45,660 267,160 (550,000) (612) 660,078 2,201,939 (53,121) (45,660) 12,785 755,235 2,871,178 3,104,139 12,785 267,160 755,235 (550,000) (612) 3,588,707 394,397 14,761 157,367 (32,600) 533,925 3,498,536 12,785 281,921 912,602 (582,600) (612) 4,122,632 Distributable distributable reserve MK’000 reserve MK’000 to equity holders of the parent MK’000 Minority interest MK’000 Total MK’000 Consolidated Financial Statements 2008 17 MPICO2009-06-04T13:18:08+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=18http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=18MPICO Statements of Changes in Equity For the year ended 31 December 2008 NonShare Distributable capital MK’000 Company For the year ended 31 December 2007 At the beginning of the year Bonus issue and scrip dividend Transfer on disposal of revalued assets Related deferred tax on disposal of revalued assets Distributable profit for the year Non-distributable profit for the year Dividends declared – Final 2006 Dividends declared – Interim 2007 At the end of the year For the year ended 31 December 2008 At the beginning of the year Distributable profit for the year Non-distributable profit for the year Dividends declared – Final 2007 Dividends declared – Interim 2008 At the end of the year 57,451 57,451 441,358 135,555 (149,373) (80,432) 347,108 1,722,535 539,682 2,262,217 3,795 53,656 57,451 561,599 (535) 45,660 385,246 (550,000) (612) 441,358 1,316,471 (53,131) (45,660) 12,785 492,070 1,722,535 reserve MK’000 distributable reserve MK’000 (continued) Consolidated Financial Statements 2008 Total MK’000 1,881,865 (10) 12,785 385,246 492,070 (550,000) (612) 2,221,344 2,221,344 135,555 539,682 (149,373) (80,432) 2,666,776 The distributable reserve is available for distribution to shareholders as dividends. The non-distributable reserve relates to unrealised capital profits (net of related deferred tax) on valuation of investment properties and is not available for distribution in terms of the Companies Act, 1984. 182009-06-04T13:18:08+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=19http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=19Group 2008 MK’000 SHARE CAPITAL Authorised: 1,200,000,000 Ordinary shares of 5t each (2007: 1,200,000,000 Ordinary Shares of 5t each) Issued and fully paid: 1,149,023,730 Ordinary shares of 5t each (2007: 1,149,023,730 Ordinary Shares of 5t each) Total issued and fully paid share capital 57,451 57,451 57,451 57,451 60,000 60,000 2007 MK’000 Company 2008 MK’000 2007 MK’000 60,000 60,000 57,451 57,451 57,451 57,451 Consolidated Financial Statements 2008 19 MPICO2009-06-04T13:18:08+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=20http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=20MPICO Cash Flow Statements For the year ended 31 December 2008 Group Notes Cash flows from operating activities Net cash inflow Returns on investments and servicing of finance Dividends received Interest received Interest paid Dividends paid to outside shareholders Dividends paid to shareholders, including tax Net cash flow from returns on investments and servicing of finance Taxation paid NET CASH FLOW FROM/(USED IN) OPERATING ACTIVITIES Cash flow from investing activities Purchase of property, plant and equipment and additions to investment properties (including capital work in progress) Proceeds on disposal of property, plant and equipment and investment properties Movement in Nyumba Yanu receivable Staff long-term loans movement Net cash flow from (used in) investing activities Net cash flow before financing Cash flow from financing activities Intercompany loan NET CASH FLOW FOR THE YEAR CASH AND CASH EQUIVALENTS at the beginning of the year CASH AND CASH EQUIVALENTS at the end of the year 15 148,721 74,548 47,963 23,004 74,548 53,781 23,004 25,297 74,173 20,767 34,860 24,959 59,571 (2,293) 1,359 69,052 (945) 19,970 74,173 26,096 (8,151) (18,883) (133,802) 20,767 1,359 (945) (24,078) (9,901) 26,096 (18,883) (45,243) (61,864) (49,496) (132,864) (24,492) (52,456) 54,203 154,569 14,177 (16,621) (207,177) (60,270) (480,974) (401,724) (84,617) (56,149) (363,461) (106,227) 65,110 (6,832) (35,650) (229,805) 121,137 (3,536) (47,963) (550,612) 124,350 27,335 (6,497) (229,805) 127,037 60,210 (96) (550,612) 21 321,650 1,037,267 154,943 453,067 2008 MK’000 2007 MK’000 Company 2008 MK’000 2007 MK’000 Consolidated Financial Statements 2008 202009-06-04T13:18:08+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=21http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=21Notes to the Financial Statements For the year ended 31 December 2008 1. General information The main business of the Group, which is incorporated in Malawi, comprises the development, rental and management of property. The Group’s administrative office and registered office is in Old Mutual House, City Centre, Lilongwe. 2. Adoption of new and revised International Financial Reporting Standards In the current year, the Group has adopted all of the new and revised Standards and Interpretations issued by the International Accounting Standards Board (the IASB) and the International Financial Reporting Interpretations Committee (IFRIC) of the IASB that are relevant to its operations and effective for accounting periods beginning on 1 January 2008. The adoption of these new and revised Standards and Interpretations has not resulted in any changes to the Group’s accounting policies. At the date of authorisation of these financial statements, the following Standards and Interpretations were in issue but not yet effective: • I FRS8Operating Segments introduces the “management approach” to segment reporting and is effective forperiodsbeginningonorafter1January2009; • RevisedIAS23Borrowing Costs removes the option to expense borrowing costs and requires that an entity tocapitaliseborrowingcostsiseffectiveforfinancialstatementsforperiodsbeginning1January2009; • IFRIC13Consumer Loyalty Programmes addresses the accounting by entities that operate, or otherwise participate in, customer loyalty programmes for their customers. The IFRIC becomes mandatory for financial statementsforperiodsbeginningonorafter1July2008; • IAS39&IFRS7Reclassification of Financial Assets Effective for annual periods beginning on or after 1 July 2008; • IAS1(Revised2007)Presentation of Financial Statements. Effective for annual periods beginning on or after1January2009; • IAS27 Consolidated and Separate Financial Statements. Effective for annual periods beginning on or after 1July2009;and • IFRIC17Distributions of Non-cash Assets to Owners There have been new interpretations to this standard which will become effective periods beginning on or after 1 July 2009. The directors anticipate that other than IAS 1 and IAS 27, these Standards and Interpretations in future periods will have no material impact on the financial statements of the Group. IAS 1 will impact the disclosure and presentation of these financial statements while IAS 27 will have an impact on consolidation of the Group’s financial statements. Consolidated Financial Statements 2008 21 MPICO2009-06-04T13:18:08+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=22http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=22MPICO Notes to the Financial Statements For the year ended 31 December 2008 3. Significant accounting policies (continued) Consolidated Financial Statements 2008 The principal accounting policies are set out below. 