http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/RSS.ashxAfrican Annual Reports PagesThu, 08 Oct 2009 16:26:55 +0200http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=1http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=12009-10-08T16:26:55+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=2http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=2M.L. Rathi Chairman P.L. Kagalwala Managing Director Prof. F.G. Omaswa Director S.Rajappa Director F.F.Magezi Director Dr. A.K. Khandelwal (Chairman), addressing Bank's Shareholders in the Annual General Meeting on 12.05.2003. Others present on high table are Mr.John Kiruthu (Auditor), Mr. M.P. Ranade (Director), Mr.F.F. Magezi (Director), Mr. P.L Kagalwala (Managing Director), Mr. S. Rajappa (Director) and Mr. N.K. Srivastava (Company Secretary)2009-10-08T16:26:55+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=3http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=3I am pleased to welcome you to the 34th Annual General Meeting of your bank and am privileged to present this annual report before you. Your bank has renewed its resolution of providing excellent banking services in Uganda in recently concluded Golden Jubilee Year celebration and the same is manifested in the remarkable achievements during the year 2003. The growth in real Gross Domestic Product (GDP) for the year 2002/03 has been reported below the projected growth of 7% due to slow down in growth of food crop and other agricultural production on account of deterioration in climatic conditions. With the expected recovery in this front, growth in real GDP for the year 2003/04 fiscal is projected at 5.6% while Govfs medium term objective is to restore GDP growth of 7% per annum. Thus the Government's focus on macro stability, particularly low inflation rate and stable exchange rates continue to be the overall objective of monetary 8: fiscal policies. Inter bank foreign exchange rate depreciated during the year from U.Shs. 1,850/- in Dec. 2002 to U.shs. 1,998/- in June 2003 but during last quarter of the year 2003 Uganda shillings emerged out of the spell of persistent depreciation against the dollar to appreciate to U.shs. 1,910/-. The monthly average exchange rate on Inter Bank Exchange Market appreciated from U.shs. 1,993/in September 2003 to U.shs. 1,974/- in October 2003 and further to U.shs. 1,943/- in December 2003. The rate of return on investment in Treasury bills recorded fluctuation throughout the year for all the tenures due to frequent changes in money market. The -91- days Treasury Bill rate which was 13.44% in Dec. 2002 rose upto 18.83% in July 2003 but came down to 14.48% in September 2003 before reaching to the highest level of 20.22% in December 2003. The Bank Rate, at which banks borrow from Central Bank and reflects the developments in inter bank shilling market rose through out the year from 13.08% in January 2003 to 25.62% in December 2003. This trend of interest rate has again taken turn to decline and reported 13.52% as on date of writing this statement. One healthy development in Financial Sector during the year was the initiative of the Government for long term Bond market in the country. Government has issued -2- years 10% Treasury Bond, -3- years 10.25% and -5- years 10.75% Treasury Bond during first quarter of year 2004 to give boost to bond market for stable growth of economy. All Government bonds have been oversubscribed and offered more avenues to investors, Primary Dealers in both primary and secondary market.2009-10-08T16:26:55+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=4http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=4Your bank has registered well supported unprecedented growth in all business parameters too. The Performance during the year 2003 highlights in brief are: by market driven product innovation o Profit growth before tax increased from of 40%. U.5hs. 5,886 Mn. in 2002 to U.5hs. 8,214 Mn. exhibiting o Deposit level grew from U.5hs. 92 Bn. in 2002"to U.Shs. 107 Bn. registering 16.30%. Annual growth of o Advances increased from U.5hs. 17,513 Mn. in 2002 to U.5hs. 25,057 Mn. in year 2003 showing jump of 43%. o Size of Balance Sheet has registered a hefty growth from U.5hs. 118 Bn. in 2002 to U.5hs. 136 Bn. in 2003 showing growth of more than 15%. comforts banking and has changed environment to During the year your bank has shown great concern about customer the premises of Jinja Branch, which also under renovation suit the taste of customers. constituents. to provide an ultra modern fully air-conditioned The Bank has extended now has a very pleasant ambience. Kampala Road Branch is business hours of all branches in the country better services to its by one hour from 8.30 a.m. - 2.00 p.m. to 8.30 a.m. - 3.00 p.m. for rendering Your Bank is committed to good governance and has complied with applicable laws and by regulations. The Bank's operations are guided by the Board and the Committees and Asset - Liability Professionals constituted the Board on Credit, Audit, Personnel and Administration The Board of Directors executives operational areas. banking scenario of the Bank comprises Management. senior of Ugandan and experienced from the Parent Bank who guide the Bank on policy formulation as well as on various Keeping in view the fast changing financial reforms worldwide in Uganda as a sequel to liberalization and the bank has geared up fully to meet the challenges of competition.2009-10-08T16:26:55+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=5http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=5/ CHAIRMAN'S STATEMENT ~~ '7 If creating a congenial economic to excel. environment for the banks to develop. My grateful thanks are to support the Ministries and various Departments of the Government of Uganda for their valuable and encouragement I thank the Government the operations trading Uganda Securities and other officials I am equally market. of Bank of Uganda for their guidance grateful to authorities of Capital Unit for creating favourable in strengthening Authority, of equity of the bank. capital Markets Exchange and Privatisation environment in secondary I would also like to place on record our appreciation received from our valued shareholders achieved the appreciable I appreciate directions On behalf members the support results. rendered by my Director for the continued without and whole hearted support not have and customers whom the bank would Colleagues of the Bank. I am grateful for the and support they have given to the management. of the Board of Directors at all levels for their will continue and Management work during of the Bank, I wish to thank the year. I am confident the staff of dedicated this spirit belongingness and will make us to achieve our goals in future. Economic indicators customers being positive, we rededicate ourselves to accomplish highest standard our commitment to the for rendering of banking services and enhancement of stakeholders' value in the coming year. Yours truly, a? ~~LJ .