3.1 Statement of compliance The financial statements have been prepared in accordance with International Financial Reporting Standards. 3.2 Basis of preparation The consolidated financial statements are prepared in terms of the historical cost convention with the exception of investment properties, which are included at valuation. No other procedures have been adopted to reflect the impact on the financial statements of specific price changes or changes in the general level of prices. 3.3 Basis of consolidation The consolidated financial statements incorporate the financial statements of the Malawi Property Investment Company Limited (MPICO) and entities controlled by MPICO. Control is achieved where the company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective dated of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by other members of the Group. All intra-group transactions, balances, income and expenses are eliminated in full on consolidation. Minority interests in the net assets (excluding goodwill) of consolidated subsidiaries are identified separately from the Group’s equity therein. Minority interests consist of the amount of those interests at the date of the original business combination and the minority’s share of changes in equity since the date of the combination. Losses applicable to the minority in excess of the minority’s interest in the subsidiary’s equity are allocated against the interest of the Group except to the extent that the minority has a binding obligation and is able to make an additional investment to cover the losses. 222009-06-04T13:18:08+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=23http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=23Property, plant and equipment are shown at cost, less related depreciation. Property, plant and equipment are depreciated on the straight line basis at rates that will reduce book amounts to estimated residual values over the anticipated useful lives of the assets as follows: Fixtures, equipment and computers Motor vehicles 5 years 4 years The assets residual values and useful lives are reviewed, and adjusted if appropriate, at every year-end. 3.5 Investment properties Investment property, which is property held to earn rentals and/or for capital appreciation, is measured initially at its cost, including transaction costs. Subsequent to initial recognition, investment property is measured at fair value. Gains or losses arising from changes in the fair value of investment property are included in profit or loss for the year in which they arise. The increase in the fair value of investment properties, net of the related deferred tax, is appropriated to a nondistributable reserve in compliance with profit distribution restrictions included in the Malawi Companies Act, 1984. In the event of disposal of the property held at fair value, the related portion of the reserve is transferred to the distributable reserve. The income statement will then report a profit or loss on disposal based on the difference between proceeds and the carrying value. A property is deemed to have been sold when formal Government consent to the sale is received. 3.6 Non-current assets held for sale Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset (or disposal group) is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification. 3.7 Taxation Income tax expense represents the sum of the tax currently payable and deferred tax. Current tax The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted by the balance sheet date. Consolidated Financial Statements 2008 23 3.4 Property, plant and equipment MPICO2009-06-04T13:18:08+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=24http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=24MPICO Notes to the Financial Statements For the year ended 31 December 2008 3. Significant accounting policies (continued) 3.7 Taxation (continued) Deferred tax Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial (continued) Consolidated Financial Statements 2008 statements and the corresponding tax bases used in the computation of the taxable profit, and are accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted at the balance sheet date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. Current and deferred tax for the year Current and deferred tax are recognised as an expense of income in the income statement, except when they relate to items credited or debited directly to equity, in which case the tax is also recognised directly in equity. 3.8 Foreign currency translation (a) Functional and presentation currency Items included in the financial statements of each of the Group’s subsidiaries are measured using Malawi Kwacha, the functional currency of the primary economic environment in which the entire Group operates. The consolidated financial statements are presented in Malawi Kwacha, which is the Group’s functional and presentation currency. (b) Transactions and balances Transactions in currencies other than Malawi Kwacha are initially recorded at the rates of exchange ruling on the dates of the transactions. Monetary assets and liabilities denominated in such currencies are retranslated at the rates ruling on the balance sheet date. Profits or losses arising on retranslation are dealt with in the income statement. 3.9 Pension fund MPICO contributes to a defined contribution pension scheme administered by Old Mutual Malawi who are also a shareholder of the company. All payments made to the scheme are charged as an expense as they fall due. 3.10 Finance costs All finance charges are taken to the income statement as and when incurred. 