•. --~-~~~ M.L. Rathi Chairman2009-10-08T16:26:55+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=6http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=6Bank of Baroda (U) Ltd Head office: 18, Kampala Road, P.O. Box 7197, Kampala (Uganda) NOTICE IS HEREBY GIVEN that the 34th Annual General Meeting of Bank of Baroda (U) Ltd. will be held in Sasa Hall - Grand Imperial Hotel, 6/6A, Shimoni Road, Kampala on Wednesday 16th June, 2004 at 3.30 p.m. to transact following business:- To receive and consider the audited financial statements - consolidated balance sheet as at 31.12.2003, consolidated income statement for the year ended 31.12.2003, report of the Board of Directors on working 8: activities of the bank, together with the Auditors' report thereon. To consider and, if deemed fit, to approve the final dividend proposed by the Directors at U.5hs. 601- per share. To confirm the appointment of Mr. M.L. Rathi as a Director of the bank since 22.09.2003 in place of Mr. M.P. Ranade. To appoint Mis KPMG Uganda as Bank's Auditors for the period ending with the next Annual General Meeting of the Bank and to authorise the Board of Directors to maintain their (the Auditors') remuneration at the fee agreed in previous years. The members entitled attend instead of her I to attend and vote the meeting is entitled to appoint a proxy to him I itself and such proxy need not be a member of the bank. The2009-10-08T16:26:55+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=7http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=7proxy, in order to be effective, must be received by the bank at least 24 hours before the date of meeting. The format of the proxy form is attached with the annual report. No person shall be entitled to attend the meeting as a duly authorised representative of a Company, unless a copy of the resolution appointing him I her as a duly authorised representative certified to be true copy by the Chairman of the meeting at which it was passed has been deposited at the Head office of the Bank within not less than 24 hours before the date of the meeting. For the convenience of members, admission form is annexed to annual report. The members are requested to fill in and affix their signatures in the space provided therein and hand-over the admission form at the entrance of the meeting place. Proxy I Representative of shareholders should mark on the attendance slip as proxy or representative as the case may be. The final dividend as declared by the Board of Directors and approved by the general members will be paid to those shareholders whose names appear on Bank's Register of shareholders as on 21 st June, 2004 and same will be mailed on 16th July, 2004 after deducting withholding tax wherever applicable. Information of change of address, dividend mandate and particulars of the bank, branch and account number, which the shareholder desires to incorporate in his I her dividend warrant should reach to the Bank before 21 st June, 2004 to enable the bank to give effect to such intimation. Please note that copies of the Annual Report will not be distributed at the Annual General Meeting, therefore, members are requested to bring their copies of the Annual Report to the meeting. Members are also requested to inform the bank at least 48 hours before, about any other business which they propose to be legally transacted at the meeting2009-10-08T16:26:55+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=8http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=8Directors, officers and administration Directors' report 3-5 2 Report of the auditors Income statement Consolidated balance sheet 6 7 8 Company balance sheet Cash flow statement Statement of changes in equity statements 9 10 11 12 - 32 Notes to the financial2009-10-08T16:26:55+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=9http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=9~ :.ECTOR1,OF~ICERS & ADMINISTRATION ,®:;t :¥' " w"f, ,' Dr. A K Khandewal** Mr. P L Kagalwala** Mr. M P Ranade** Prof. F G Omaswa* Mr. F F Magezi* Mr. S Rajappa** Mr. M L Rathi** (Chairman, resigned 2 February 2004) (Managing Director) (Resigned on 1 September 2003) Mr. Nagesh K. Srivastava Bank of Baroda (Uganda) Limited Plot 18 Kampala Road P. O. Box 7197 Kampala Uganda KPMG Certified Public Accountants 15t Floor, Rwenzori Courts Plot 28:4A Nakasero road P. O. Box 3509 Kampala Uganda Kateera 8: Kagumire Advocates 8: Solicitors Stanbic Bank Building Plot 36, Kampala Road P. O. Box 7026 Kampala Uganda Bank of Baroda (Uganda) Limited Plot 18 Kampala Road P. O. Box 7197 Kampala Uganda Bank of Baroda Mumbai Main Office Vostro Alc Cell 10/12 Mumbai Samachar Mumbai American Express Bank Limited 2, Blue Hill Plaza, 1st Floor Pearl River New York Marg, Fort2009-10-08T16:26:55+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=10http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=10The directors submit their report together with the audited financial statements for the year ended 31 December 2003, which discloses the state of affairs of the company, in accordance with section 27 of the Banking Act and section 157 of the Companies Act. The Bank of Baroda (Uganda) Limited (the Bank) monitors the adequacy of its capital using ratios established by the Bank of Uganda with reference to computations from International Convergence of Capital Measurement and Capital Standards (Committee on Banking Regulations and Supervisory Practice, Basle, 1998). These ratios measure capital adequacy by comparing the Bank's eligible capital with total risk-adjusted assets plus risk-adjusted off balance sheet items as may be determined by Bank of Uganda by statutory instru ment. Assets are weighted according to broad categories of notional credit risk, being assigned a risk weighting according to the amount of capital deemed to be necessary to support them. Four categories of risk weights (00/0, 200/0, 300/0, 500/0, 700/0 and 1000/0) are applied. e.g. notes, coins and other cash assets, balances held with Bank of Uganda including securities issued by the Government of Uganda and securities held under the Bank of Uganda have a zero risk weighting, which means that no capital is required to support the holding of these assets. Property and equipment carries a 1000/0 risk weighting. Based on the existing guidelines this means that they must be supported by capital equal to 80/0 of the carrying amount. Other asset categories have intermediate weightings. Off-balance sheet credit related commitments such as guarantees and acceptances, performance bonds, documentary credit etc., are taken into account by applying different categories of credit risk conversion factors, designed to convert these items into balance sheet equivalents. The resulting credit equivalent amounts are then weighted for credit risk using the same percentages as for balance sheet assets. Core capital (Tier 1) consists of paid-up share capital, retained profits less non-dealing investments. Supplementary capital (Tier 2) includes revaluation reserves on property, general provisions and non-dealing investments.2009-10-08T16:26:55+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=11http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=112. Capital adequacy (contd .) Balance sheet Nominal amount 2003 Ushs '000 Balance sheet assets net of provisions Cash and balances with Bank of Uganda Deposits and balances due from Institutions outside Uganda Loans and advances to customers Investments Treasury bills and eligible bills Property and equipment Other assets Total Off-balance sheet positions Credit related commitments Total risk-weighted assets Capital adequacy requirement calculation Capital 2003 Ushs 000 Tier 1 Tier 1 + Tier 2 Capital Risk weighted amounts 13,378,951 16,918,980 17,465,411 153,347,189 13,093,501 130,992,195 10,216,783 64,022,754 7,343,582 34,665,923 8,780,689 9,162,265 Risk weighted Amount 2002 Ushs '000 2003 Ushs '000 2002 Ushs '000 Banking 24,156,602 25,057,304 10,000 70,629,585 6,375,562 872,036 21,476,497 17,512,990 10,000 62,584,897 5,854,317 1,007,177 6,375,562 872,036 5,854,317 1,007,177 24,156,602 22,391,771 10,000 4,295,299 16,155,548 10,000 135,881,778 117,608,143 53,805,971 27,322,341 Ratio 2002 Ushs 000 12,217,245 16,268,632 2003 2002 °/0 20.9% 26.43% °/0 35.2% 46.9°/1 for loans and advances to customers are stated net of specific provisions for bad and doubtful debts. These balances have also been offset against fixed as securities. (2002:Ushs deposits and short term deposits placed by customers The audited net profit after tax for the bank for the year is Ushs 5,634,632,649 3,571,417,000). 