242009-06-04T13:18:08+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=25http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=25Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated rebates and other similar allowances. Rental income from investment properties is recognised on a straight-line basis over the term of the relevant lease. Such rental income is first recognised when an occupancy agreement with a tenant is formalised. Dividend revenue from investments is recognised when the shareholder’s right to receive payment has been established. Interest revenue is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount. 3.12 Financial assets Investments are recognised and derecognised on a trade date where the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, net of transaction costs except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value. Financial assets are classified into the following specified categories: financial assets as ‘at fair value through profit or loss’ (FVTPL), ‘held-to-maturity investments’, ‘available-for-sale’ (AFS) financial assets and ‘loans and receivables’. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. Effective interest method The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset, or, where appropriate, a shorter period. Income is recognised on an effective interest basis for debt instruments other than those financial assets designated as at FVTPL. Financial assets at FVTPL Financial assets are classified as at FVTPL where the financial asset is either held for trading or it is designated as at FVTPL. A financial asset is classified as held for trading if: • • • ithasbeenacquiredprincipallyforthepurposeofsellinginthenearfuture;or itisapartofanidentifiedportfoliooffinancialinstrumentsthattheGroupmanagestogetherandhasa recentactualpatternofshort-termprofit-taking;or itisaderivativethatisnotdesignatedandeffectiveasahedginginstrument. Consolidated Financial Statements 2008 25 3.11 Revenue recognition MPICO2009-06-04T13:18:08+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=26http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=26MPICO Notes to the Financial Statements For the year ended 31 December 2008 3. Significant accounting policies (continued) 3.12 Financial assets (continued) A financial asset other than a financial asset held for trading may be designated as at FVTPL upon initial recognition if: • suchdesignationeliminatesorsignificantlyreducesameasurementorrecognitioninconsistencythat wouldotherwisearise;or • (continued) Consolidated Financial Statements 2008 thefinancialassetformspartofaGroupoffinancialassetsorfinancialliabilitiesorboth,whichismanaged and its performance is evaluated on a fair value basis, in accordance with the Group’s documented risk managementorinvestmentstrategy,andinformationaboutthegroupingisprovidedinternallyonthatbasis; or • itformspartofacontractcontainingoneormoreembeddedderivatives,andIAS39permitstheentire combined contract (asset or liability) to be designated as at FVTPL. Financial assets at FVTPL are stated at fair value, with any resultant gain or loss recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any dividend or interest earned on the financial asset. AFS financial assets Listed shares and listed redeemable notes held by the Group that are traded in an active market are classified as being AFS and are stated at fair value. Gains and losses arising from changes in fair value are recognised directly in equity in the investments revaluation reserve with the exception of impairment losses, interest calculated using the effective interest method and foreign exchange gains and losses on monetary assets, which are recognised directly in profit or loss. Where the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously recognised in the investments revaluation reserve is included in profit or loss for the year. Dividends on AFS equity instruments are recognised in profit or loss when the Group’s right to receive payments is established. The fair value of AFS monetary assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the balance sheet date. The change in fair value attributable to translation differences that result from a change in amortised cost of the asset is recognised in profit or loss, and other changes are recognised in equity. Loans and receivables Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as ‘loans and receivables’. Loans and receivables are measured at amortised cost using the effective interest method less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables where the recognition of interest would be immaterial. 262009-06-04T13:18:08+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=27http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=27Impairment of financial assets Financial assets, other than those at FVTPL, are assessed for indicators of impairment at each balance sheet date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted. For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables where the carrying amount is reduced through the use of an allowance account. When a trade receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss. With the exception of AFS equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised. In respect of AFS equity securities, any increase in fair value subsequent to an impairment loss is recognised directly in equity. 