3. Results The results for the year are set out on page 8. The highlights • • • • are as hereunder: made during written the year 2003 on accounts provided for and accounts off amounted to Ushs 1,124 million. Recovery previously The rate of growth In terms of capital of deposits during 2003 is 16%. of 42% during the year. Ratio total capital is 26.43% of total risk weighted adequacy Advances registered a growth2009-10-08T16:26:55+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=12http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=12'" !8 '" " 't'+, x®';1~". " ~. o;.'-~'i~@ ~ ~ " 'B ' '11~%iW ~l@ 'if " , ~ ~ tz d DIRECTOR'S REPORT '-~¥"',% ,~Il, ~Wi 0'i£~ **" 1 JJ ' "* •. ~ • assets against minimum requirement of 12%. Core capital at the end of the year is 20.9% against minimum requirement of 8%. Non-Performing Assets (NPAs) as a percentage of total advances stands at only 0.48% in 2003; and regulatory environments 4. Operating In 2003, the Uganda shilling depreciated from a shilling - dollar parity of Ush 1850 : $1 to Ush 1936: $1 representing depreciation of 5% during the year. On the other hand the effective yield on treasury bills increased to 20.22% from 12.2% in 2002. The bank complied with the minimum core capital and total capital requirements, wh!ch are 8% and 12% respectively. Minimum capital for purposes of licensing the bank is Ushs 4 billion. 5. Human Resource Management The Human Resource Management department continues to playa very important role in the ever-changing competition scenario. The Bank's mission continues to be to convert every employee of the Bank into a knowledge worker to enable them to cope with increased customer expectations and new areas of banking outside the traditional lone. Mainly Bank of Baroda, India and the Uganda Institute of Bankers conduct the training. In addition, the bank has conducted a number of in-house training programmes and deputed -4- staff members to India for training. 6. Information technology All branches of the bank are computerised Bankmaster version 6 to version 7 in 2003. 7. Dividend with Bank Master. The bank has upgraded The directors recommend the payment of a dividend of Ushs 2.4 billion (2002: Ushs 2.4 billion). 8. Directors The directors who served during the year are set out on page 2. 9. Auditors The auditors, KPMG were appointed in accordance with Section 159 (1) of the Companies Act (CAP 110). The auditors have been approved by Bank of Uganda in accordance with Section 23 of the Financial Institutions Statute, 1993, and being eligible have indicated their willingness to continue in office. 10. Approval of financial statements The financial statements were approved by the board of directors on 2nd March 2004. Company Secretary Date: 2nd March 20042009-10-08T16:26:55+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=13http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=13AUDITOR'S REPORT . :t ili: ," ; . REPORT OF THE AUDITORS TO THE SHAREHOLDERS OF BANK OF BARODA (UGANDA) LIMITED We have audited the financial statements of Bank of Baroda (Uganda) Limited for the year ended 31 December 2003 as set out on pages 7 to 32 in respect of the amounts reported in Uganda Shilling, in accordance with our letter of appointment. We have not audited the memorandum figures in Indian Rupees (Rupees'OOO) and accordingly we do not express an opinion on them. . The financial statements are in agreement with the books of account. We have obtained all the information explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit. and Under the provisions of the Companies Act, the directors and management are responsible for the preparation of financial statements, which give a true and fair view of the Bank's state of affairs and its income statement. Our responsibility is to express an independent opinion on the financial statements based on our audit and to report our opinion to you. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we plan and perform our audit to obtain reasonable assurance that the financial statements are free from material misstatement. An audit includes an examination, on a test basis, of evidence supporting the amounts and disclosures in the financial statements. It also includes an assessment of the accounting policies used and significant estimates made by the directors, as well as an evaluation of the overall presentation of the financial statements. In our opinion, the financial statements, which have been prepared on the basis of the accounting policies set out on pages 12 to 32, give a true and fa i r view of the Bank's state of affa i rs at 31 December 2003 and its resu Its of operations and cash-flows for the year then ended in accordance with International Financial Reporting Standards and comply with the requirements of the Companies Act, CAP 110, and all material provisions under the Financial Institutions Statute 1993. KPMG Certified Public Accountants P. O. Box 3509 KAMPALA Uganda2009-10-08T16:26:55+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=14http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=14CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2003 2003 2002 Ugandan Shillings Notes Ushs'OOO Ugandan Shillings Ushs'OOO Interest income Interest expense Net interest income Non - Interest income Other income Bad and doubtful reversa I / (expense) Non - interest expenses Profit before tax Income tax Profit after tax Diluted earnings per share Proposed dividend per share debts 2 3 14,269,978 ' (4,101,281) 9,241,791 (2,802,729) 10,168,697 4 3,734,294 1,249,692 5 80,217 (7,018,548) 6,439,062 3,979,446 2,216,439 (27,196) 6 (6,721,332) 7 8 8,214,352 (2,580,433) 5,886,419 (2,294,192) 5,633,919 9 10 Ushs 140.85 Ushs 60.00 3,592,227 Ushs 89.81 Ushs 60.002009-10-08T16:26:55+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=15http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=15CONSOLlD~JED BAL~~CE SHEET . .~. 1 Ushs '000 Assets Cash and balances with Bank of Uganda Treasury bills and other eligible bills Deposits and balances due from banking institutions Amounts due from overseas branches of parent company Interest receivable and other assets Loans and advances to customers Advance tax paid Property and equipment Total assets liabilities Customer deposits Deposits and balances due to banking institutions Amounts due to overseas branches of parent company Interest payable and other liabilities Retirement benefit obligations Tax payable Deferred tax Liability Total liabilities 8 19 20 21 22 23 106,724,590 3,500,359 820,002 3,799,897 837,609 116,336 907,387 116,706.180 92,219,859 2,246,159 1,959,313 3,571,542 745,558 20,101 673,182 101,435,714 18 11 12 13 14 15 16 8,780,688 70,629,585 15,597,017 8,562,288 886,351 25,057,304 976 6,375,562 135.889.771 9,162,265 62,584,897 2,680,586 18,799,029 1,012,378 17,512,990 751 5,854,316 117.607.212 Shareholders' Share capital Retained profits equity (page 12) 4,000,000 9,402,064 2,400,000 4,000,000 5,975,749 2,400,000 Proposed dividend R~\udtion Tl.'Sl.'TVt'S 1,1~',527 equity equity and liabilities 19,183,591 135.889.771 1,7%,749 16,171,498 117.607.212 Total shareholders' Total shareholders' Acceptances. guarantees a letters of credit for which there are counter liabilities to customers 25 17,465,411 13.093.501 The balance sheet is to be read in conjunction with the notes to the financial statements set out on pages' 2 to 32.2009-10-08T16:26:55+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=16http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=16, y ~, COMPANY, BALANCE ~HEET . Bank of Baroda (U) Ltd COMPANY BALANCE SHEET AS