3.13 Financial liabilities and equity instruments issued by the Group Classification as debt or equity Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement. Equity instruments An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs. Financial liabilities Financial liabilities are classified as either financial liabilities at FVTPL or other financial liabilities. Financial liabilities at FVTPL Financial liabilities are classified as at FVTPL where the financial liability is either held for trading or it is designated as at FVTPL. Consolidated Financial Statements 2008 27 MPICO2009-06-04T13:18:08+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=28http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=28MPICO Notes to the Financial Statements For the year ended 31 December 2008 3. Significant accounting policies (continued) 3.13 Financial liabilities and equity instruments issued by the Group (continued) A financial liability is classified as held for trading if: • • • ithasbeenincurredprincipallyforthepurposeofrepurchasinginthenearfuture;or (continued) Consolidated Financial Statements 2008 itisapartofanidentifiedportfoliooffinancialinstrumentsthattheGroupmanagestogetherandhasarecent itisaderivativethatisnotdesignatedandeffectiveasahedginginstrument. actualpatternofshort-termprofit-taking;or A financial liability other than a financial liability held for trading may be designated as at FVTPL upon initial recognition if: • • suchdesignationeliminatesorsignificantlyreducesameasurementorrecognitioninconsistencythatwould otherwisearise;or thefinancialliabilityformspartofaGroupoffinancialassetsorfinancialliabilitiesorboth,whichismanaged and its performance is evaluated on a fair value basis, in accordance with the Group’s documented risk managementorinvestmentstrategy,andinformationaboutthegroupingisprovidedinternallyonthatbasis; or • itformspartofacontractcontainingoneormoreembeddedderivatives,andIAS39permitstheentire combined contract (asset or liability) to be designated as at FVTPL. Financial liabilities at FVTPL are stated at fair value, with any resultant gain or loss recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability. Financial liabilities at FVTPL Financial liabilities at FVTPL are stated at fair value, with any resultant gain or loss recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability. Other financial liabilities Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period. 282009-06-04T13:18:08+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=29http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=29At each balance sheet date, the Group 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. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risk specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. Impairment losses are recognised as an expense immediately. If an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised as income immediately. 3.15 Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. Consolidated Financial Statements 2008 29 3.14 Impairment of non-financial assets MPICO2009-06-04T13:18:08+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=30http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=30MPICO Notes to the Financial Statements For the year ended 31 December 2008 3. Significant accounting policies (continued) 3.16 Share capital (a) Shares issue costs (continued) Consolidated Financial Statements 2008 Incremental costs directly attributable to the issue of new shares or options or to the acquisition of a business are shown in equity as a deduction, net of tax, from the proceeds. (b) Dividends on ordinary shares Dividends on ordinary shares are recognised in equity in the period in which they are approved by the shareholders. 4. Critical accounting judgements and key sources of estimation uncertainty The preparation of financial statements, in conformity with IFRS, requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the principal accounting policies of the company. Estimates and judgements are evaluated and based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. 4.1 Critical judgements in applying the Group’s accounting policies No critical judgements were made by the directors during the current period which would have a material impact on the financial statements. 4.2 Key sources of estimation uncertainty Valuation of investment properties Investment properties are carried at fair value in accordance with IAS 40 Investment Property. Fair values have been determined through valuations carried out by Knight Frank, qualified and registered valuers. Provision for doubtful debts Provision for doubtful debts is based upon a policy which takes into account past transaction history with debtors and projected collections. Actual collection experience may differ from the current projections. Provision for severance pay An estimate of MK115 million has been made in respect of severance pay based on the current provisions of the Employment Law and based on the assumption that employee terminations will be evenly spread between the immediate future and anticipated retirement dates. Some of these current provisions of the law are the subject of legal challenges and reviews. As such the actual amounts to be paid in future may be different. 302009-06-04T13:18:08+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=31http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=31The Group’s major source of revenue is from rental of property situated in the major cities and other places in Malawi. The following analysis shows the rental income, investment property values and property fair value movements by geographical market. GROUP Fair value Rental income 2008 MK’000 Blantyre Lilongwe Other markets Total COMPANY Fair value Rental income 2008 MK’000 Blantyre Lilongwe Other markets Total 94,538 232,082 20,926 347,546 2007 MK’000 49,268 231,952 19,133 300,353 Property values 2008 MK’000 979,856 2,232,039 216,500 3,428,395 2007 MK’000 605,475 1,861,640 189,119 2,656,234 2008 MK’000 141,281 603,480 27,400 772,161 increase 2007 MK’000 181,099 449,348 72,511 702,958 202,336 522,941 22,108 747,385 2007 MK’000 114,852 498,084 20,187 633,123 Property values 2008 MK’000 1,190,056 4,919,231 227,000 6,336,287 2007 MK’000 1,032,875 3,976,841 198,620 5,208,336 2008 MK’000 223,381 869,854 27,400 1,120,635 increase 2007 MK’000 242,152 1,006,674 75,978 1,324,804 Consolidated Financial Statements 2008 31 5. Business and geographical segments MPICO2009-06-04T13:18:08+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=32http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=32MPICO Notes to the Financial Statements For the year ended 31 December 2008 Group 2008 MK’000 2007 MK’000 Company 2008 MK’000 (continued) 2007 MK’000 Consolidated Financial Statements 2008 6. Investment properties VALUATION Freehold Leasehold Total investment properties Movements in the valuation of investment properties are set out below. VALUATION Freehold At the beginning of the year Additions Fair value adjustment Disposal of Property At the end of the year Leasehold At the beginning of the year Additions Fair value adjustment At the end of the year Total valuation 1,004,274 130,951 1,135,225 6,336,287 687,081 7,481 309,712 1,004,274 5,208,336 324,600 32,060 356,660 3,428,395 223,019 481 101,100 324,600 2,656,234 4,204,062 7,316 989,684 5,201,062 3,181,768 27,202 1,015,092 (20,000) 4,204,062 2,331,634 740,101 3,071,735 1,740,337 9,439 601,858 (20,000) 2,331,634 5,201,062 1,135,225 6,336,287 4,204,062 1,004,274 5,208,336 3,071,735 356,660 3,428,395 2,331,634 324,600 2,656,234 The registers of land and buildings are open for inspection at the registered offices of the company. Investment properties were revalued to fair value as at 31 December 2008 on the basis set out in Note 3.5 to the financial statements. The valuations were carried out by Mr. Don Whayo B.Sc., Dip (Urb. Man.) B.A. MSIM, MRICS, Chartered Valuation Surveyor, in accordance with the Appraisal and Valuation Standards laid down by the Royal Institution of Chartered Surveyors and the International Valuation Standards. 322009-06-04T13:18:08+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=33http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=33Included in the investment properties balance as at 31 December 2008 were properties encumbered as follows: 1. Lingadzi House valued at MK391 million (2007: MK333 million) The property is the subject of a charge in favour of First Merchant Bank to secure a sum of MK70 million and a further charge to secure a sum of MK30 million registered on 16 May 2003 and 29 June 2006 respectively. 2. Plot Number Bwaila 40/1 valued at MK78 million (2007: MK41 million) On 7 September 2006 the Government of Malawi issued a Vacant Land Development Order over this piece of land. The Group has been arguing that besides the fact that proper procedures were not followed in effecting the order, such an order is applicable to leasehold land only. As a result, the company contested the order in courts through its lawyers Messrs Likongwe and Company. However, during the year the courts ruled in favour of Government on the matter. The Group has appealed against the ruling. As at the time of finalising these consolidated financial statements, the issue had not yet been concluded. Due to this development, the fair value increase arising in the year has not been recognised to income and the value recognised for the plot has remained at MK41 million as at 31 December 2008. Consolidated Financial Statements 2008 33 MPICO2009-06-04T13:18:08+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=34http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=34MPICO Notes to the Financial Statements For the year ended 31 December 2008 7. Plant and equipment (continued) Consolidated Financial Statements 2008 GROUP Fixture & Fittings MK’000 COST At 1 January 2007 Additions At 31 December 2007 At 1 January 2008 Disposals Additions At 31 December 2008 ACCUMULATED DEPRECIATION At 1 January 2007 Charge for the year At 31 December 2007 At 1 January 2008 Disposals Charge for the year At 31 December 2008 CARRYING AMOUNT Carrying amount 31 December 2008 Carrying amount 31 December 2007 39,619 7,946 9,084 11,163 14,077 65,059 40,855 127,839 59,964 6,748 1,828 8,576 8,576 2,734 11,310 7,552 2,079 9,631 9,631 2,079 11,710 3,465 1,156 4,621 4,621 (4,621) 4,693 4,693 9,527 4,464 13,991 13,991 (1,199) 6,840 19,632 27,292 9,527 36,819 36,819 (5,820) 16,346 47,345 9,775 6,747 16,522 16,522 34,407 50,929 20,794 20,794 20,794 20,794 4,621 4,621 4,621 (4,621) 18,770 18,770 16,944 37,902 54,846 54,846 (1,270) 31,115 84,691 52,134 44,649 96,783 96,783 (5,891) 84,292 175,184 Generators MK’000 Motor vehicles MK’000 Furniture & equipment MK’000 Total MK’000 342009-06-04T13:18:08+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=35http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=35COMPANY Fixture & Fittings MK’000 COST At 1 January 2007 Additions At 31 December 2007 7,039 4,634 11,673 18,123 18,123 4,621 4,621 16,944 37,902 54,846 46,727 42,536 89,263 Generators MK’000 Motor vehicles MK’000 Furniture & equipment MK’000 Total MK’000 At 1 January 2008 Disposals Additions At 31 December 2008 ACCUMULATED DEPRECIATION At 1 January 2007 Charge for the year At 31 December 2007 At 1 January 2008 Disposals Charge for the year At 31 December 2008 CARRYING AMOUNT Carrying amount 31 December 2008 Carrying amount 31 December 2007 11,673 157 11,830 18,123 18,123 4,621 (4,621) 18,770 18,770 54,846 (1,270) 1,667 55,243 89,263 (5,891) 20,594 103,966 4,795 1,523 6,318 6,318 1,731 8,049 7,314 1,812 9,126 9,126 1,811 10,937 3,465 1,156 4,621 4,621 (4,621) 4,693 4,693 9,527 4,464 13,991 13,991 (1,198) 6,503 19,296 25,101 8,955 34,056 34,056 (5,819) 14,738 42,975 3,781 5,335 7,186 8,997 14,077 - 35,747 40,855 60,991 55,207 Property, plant and equipment are depreciated on the straight line basis at rates that will reduce book amounts to estimated residual values over the anticipated useful lives of the assets as follows: Fixtures, equipment and computers Motor vehicles 5 years 4 years The assets residual values and useful lives are reviewed, and adjusted if appropriate, at every year-end. Consolidated Financial Statements 2008 35 MPICO2009-06-04T13:18:08+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=36http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=36MPICO Notes to the Financial Statements For the year ended 31 December 2008 8. Subsidiary companies 2008 % Wholly owned subsidiaries New Capital Properties Limited Capital Developments Limited Other subsidiaries Frontline Investments Limited Capital Investments Limited Total investment in subsidiary companies The investments in subsidiary companies comprise ordinary shares and are stated at cost. The subsidiaries have no other forms of shares in issue. 