AT 31 DECEMBER 2003 Note 2003 Ushs '000 Assets 2002 Ushs '000 (ash and balances with Bank of Uganda Treasury bills and other eligible bills Deposits and balances due from banking institutions Amounts due from overseas branches of parent company Interest receivable and other assets Loans and advances to customers Investment in subsidiary Property and equipment Tota I assets 11 12 8,780,688 70,629,585 9,162,265 62,584,897 13 15,594,315 2,677,468 14 15 16 17 18 8,562,288 872,036 25,057,304 10,000 6,375,562 135,881,778 18,799,029 1,007,178 17,512,990 10,000 5,854,316 117,608,143 Liabilities Customer deposits Deposits and balances due to banking institutions Amounts due to overseas branches of parent company Interest payable and other liabilities Retirement benefit obligations Tax payable Deferred tax Liability Total liabilities Shareholders' equity (page 12) 19 106,742,590 92,247,538 20 3,500,359 2,246,159 21 22 23 820,002 3,797,017 837,609 116,336 1,959,313 3,568,621 745,558 20,101 673,182 101,460,472 8 907,387 116,721,300 Share capital Retained profits Proposed dividend Revaluation reserves Total shareholders' equity Total shareholders' equity and liabilities Acceptances, guarantees Et letters of credit for which there are counter liabilities to customers 25 4,000,000 9,378,951 2,400,000 3,381,527 19,160,478 135,881,778 4,000,000 5,951,922 2,400,000 3,795,749 16,147,671 117,608,143 17,465,411 13,093,501 The financial statements on pages 7 to 32 were approved by the board of directors on 2nd March 2004 and were signed on its behalf by: P.L. Kagalwala Managing Director Prof. F.G. Omaswa Director M.L. Rathi Director s. Rajappa EE Magezi Director Director2009-10-08T16:26:55+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=17http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=17CASHFLOW STATEMENT f ._, § , 2003 2002 Group Ushs'000 Group Ushs'000 Cash flow from operating activities Profit before tax Adjustments: Depreciation Amortisation of formation costs (Gain)/Ioss on disposal of property and equipment Provisions for retirement benefits 8,829,778 13,541 601,885 677,007 5,252 (8,754) 80,676 6,640,600 8,214,352 5,886,419 Adjustments for working capital changes (Increase)/decrease in loan advances Decrease in interest receivable and other assets Increase in treasury bills and other eligible bills Increase in customer deposits Increase in interest payable and other liabilities Increase in deposits and balances due to banking institutions Increase in retirement obligations Cash generated from operations Taxation paid Payments for retirement benefits Net cash from operating activities Cash flow from investing activities Purchases of property and equipment Proceeds from the sale of equipment Net cash used in investing activities Cash flow from financing activities Dividends paid Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Exchange rates adjustment Cash and cash equivalents at the end of the year 32,939,993 30,641,880 (2,400,000) 2,270,434 30,669,559 (2,000,000) 26,264 30,615,616 (1,154,942) 18,270 (1,136,672) (381,641) 271,425 (110,216) 5,807,106 (7,544,314) 125,802 (8,044,688) ;4,477,052 228,355 114,889 92,051 (550,853) (2,471,819) (2,709,455) (1,791,293) (3,372) 2,136,480 5,375,102 1,986,636 (26,918,881) 13,892,468 899,225 2,055,9952009-10-08T16:26:55+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=18http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=18CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2003 Group Share capital Ushs '000 Revaluation reserves Ushs '000 Retained profits Ushs '000 Proposed dividend Ushs'OOO Total Ushs '000 Balance at 1 January 2003 Net profit per year Divided paid Dividend proposed Excessdepreciation transfer Deferred tax on excess depreciation Prior year deferred tax under provision Balance at 31 December 2003 4,000,000 3,795,749 5,975,749 5,633,919 2,400,000 16,171,498 5,633,919 (2,400,000) (2,400,000) (192,396) 57,719 (279,545) 4.000.000 3.381.527 9,402.064 2,400,000 (2,400,000) 2,400,000 192,396 57,719 (279,545) 19.183,591 Company Share capital Ushs '000 Revaluation reserves Ushs '000 Retained profits Ushs '000 Proposed dividend Ushs'OOO Total Ushs '000 Balance at 1 January 2003 Net profit per year Divided paid Dividend proposed Excessdepreciation transfer Deferred tax on excess depreciation Prior year deferred tax under provision Balance at 31 December 2003 4,000,000 3,795,749 5,951,922 5,634,633 2,400,000 16,147,671 5,634,633 (2,400,000) - (2,400,000) (2,400,000) 192,396 2,400,000 (192,396) 57,719 (279,545) 4,000.000 3,381,527 57,719 (279,545) 9,378.951 2,400.000 19.160,4782009-10-08T16:26:55+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=19http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=19The principal out below: accounting policies adopted in the preparation of these financial statements are set The financial statements are prepared in accordance with and comply with International Financial Reporting Standards (IFRS) as promulgated by the Internation.al Accounting Standards Board. The financial statements are prepared under the historical cost convention, as modified the revaluation of certain property, plant and equipment, and certain financial assets. by (b) Translation of foreign currencies Transactions in foreign currencies during the year are converted into Uganda Shillings at rates ruling at the transaction dates. Assets and liabilities at the balance sheet date, which are expressed in foreign currencies, are translated into Uganda Shillings at rates ruling at that date. The resulting differences from conversion and translation are dealt with in the profit and loss account in the year in which they arise. Non-current investments, excluding marketable securities, are shown at cost and provision is only made where, in the opinion of the directors, there is a permanent diminution in value. Where there has been a permanent diminution in the value of an investment, it is recognised as an expense in the period in which the diminution is identified. All property and equipment is initially recorded at cost. Land and buildings are subsequently shown at market value, based on valuations by professional indepeneent valuers, less subsequent depreciation. All other property and equipment are stated at historical cost less depreciation. Increases in the carrying amount arising on revaluation are credited to a revaluation reserve. Decreases that offset previous increases of the same asset are charged against the revaluation reserve; all other decreases are charged to the income statement. Depreciation is calculated on the straight line and reducing balance basis to write down the cost of assets, or the revalued amounts, to their residual values over their estimated useful life as follows:2009-10-08T16:26:55+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=20http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=20'" II., ,. , w@ t ~" ~;'~ ~: NOTES TO THE FINAf';J~~f:jl~f;~~~NTS Rate Buildings Furniture, fittings Motor vehicles Computer equipment and equipment 5% Method Straight line basis Reducing balance Reducing balance Straight line basis 12 1/2 010 20% 20 - 33.3% Freehold land is only depreciated related developments. where the cost is not separately identifiable from the Gains and losses on disposal of property and equipment are determined by reference to their carrying amount and are taken into account in determining operating profit. On disposal of revalued assets, amounts in the revaluation reserve relating to that asset are transferred to retained earnings. With effect from 2000, excess depreciation computed each year on past revaluation surpluses are transferred from capital to revenue reserves, net of deferred tax. The carryi ng amount of the bank's financial assets and property and equipment are reviewed at each balance sheet date to determine whether there is any indication of impairment. If such condition exists, the assets recoverable amount is estimated and an impairment loss recognised whenever the carrying amount of an asset exceeds its recoverable amount. Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously. Interest income and interest expense is recognised on an accrual basis taking into account the effective interest rate of the interest earning asset or the interest bearing liability. Loans and advances are shown at the gross amount adjusted for any provIsion for impairment losses. A provision for loan impairment is established if there is objective evidence that the bank will not be able to collect all amounts due according to the original contractual terms of the loan. The amount of the provision is the difference between the carrying amount and the estimated recoverable amount. In addition, general provisions are maintained based on management's evaluation of the portfolio of advances and other exposures, in respect of losses which, although not specifically identified, are known from experience to be present in such portfolio.2009-10-08T16:26:55+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=21http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=21When a loan is deemed uncollectible, it is written off against the related provision for impairment. Subsequent recoveries are credited to the provision for loan losses in the income statement. A financial instrument is a contract that gives rise to both a financial asset of one enterprise and a financial liability of another enterprise. These are classified as follows:Trading instruments are those financial instruments that the bank holds principally for the purpose of short-term profit taking. These comprise mainly the forward excha'nge contracts. Originated loans and receivables are loans and receivables created by the bank providing money to a debtor. Originated loans and receivables comprise loans and advances to banks and customers, Treasury bills and Treasury bonds purchased from the primary market. Held-to-maturityassetsare financial assets with fixed or determinable payments and fixed maturity that the bank has the intent and ability to hold to maturity. These include Treasury bills and Treasury bonds purchased from the secon.dary market. Available-for-sale assets are financial assets that are not held for trading purposes, originated by the bank, or held to maturity. These include cash and balances with the Bank of Uganda. The group recognises financial assets held for trading and available-for-sale assets on the date it commits to purchase the assets. From this date any gains and losses arising from changes in fair value of the assets are recognised. Held-to-maturity loans and originated they are transferred to the group. loans and receivables are recognised on the date Subsequent to initial recognition all trading instruments and all available-for-sale assets are measured at fair value, except that any instrument that does not have a quoted market price in an active market and whose fair value cannot be reliably measured is stated at cost, including transaction costs, less impairment losses. All non-trading financial liabilities, originated loans and receivables and held-to-maturity assets are measured at amortised cost less impairment losses. Amortised cost is calculated on the effective interest rate method. Premiums and discounts, including initial transaction costs, are included in the carrying amount of the related instrument and amortised based on the effective interest rate of the instrument. Gains and losses arising from a change in the fair value of available-for-sale trading instruments are recognised in the income statement. assets and2009-10-08T16:26:55+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=22http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=22, NOTES TO THE FINANCIAL STATEMENTS I , . : 0- ,*,7F'~ ''1M,' !!iIf ill_ . "b0 Jf. A financial asset is derecognised when the bank loses control over the contractual rights that comprise that asset. This occurs when the rights are realized, expire or are surrendered. A financial liability is derecognised when it is extinguished. Available-for-sale assets and assets held for trading that are sold are derecognised and corresponding receivables from the buyer for the payment are recognized as of the date the bank commits to sell the assets. The bank uses the specific identification method to determine the gain or loss on derecognition. Held-to-maturity instruments and originated date they are transferred by the bank. loans and receivables are derecognised on the Tax on the profit for the year comprises of the net charge for the current and deferred tax. Current tax is provided on the results in the year as shown in the accounts adjusted in accordance with the tax legislation. Deferred tax is provided using the balance sheet liability method on all temporary differences between the carrying amounts for financial reporting purposes and the amounts used for taxation purposes, except differences relating to the initial recognition of assets or liabilities which affect neither accounting nor taxable profit. For the purposes of the cash flow statement, cash and cash equivalents comprise balances with less than 90 days maturity from the date of acquisition and other instruments with right of rediscounting at notional cost including: cash and balances with central banks, treasury bills and other eligible bills as well as, amounts due from other banks. A majority of the bank's employees are eligible for annual leave and long service awards. The bank also contributes for its employees to the National Social Security Fund (NSSF). Provisions for annual leave and long service awards and contributions to NSSF are charged to the income statement as incurred. Any differences between the charge to income and NSSF contributions payable is recorded in the balance sheet under other payable while separate provisions are made for leave pay and long service awards. Subsidiaries, which are those companies and other entities in which the Bank, directly or indirectly, has power to govern the financial and operating policies, are consolidated. Subsidiaries are consolidated from the date on which control is transferred to the Bank and are no longer consolidated from the date that control ceases.2009-10-08T16:26:55+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=23http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=232. INTEREST INCOME Company and Group 2 0 Uganda Shillings 000 Investment securities Loans and adva nces Other 10,234,219 3,949,829 85,930 14,269,978 2002 Uganda Shillings 000 5,971,915 2,983,078 286,798 9,241,791 3. INTEREST EXPENSE Company and Group 2003 Uganda Shillings 000 Current accounts Foreign exchange demand deposit Savings accounts Time deposits Other 4,836 70,043 301,742 3,556,596 168,064 4,101,281 2002 Uganda Shillings 000 5,628 25,060 318,736 2,336,353 116,952 2,802,729 4. NON INTEREST INCOME Group 2003 Uganda Shillings 000 Feeand commission income Gains less losses arising from dealing in foreign currencies 3,101,149 633,145 3,734,294 2002 Uganda Shillings 000 2,776,212 1,203,234 3,979,446 2003 Uganda Shillings 000 Specific provisions General provisions Reductions in specific provisions due to improved status 60,393 (97,136) (43,474) (80,217) 2002 Uganda Shillings 000 370,476 (139,233) (204,047) 27,1962009-10-08T16:26:55+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=24http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=246. NON INTEREST EXPENSES Group 2003 Uganda shillings 000 Staff costs Professiona I services Advertising and marketing Depreciation (Note 19) Loss on sale of property and equipment Repairs Et maintenance of property and equipment Auditors' remuneration Directors' emoluments as executives Directors' emoluments as nonexecutives Management Fees General expenses 2,532,897 50,895 124,291 601,885 13,541 690,892 40,772 77,196 1,600 1,171,650 1,712,929 7,018,548 2002 Uganda shillings 000 2,762,604 18,714 67,883 677,007 4,357' 548,742 38,919 98,834 2,600 1,086,750 1,414,922 6,721,332 The following are included within staff costs: 2003 Uganda shillings 000 Staff leave provisions Termination benefits (gratuity) 22,801 112,642 2002 Uganda shillings 000 9,685 80,676 The bank operates a gratuity persons employed actuarially determined scheme for its employees (refer to note 23). The average number of provisions are not have been prudently determined. by the Bank during the year was 154 (2002: 160). The gratuity on the basis that the existing provisions 2003 Uganda shillings 000 Depreciation expense Directors' emoluments (Executives) Directors' emoluments (Non-executives) Auditors fees including VAT at 17% 601,885 77,196 1,600 40,772 2002 Uganda shillings 000 677,007 98,834 2,600 38,9192009-10-08T16:26:55+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=25http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=258. INCOME TAX Group 2003 Uganda shillings 000 Current tax Current period Prior year over provision Prior year tax credit Deferred tax Deferred tax charge Prior year under provision 5,190 7,189 12,379 Total income tax charge 2,580,433 375,878 2,294,192 375,878 2,616,334 (20,101) (28,179) 2,568,054 1,918,314' 1,918,314 2002 Uganda shillings 000 The tax on the Group's profit before tax differs from the theoretical using the basic tax rate as follows: amount that would arise 2003 Uganda shillings 000 Profit before tax Tax calculated at a tax rate of 300/0(2002: - 300f0) Tax effect on prior year over provision on current tax Tax effect on opening balance of deferred tax Tax effect of non-deductible costs 8,214,352 2,464,306 (48,280) 7,189 157,218 2,580,433 2002 Uganda shillings 000 5,886,419 1,765,926 528,266 2,294,1922009-10-08T16:26:55+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=26http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=26Deferred tax assets and liabilities and the deferred tax charge!(credit) are attributable to the following items: in the profit and 1055 account, Charged to Equity Ushs 000 Deferred tax liabilities Property, plant and equipment Property revaluations 170,927 859,180 1,030,107 Deferred tax assets Provisions (356,925) (356,925) Net deferred tax liability 673,182 7,189 7,189 12.379 (349,736) (349,736) 907.387 5,190 5,190 221,826 221,826 1,081,006 1,257123 Deferred income taxes are calculated on all temporary differences under the liability method using a tax rate of 300J0 (2002: 300J0). The movement on the deferred tax account is as follows: 2003 Ushs 000 At beginning of the year charge 673,182 12,379 279,545 (57,719) 907,387 2002 Ushs 000 297,304 Income statement 375,878 Prior year deferred tax under provision Deferred tax on depreciation At end of the year transfer 2003 Ushs 000 Net profit attributable to shareholders Ushs 000 Number of ordinary shares issued Basic earnings per share Diluted earnings per share 5,633,919 40,000,000 Ushs 140.85 Ushs140.85 2002 Ushs 000 3,592,227 40,000,000 Ushs 89.81 Ushs 89.812009-10-08T16:26:55+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=27http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=27Dividend has been proposed at 60% of issued and fully paid share capital. Payment of dividends subject to withholding tax at the rate of 15%. is 2003 2002 Uganda Shillings Cash in hand Balances with Bank of Uganda 000 1,995,790 6,784,898 8,780,688 Uganda Shillings 000 1,424,394 7,737,871 9,162,265 Cash in hand and balances with Bank of Uganda comprise reserve balances requirements mainly of mandatory minimum cash prescribed by the Bank of Uganda from time to time. 2003 2002 Uganda Shillings 000 Treasury bills Government Stock Repo from BOU 67,929,375 210 Uganda Shillings 000 59,584,687 210 3,000,000 62,584,897 bills for a term of 91 days, 2,700,000 70,629,585 The Government of Uganda through Bank of Uganda issues treasury 182 days, 273 days and 364 days. Repos are short-term are carried at their fair value. bills issued by Bank of Uganda. All bills2009-10-08T16:26:55+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=28http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=282003 Uganda Shillings 000 Due from other banks Placements with other banks 109,017 15488000 2002 Uganda Shillings 000 1,180,586 1 500000 15,597,017 2,680,586 2003 Uganda Shillings 000 Due from other banks Placements with other banks 106,315 15,488,000 2002 Uganda Shillings 000 1,177,468 1,500,000 15,594,315 2,677,468 2003 Uganda Shillings 000 Bank of Baroda, London - US$ Bank of Baroda, London - GBP Bank of Baroda, Mumbai - IRs' Bank of Baroda, Brussels - EURO Bank of Baroda, Durban-US$ Bank of Baroda, Nairobi-KSHS Bank of Baroda, Brussels US$(PLCMT) BanK of Baroda, Brussels-EURO (PLCMT) Bank of Baroda, Treasury Branch Mumbai-US$ (PLCMTl Bank of Baroda, New York, US$ (PLCMT) Bank of Baroda, London (PLCMT) 692 551,116 240,918 159,933 135,520 5,509 3,872,000 300,000 1,936,000 677,600 683,000 8,562,288 2002 Uganda Shillings 000 29,482 634,174 332,706 98,827 147,8402009-10-08T16:26:55+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=29http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=2915. INTEREST RECEIVABLE AND OTHER ASSETS Group 2003 2002 Uganda Shillings 000 Interest receivable Inter-branch Other assets accounts (NET) 66,049 34,819 785,483 886,351 Uganda Shillings 000 158,079 204,475 649,824 1,012,378 Company 2003 2002 Uganda Shillings 000 Interest receivable Inter-branch Other assets accounts (NET) 66,049 34,819 771,168 872,036 Uganda Shillings 000 158,079 204,475 644,624 1,007,178 16. LOANS AND ADVANCES TO CUSTOMERS Company and Group 2003 2002 Uganda Shillings 000 Overdrafts Demand and term loans Personal loans Other 13,781,281 11,174,314 245,125 56,583 25,257,304 Uganda Shillings 000 10,349,222 7,068,952 192,967 192,399 17,803,540 Gross loans and advances 2003 2002 Uganda Shillings 000 Uganda Shillings 000 17,803,540 (34,912) (255,638) 17,512,990 Gross loans and advances Specific provisions for impairment General provisions for impairment 25,257,304 (41,498) (158,502) 25,057,304 Net loans and advances2009-10-08T16:26:55+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=30http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=302003 Uganda Shillings 000 Balance at 1 January Specific doubtful debts expense Bad debts written off Recoveries of amounts previously provided Balance at 31 December 290,550 60,393 (10,333) (140,610) 2002 Uganda Shillings 000 626,720 370,476 (363,366) (343,280) 200,000 290,550 The aggregate amount of non-performing loans on which interest was not being accrued amounted to Ushs 120 million as at 31 December 2003. (Ushs 60 million as at 31 December 2002). Economic follows: sector risk concentrations within the customer loan portfolio were as 2003 0/0 2002 0/0 Government Agricultural Manufacturing Trade and commerce Transport & communications Building and construction Other 7.40 38.97 13.27 2.20 6.31 31.85 100.00 0.10 18.15 19.20 21.26 1.37 6.33 33.59 100.00 17. INVESTMENTS IN SUBSIDIARIES Company 2003 Uganda shillings 000 Baroda Capital Markets (U) Ltd Less provision for impairment in value Net investment 10,000 2002 Uganda shillings 000 10,000 10,000 10,0002009-10-08T16:26:55+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=31http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=3118. PROPERTY AND EQUIPMENT Company and Group Landand Buildings