69.50 50.75 69.50 50.75 1,870 1,401 72,810 100.00 100.00 100.00 100.00 570 68,969 2007 % 2008 MK’000 (continued) 2007 MK’000 570 68,969 Consolidated Financial Statements 2008 1,870 1,401 72,810 9. Nyumba Yanu receivable This relates to advances made and direct costs incurred on the houses being constructed under the Nyumba Yanu Project. Nyumba Yanu, a subsidiary of Fargo Ltd, is the proprietor of the Absolute Title in 34 plots of land comprised in title number NK 309 comprising 1.97 hectares of land situated at Maone in Blantyre. Nyumba Yanu obtained planning approval in accordance with the Local Government Act and the Town & Country Planning Act for the construction of 34 houses on the land. The Group, through New Capital Properties Ltd, financed the construction of the houses by Fargo Ltd. No interest is charged by the Group on the amounts advanced but the Group is selling the houses whose construction was completed in the prior year. MPICO has a caution on the land. During the year 15 houses were sold and deposits amounting to MK18 million were received towards the purchase of the remaining 19 houses. The houses are let to third parties at commercial rent. This receivable amount was less than the estimated net realisable value on the sale of houses as at year-end taking into account the rent being received on these houses. Company 2008 MK’000 Opening balance Advances made in the year Interest on finance from FMB Recovery on sale of houses 117,445 3,778 (72,830) 48,393 2007 MK’000 98,970 15,864 2,611 117,445 36 Closing balance2009-06-04T13:18:08+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=37http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=37Group 2008 MK’000 2007 MK’000 Company 2008 MK’000 2007 MK’000 10. Receivables Rental and service charges Prepaid property expenses Valuation and consultancy receivables Staff receivables Other receivables Provision for doubtful receivables Total receivables 185,665 12,196 2,415 23,011 7,985 (51,763) 179,509 92,708 6,520 4,589 24,799 10,612 (56,722) 82,506 77,007 10,484 2,415 23,011 6,443 (35,883) 83,477 64,198 9,009 11,110 24,805 (36,616) 72,506 Except for receivables from Government, no interest is charged on receivables in respect outstanding rentals. Interest at the prevailing commercial bank lending rate is charged on amounts due from Government. As at year end the amount outstanding from Government was MK112 million (2007: nil) for the group {Company MK35 million (2007: nil)}. The total interest charged on overdue Government rentals amounted to MK73 million (2007: nil) {Company MK23 million (2007: nil)} for the year. Apart from the amounts due from Government, the rest of the Group’s receivables are spread on a large number of counterparties and tenants. The Group has provided fully for all receivables over 90 days except for rentals receivable from Government because historical experience is such that receivables that are past due beyond 90 days are generally not recoverable. Movement in provision for doubtful receivables Balance at beginning of the year Amounts written off during the year Amounts recovered during the year Increase in provision recognised in income statement Balance at end of the year 17,324 51,763 12,354 56,721 15,033 35,883 8,419 36,616 56,721 (8,680) (13,602) 60,184 (1,765) (14,052) 36,616 (8,682) (7,084) 36,483 (54) (8,232) Consolidated Financial Statements 2008 37 MPICO2009-06-04T13:18:08+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=38http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=38MPICO Notes to the Financial Statements For the year ended 31 December 2008 11. Related party transactions (continued) Consolidated Financial Statements 2008 In determining the recoverability of a rentals receivable, the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date. The concentration of credit risk is limited due to the customer base being large and unrelated. Accordingly, the directors believe that there is no further credit provision required in excess of the provision for doubtful receivables. At the year-end, the company had the following balances with subsidiary companies. The company also had staff loans and advances as disclosed in the balance sheet and in note 10 to the financial statements. Amounts owed by related parties 2008 MK’000 New Capital Properties Limited Capital Developments Limited Frontline Investments Limited Capital Investments Limited Total balances with subsidiaries New Capital Properties Limited loan MPICO Group had the following transactions and balances with Old Mutual, the parent company: 2008 MK’000 Pension contribution costs for the year Rental income and service charges for the year Over-recovered service charges receivable as at year-end Amount receivable from Old Mutual SA Management fees charged in the year– Old Mutual SA 9,287 3,261 293 2007 MK’000 7,928 1,575 (167) 1,901 6,011 9,854 11,558 5,581 11,268 38,261 2007 MK’000 7,449 15,407 4,822 5,504 33,182 34,860 Rental income and service charges for the year relates to the rentals charged by MPICO for the office space that Old Mutual occupies in Old Mutual Building in Lilongwe. The service charges relate to Old Mutual’s share of utilities paid by MPICO that are then recovered from the tenants and the service charges are charged based on office space occupied. These transactions are at arms-length. 382009-06-04T13:18:08+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=39http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=39Amount receivable from Old Mutual SA relates to overpayment made by MPICO to Old Mutual during the rehabilitation of MPICO Group properties by a contractor subcontracted by Old Mutual properties. Old Mutual SA has been refunding the amount by netting off with management fees charged to MPICO. Management fees are payable to Old Mutual South Africa. The balances due to MPICO relate to unsettled management fees, net of payments made on behalf of the company. The loan amount due from New Capital Properties Ltd related to financing provided for the construction of houses for sale in the Nyumba Yanu project as detailed in note 9 above. The loan was fully repaid in the year but attracted interest at 3% above the base lending rate, currently 19.5%, which is the same rate as MPICO’s overdraft facility with First Merchant Bank is charged. During the year, the company entered into the following transactions with its subsidiary companies. 2008 MK’000 Management fees charged to subsidiaries Compensation of key management personnel During the year loans totalling MK4.0 million (2007: MK10.0 million) were advanced to employees in key positions. At 31 December 2008 the total loans balance outstanding from employees in key positions was MK17.0 million (2007: MK21.5 million). These loans were granted on the same interest and repayment terms as loans to other staff members. Furthermore, emoluments paid to the employees in key positions during the year were as follows: Salary, housing allowance, pension and other benefits 51,070 41,049 94,476 2007 MK’000 257,161 Loans and advances to directors as at 31 December 2008 amounted to MK10.6 million (2007: MK9.0 million). These were granted on the same interest and repayment terms as loans to staff members. Consolidated Financial Statements 2008 39 11. Related party transactions (Continued) MPICO2009-06-04T13:18:08+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=40http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=40MPICO Notes to the Financial Statements For the year ended 31 December 2008 Group 2008 MK’000 2007 MK’000 Company 2008 MK’000 (continued) 2007 MK’000 Consolidated Financial Statements 2008 12. Provisions Severance pay 114,684 103,277 114,684 103,277 The provisions for severance pay relate to severance pay allowance provided for in accordance with the Employment Act and the Group’s conditions of service. The amount has been determined as detailed in note 4.2 to the consolidated financial statements. 