Ushs000 Cost or valuation At 1 January 2003 Additions Reclassification Disposal At 31 December 2003 Depreciation At 1 January 2003 Charge for the year Reclassification On disposal At 31 December 2003 Net Book Value At 31 December 2003 At 31 December 2002 5.133,921 4,569,192 191,536 220,384 247,148 198.910 802.958 865,830 6,375.562 5.854,316 420,979 (21,646) 380,623 1.670.231 (23,299) 963.587 (44,946) 3,435,420 143,234 277,745 354,385 47,884 1,508,683 161,548 872,178 114,708 2,878,481 601,885 5,554,900 (25,002) 572,159 1.917.379 4,712,426 842,474 574,769 22,392 1,707,593 203,645 6,141 1,738,008 86,433 (6,141 ) (51,755) 1,766.545 (76,758) 9,810.982 8,732,796 1,154,944 Motor vehicles Ushs000 Computer equipment Ushs000 Furniture, fittings Et equipment Ushs000 Total Ushs000 The Bank premises were re-valued in 2002 by an independent professional firm of surveyors. Valuation was conducted on the basis of the market value for existing use. The book values of the properties were adjusted up to the revaluations and the resultant uplift/surplus net of deferred tax was credited to revaluation reserves in shareholders equity. Land and buildings include the Kampala main Branch freehold property - with the carrying value of Ushs 4.4 billion - and the leasehold properties housing four Branches, namely: Jinja, Iganga, Mbale and Mbarara - with a carrying value of Ushs 759 million. The carrying value of the Kampala main property (freehold) as at the year-end, therefore represented 85% of the total carrying value of Land and Buildings. IAS 17 requires that payment made to secure a lease for land should be presented as Prepaid Operating Lease Rentals under non-current assets in the balance sheet and amortised over the period of the lease. In view of the difficulty in apportioning the cost of land from the purchase price, since these properties were already developed prior to acquisition, and the weak market price of land outside Kampala resulting in a significant portion of the valuation being attributed to the leasehold improvements, management have attributed the entire valuation to leasehold improvements. Leasehold land is therefore not considered material to warrant separate disclosure. Land and buildings on leasehold are therefore deemed to represent buildings and therefore as Property and Equipment and depreciated at 5%. If the land and buildings follows: were stated on a historical presented cost basis, then the carrying value would be as2009-10-08T16:26:55+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=32http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=32NOTES TO THE FINANCIAL STATEMENTS '~ k~ • 2003 Uganda Shillings 000 820,002 2002 Uganda Shillings 000 1,959,313 820.002 1,959,3132009-10-08T16:26:55+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=33http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=332003 Uganda Shillings 000 Leave entitlement Accrued interest Bills payable Other liabilities 153,687 1,963,948 373,696 1,308,566 3,799,897 2002 Uganda Shillings 000 172,565 1,284,341 612,071 1,502,565 3,571,542 2003 Uganda Shillings Leave entitlement Accrued interest Bills payable Other liabilities 153,687 1,963,948 373,695 1,305,687 3,797,017 2002 Uganda Shillings oem 000 172,565 1,284,341 612,071 1,499,644 3,568,621 The retirement benefit obligations comprise of gratuity and social security. The gratuity is computed at 55% of the monthly salary last drawn by each employee multiplied by each completed year of service, subject to eligibility under the terms and conditions of the scheme. 2003 Uganda Shillings 000 Balance at 1 January Additional provisions made during the year Payments made Balance at 31 December 745,558 112,642 (20,591 ) 837,609 2002 Uganda Shillings 000 668,254 80,676 (3,372) 745,558 - The Bank also makes contributions to the National Social Security Fund. Contributions are determined by local statute and are shared between employer and employee. For the year ended 31 December 2003, the Bank contributed Ushs 153 million (2002: Ushs 162 million), which has been charged to the income statement.2009-10-08T16:26:55+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=34http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=34Ordinary shares Ushs 000 Authorised: 40,000,000 ordinary shares of Ushs 100 each (2002: 40,000,000 ordinary shares of Ushs 100 each) Issued and fully paid: 40,000,000 ordinary shares (2002-40,000,000) Reconciliation of Ushs 100 each 40,000,000 4,000,000 Balance at the beginning of the year Translation differences Balance at 31 December 2003 N/A 40,000,000 N/A 4,000,000 25. OFF BALANCE COMMITMENTS SHEET FINANCIAL INSTRUMENTS, CONTINGENT LIABILITIES AND Company and Group In common with other banks, the Bank conducts business involving acceptances, guarantees, performance bonds and indemnities. The majority of these facilities are offset by corresponding obligations of third parties. Contingent liabilities Acceptances and letters of credit Guarantees and performance bonds Commitments 2003 Uganda Shillings 000 4,930,546 10,613,451 15,543,997 2002 Uganda Shillings 000 5,304,319 6,508,864 11,813,183 Un-drawn formal stand-by facilities, credit lines and other commitments to lend 1,280,318 13,093,501 An acceptance is an undertaking by a bank to pay a bill of exchange drawn on a customer. The bank expects most acceptances to be presented and reimbursement by the customer is normally immediate. Letters of Credit commit the bank to make payments to third parties, on production Such payments are subsequently reimbursed by customers. of documents. Guarantees are generally written by a bank to support performance by a customer to third parties. The bank will only be required to meet these obligations in the event of the customer's default.2009-10-08T16:26:55+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=35http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=35~,~ NOTES TO TIjE FINANCIAL STATEMENTS , # ,J , d '" Commitments to lend are agreements to lend to a customer in future subject to certain conditions. Such commitments are normally made for a fixed period. The Bank may withdraw from its contractual obligation for the undrawn portion of agreed credit limits by giving reasonable notice to the customer. The bank is exposed to various risks associated with the effects of fluctuations in the prevailing levels of market interest rates on its financial position and cash flows. The table below summaries the exposure to interest rate risks. Included in the table are the Bank's assets and liabilities at carrying amounts, categorised by the earlier .of contractual re pricing or maturity dates. The bank does not bear an interest rate risk on off balance sheet items. Non-interest Up to 1 month Ushs 000 1 - 3 months Ushs 000 3 - 12 months Ushs 000 1 - 5 years Ushs 000 Over 5 years Ushs 000 bearing Ushs 000 Total Ushs 000 Cash and Bank of Uganda balances Government securities Loans and advances Deposits Et balances due from banking institutions Other investments Interest receivable and other assets Amounts due from group companies Property and equipment Total assets Liabilities and equity 22,957,712 39,628,558 21,182,825 22,740,080 17,695,079 79,489,307 23,507 57,467 5,749,217 2,919,158 15,488,228 15,613,742 1,353,614 14,538,826 237,095 40,477,017 23,466,595 8,780,688 8,780,688 70,629,585 25,057,304 24,156,603 10,000 791,062 10,000 872,036 6,375,562 15.957,312 6,375,562 135,881,778 Customer deposits Deposits and balances due to banking institutions Interest payable and other liabilities Retirement benefit obligations Tax payable Deferred tax liability Capital and reserves Total liabilities and equity 22,973,495 106,742,590 1,361,361 572,830 220,320 525,000 1,278,310 2,434,000 1,725,557 837,610 116,335 907,387 