13. Deferred taxation At the beginning of the year Transfer on disposals Charged to income statement At the end of the year 1,294,578 428,074 1,722,652 927,252 (12,785) 380,111 1,294,578 601,703 256,399 858,102 434,320 (12,785) 180,168 601,703 14. Payables Accruals Prepaid rentals Other payables Litigation provisions Property expenses payables Total payables 8,595 42,225 25,526 13,103 23,345 112,794 60,183 8,870 21,724 19,080 13,275 123,132 4,973 10,717 25,621 13,103 54,414 18,879 15,060 15,376 19,080 68,395 Accruals are in respect of various expenses incurred but whose invoices had not yet been received or received but not booked as at year-end. Prepaid rentals comprise of rentals paid in advance by tenants as at year-end. The amounts do not attract any interest charges. The provision in respect of litigation and other claims relates to an estimate of the claims and related legal costs likely to be settled by the Group with regard to various legal claims against the Group. The estimate is based on advice from legal counsel. Property expenses payables relate to unpaid but booked invoices for property maintenance and other directly attributable property management costs. No interest is chargeable on these payables and there is no specific allowed credit period from the date of the invoice but the Group’s financial risk management policies include 40 ensuring that invoices are paid within 30 days.2009-06-04T13:18:08+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=41http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=41Group 2008 MK’000 2007 MK’000 Company 2008 MK’000 2007 MK’000 15. Cash and cash equivalents as stated in the balance sheet Funds at call and on deposit Bank balances and cash Bank overdraft Total cash and cash equivalents 104,673 44,048 148,721 80,218 4,023 (9,693) 74,548 23,483 24,480 47,963 28,078 3,483 (8,557) 23,004 16. Increase in fair value of investment properties During the year, a fair value adjustment to investment properties has been credited and the associated tax has been charged to the income statement. To ensure compliance with profit distribution rules under company law in Malawi, the net of tax balance has been transferred to a non-distributable reserve. This is analysed as follows: Fair value adjustment credited to income statement Related deferred tax Minority interest Amount transferred to non-distributable reserves 1,120,635 (385,137) (56,289) 679,209 1,324,804 (412,202) (157,367) 755,235 772,161 (232,479) 539,682 702,958 (210,888) 492,070 17. Profit before taxation Profit before taxation is arrived at after charging/(crediting):Auditors’ remuneration Group internal auditors’ remuneration Depreciation of property, plant and equipment Profit on disposal of property, plant and equipment Directors’ remuneration Bad debts Pension costs Staff costs 22 staff in 2008 (22 in 2007) - fees for services as directors - for managerial services 6,974 2,199 16,346 (1,288) 9,015 32,808 17,324 3,715 91,338 8,310 9,527 (22,096) 10,213 29,160 12,354 3,171 83,654 4,054 14,738 (1,288) 3,799 32,808 15,033 3,715 91,338 4,950 8,954 (22,096) 4,797 29,160 8,419 3,171 83,654 Consolidated Financial Statements 2008 41 MPICO2009-06-04T13:18:08+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=42http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=42MPICO Notes to the Financial Statements For the year ended 31 December 2008 Group 2008 MK’000 2007 MK’000 Company 2008 MK’000 (continued) 2007 MK’000 Consolidated Financial Statements 2008 18. Taxation Income tax Deferred tax Dividend tax Total taxation charge Reconciliation of effective tax rates to standard tax rate: Effective taxation rates Impact of dividend income not taxed Other permanent differences Standard tax rate 36.4% (6.4%) 30.0% 28.0% 2.0% 30.0% 34.6% 2.3% (6.9%) 30.0% 23.2% 3.9% 2.9% 30.0% 125,814 428,074 21,114 575,002 84,851 380,111 464,962 79,716 256,399 21,114 357,229 84,851 180,168 265,019 19. Earnings per share The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows: 2008 Distributable profit Non-distributable profit Profit for the year attributable to equity holders of the parent Weighted average number of ordinary shares for the purposes of basic earnings per share 1,149,023,730 1,149,023,730 222,184,000 679,209,000 901,393,000 2007 267,160,000 755,235,000 1,022,395,000 422009-06-04T13:18:08+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=43http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=43Group 2007 MK’000 2006 MK’000 Company 2007 MK’000 2006 MK’000 20. Dividends declared The annual general meeting held on 28 June 2008 approved a dividend of MK149.4 million for the year 2007 profits and the dividend was paid in August 2008. An interim dividend for the year 2008 of MK80.4 million was paid in October 2008. 21. Reconciliation of profit before taxation to net cash inflow from operating activities Profit before taxation Increase in fair value of investment properties Interest receivable Dividends receivable Interest payable Depreciation (Increase)/decrease in receivables Increase/(decrease) in payables Increase in severance pay provision Profit on disposal of assets Movement on group company balances Net cash inflow from operating activities 1,581,439 (1,120,635) (65,110) 6,832 16,346 (97,003) (10,338) 11,407 (1,288) 321,650 1,659,485 (1,324,804) (16,249) 3,536 9,527 789,510 (80,879) 19,237 (22,096) 1,037,267 1,032,466 (772,161) (27,335) (79,350) 6,497 14,738 (10,971) (13,981) 11,407 (1,288) (5,079) 154,943 1,142,335 (702,958) (17,967) (147,400) 96 8,955 231,495 (28,196) 19,237 (22,096) (30,434) 453,067 22. Financial instruments Below is an analysis of how the Group manages the risk associated with the following relevant financial instruments. (a) Capital risk management The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The capital structure of the Group consists of mainly equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings as disclosed in the statement of changes in equity. The Board reviews the capital situation on an annual basis and based on each review, the Group will balance its overall capital structure through the payment of dividends and raising finance through borrowings or repaying any existing borrowings. The Group’s overall strategy remains unchanged from 2007. Consolidated Financial Statements 2008 43 MPICO2009-06-04T13:18:08+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=44http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=44MPICO Notes to the Financial Statements For the year ended 31 December 2008 22. Financial instruments (Continued) (b) Significant accounting policies (continued) Consolidated Financial Statements 2008 Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 3 to the consolidated financial statements. (c) Credit risk management Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has adopted a policy of only dealing with creditworthy counterparties and ensuring that tenants pay rentals in advance, as a means of mitigating the risk of financial loss from defaults. The Group’s exposure and the credit worthiness of its tenants is continuously monitored. Excluding Government, rentals receivable are from a large number of tenants, spread across diverse sectors and geographical areas. Apart from the exposure to Government, the Group does not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. The credit risk exposure is managed by proactively engaging Government in good time on amounts due from it. The credit risk on liquid funds is limited because the counterparties are financial institutions in a highly regulated industry. The carrying amount of receivables (notes 9 and 10) and cash and cash equivalents (note 15) recorded in the financial statements, grossed up for any allowances for losses, represents the Group’s maximum exposure to credit risk. 23. Operating lease arrangements The Group as lessor Leasing arrangements Operating leases relate to the investment property owned by the Group with lease terms of between 1 and 10 years, with an option to extend the lease term. All operating lease contracts contain market based rental review clauses in the event that the lessee exercises its option to renew. The lessees do not have options to purchase the property at the expiry of the lease period. The property rental income earned by the Group from its investment property, all of which is leased out under operating leases, amounts to MK747 million (financial year 2007: MK633 million). 442009-06-04T13:18:08+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=45http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=45Group 2008 MK’000 2007 MK’000 Company 2008 MK’000 2007 MK’000 24. Contingent liabilities The Group is currently contesting various civil cases filed by various plaintiffs. On advice from legal counsel, MK19 million has been provided for in respect of these claims. Other litigation matters On 7 September 2006 the Government of Malawi issued a Vacant Land Development Order over plot number Bwaila 40/1 owned by the Group. The Group has been arguing that besides the fact that proper procedures were not followed in effecting the order, such an order is applicable to leasehold land only. As a result, the company contested the order in courts through its lawyers Messrs Likongwe and Company. However, during the year the courts ruled in favour of Government on the matter. The Group has appealed against the ruling. As at the time of finalising these consolidated financial statements, the issue had not yet been concluded. It is believed that the company will succeed on the judicial review matter on the grounds of natural justice. 25. Capital commitments Authorised but not contracted 181,012 178,202 124,912 109,352 Capital expenditure commitments are to be financed from internal resources and existing facilities. 26. Economic factors Economic factors relevant to the company’s performance are set out below. Year-end exchange rate MK/US$ Inflation rate % Bank base rate Subsequent to year-end, on 21 January 2009, these economic factors had not changed. 140.6 9.9 19.5% 140.3 7.5 19.5% Consolidated Financial Statements 2008 45 MPICO2009-06-04T13:18:08+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=46http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=46MPICO APPPENDIX 1 Detailed Income Statement For the year ended 31 December 2008 (Company only) Consolidated Financial Statements 2008 Company 2008 MK’000 INCOME Rental income Increase in fair value of investment properties Profit on disposal of property, plant and equipment Interest receivable from subsidiaries Interest receivable from others Dividends receivable from subsidiaries Management fees from subsidiaries Management fees from others Consultancy fees Bad and doubtful debts recovered Other income Total income 347,546 772,161 1,288 1,900 25,435 79,350 94,476 8,893 7,814 7,084 1,407 1,347,354 300,353 702,958 22,096 10,429 7,538 147,400 257,161 8,194 6,865 8,232 204 1,471,430 2007 MK’000 462009-06-04T13:18:08+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=47http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=47Company 2008 MK’000 EXPENDITURE Salaries and benefits Maintenance of properties Administration costs Security Rates Listing, transfer secretaries costs Bad and doubtful debts charged Electricity and water Depreciation of property, plant and equipment Severance pay Legal and professional fees Entertainment Interest on overdrafts Fringe benefits tax Travelling Auditors’ remuneration Directors’ fees Insurance General expenses Bank charges Rent payable Litigation costs Tax Penalty Costs recovered from tenants Total expenditure PROFIT before taxation 91,380 86,656 39,294 18,502 17,891 15,516 15,033 14,758 14,738 11,407 8,837 7,863 6,497 6,112 5,038 4,054 3,799 3,655 919 477 339 (57,877) 314,888 1,032,466 83,968 99,196 38,375 16,777 26,393 25,408 8,419 17,148 8,954 19,336 5,259 1,991 95 4,214 3,639 4,950 4,797 2,493 937 353 339 19,059 (6,310) (56,695) 329,095 1,142,335 2007 MK’000 Consolidated Financial Statements 2008 47 MPICO2009-06-04T13:18:08+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=48http://ipaper.ipapercms.dk/AfricanShareHolder/mw/MPICO/2008/?Page=4848 Consolidated Financial Statements 2008 MPICO2009-06-04T13:18:08+02:00