19,160,478 4,320,361 3,797,017 837,610 116,335 907,387 19,160,478 135.881,778 24,891.903 39,848,878 22,986.135 2,434.000 45,720,862 Gap at 31 December 2003 As at 31 December 2002 Total assets Total liabilities Interest sensitivity gap as at 31 December 2002 (2,151.823) (22,153,799) 56,503.172 (2,434,000) - (29,763.550) 30,359,308 22,760,406 7,598,902 14,682,928 26,826,202 38,740,296 50,455,124 33,825,611 17,566,411 16,259.200 117,608,143 117,608,143 (12,143,274) (11,714.828)2009-10-08T16:26:55+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=36http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=3628. LIQUIDITY RISK The table below analyses assets and liabilities relevant maturity at balance sheet date to the contractual maturity date. up to 1 month Ushs 000 groupings based on the remaining period 1- 3 months Ushs 000 3 - 12 months Ushs 000 1- 5 years Ushs 000 Over 5 years Ushs 000 Total Ushs 000 Cash and Bank of Uganda balances Government securities Loans and adva nces Deposits & balances due from banking institutions Other investments Interest receivable and other assets Amounts due from group companies Property and equipment Taxation recoverable Total assets Liabilities and equity 8,780,688 15,613,742 1,353,614 5,749,217 14,538,826 237,095 2,919,158 40,477,017 23,466,595 15,488,228 10,000 653,287 218,749 8,780,688 70,629,585 25,057,304 24,156,603 10,000 872,036 6,375,562 6,375,562 32,150,548 17,913,828 79,431,840 6,385,562 135,881,778 Customer deposits Deposits and balances due to banking institutions Interest payable and other liabilities Retirement benefit obligation Tax payable Deferred tax liability Capital and reserves Total liabilities and equity Net Liquidity Gap as at 31 December 2003 45,931,207 2,745,361 1,407,852 39,628,558 21,182,825 525,000 1,050,000 106,7 42,590 4,320,361 3,797,018 837,609 116,335 907,387 837,609 116,335 907,387 19,160,478 135,881,778 200,219 2,188,947 2,400,000 50,084,420 (17,933,872) 2,766,125 275,000 39,828,777 (21,914,948) 2,760,105 625,000 26,296,772 53,135,068 6,756,627 1,303,000 1,050,000 (1,050,OOO) 3,261,140 16,760,478 18,621,809 (12,236,247) Off balance sheet position Credit commitments As at 31 December 2002 15,543,997 2,203,000 Total assets Total liabilities Net liquidity gap as at 31 December 2002 40,248,116 22,760,406 17,487,710 20,258,867 26,826,202 (6,567,335) 49,454,253 50,455,124 (1,000,871 ) 1,782,590 5,864,317 17,566,411 117,608,143 117,608,143 1,782,590 (11,702,094) Management is of the view that the mismatch The figures returned indicate a mismatch of assets and liabilities. does not subject the bank to severe liquidity risks because maturities for all government securities and balances with overseas banks can be restructured in accordance with business demands.2009-10-08T16:26:55+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=37http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=3729. CURRENCY RISK The Bank operates wholly within Uganda and its assets and liabilities are reported in Uganda shillings. Although it maintains trade with the majority shareholder and other correspondent banks it held no significant foreign currency exposure as at 31 December 2003. Other Euro Ushs 000 US$ Ushs 000 GBP Ushs 000 Ushs Ushs 000 currencies Ushs 000 Total Ushs 000 Assets Cash and balances with Bank of Uganda Government securities Loans and advances Deposits and balances due from Banking Institutions Other investments Interest receivable and other assets Amounts due from group companies Property and equipment Tota I assets Liabilities and equity 23,112 719,249 41,287 7,997,040 70,629,585 - 8,780,688 • 70,629,585 25,057,304 6,055,446 24,156,603 10,000 872,036 I' 4,507,150 459,932 16,407,125 1,234,100 20,550,154 10,000 872,036 6,375,562 483,044 21,633,524 1,275,387 100,058,815 12,431,008 6,375,562 135,881,778 Customer deposits Deposits and balances due to banking institutions Interest payable & other liabilities Retirement obligation Tax payable Deferred tax liability Capital and reserves Total liabilities and equity 134,283 300,000 26,042,952 536,361 1,220,742 79,131,705 3,484,000 3,797,018 837,609 116,335 907,387 19,160,478 212,908 106,742,590 4,320,361 3,797,018 837,609 116,335 907,387 19,160,478 434,283 26,579,313 1,220,742 107,434,532 212,908 135,881,778 Net balance sheet position 48,761 (4,945,789) 54,645 (7,375,717) 12,218,100 Off balance sheet position Credit commitments As at 31 December 2002 119,563 116,983 2,580 21,731,576 24,985,143 (3,253,567) 669,131 471,710 197,421 94,755,167 91,978,871 2,776,296 332,706 55,436 277,270 15,543,997 2,203,000 TotaI assets Total liabilities Net balance sheet position 117,608,143 117,608,143 30. RISK MANAGEMENT DISCLOSURES This section provides details of the bank's exposure to risk and describes the methods used by management to control risk. The most important types of financial risks to which the bank is exposed are credit risk, liquidity risk and market risk. Market risk includes currency risk and interest rate risk.2009-10-08T16:26:55+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=38http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=38A (i) Risks Credit risk The bank's credit exposure at the balance sheet date from financial instruments held or issued for trading purposes is represented by the fair value of instruments with a positive fair value at that date, as recorded on the balance sheet. The risk that counter-parties to trading instruments might default on their obligations is monitored on an ongoing basis. In monitoring credit risk exposure, consideration is given to trading instruments with a positive fair value and to the volatility of the fair value of trading instruments. To manage the level of credit risk, the bank deals with counter-parties of good credit standing, enters into master netting agreements whenever possible, and when appropr~ate, obtains collateral. An assessment of the extent of which fair values of collaterals cover existing credit risk exposures on loans and advances to customers. The bank also monitors concentrations of credit risk that arise by industry and type of customer in relation to the bank loans and advances to customers by carrying a balanced portfolio. The bank has no significant exposure to any individual customer or counterparty. (ii) Liquidity risk Liquidity risk arises in the general funding of the bank's activities and in the management of positions. It includes both the risk of being unable to fund assets at appropriate maturities and rates and the risk of being unable to liquidate an asset at a reasonable price and in an appropriate time frame. The bank has access to a diverse funding base. Funds are raised mainly from deposits and share capital. This enhances funding flexibility, limits dependence on anyone source of funds and generally lowers the cost of funds. The bank strives to maintain a balance between continuity of funding and flexibility through the use of liabilities with a range of maturities. The bank continually assesses liquidity risk by identifying and monitoring changes in funding required to meet business goals and targets set in terms of the overall bank strategy. Market risk (0) Interest rate risk The bank's operations are subject to the risk of interest rate fluctuations to the extent that interest earning assets and interest bearing liabilities mature or reprice at different times or in differing amounts. Risk management activities are aimed at optimizing net interest income, given market interest rates levels consistent with the bank's business strategies. The bank does not have any significant interest rate risk exposures. (b) Currency risk The bank is exposed to currency risk through transactions in foreign currencies. transactional exposures give rise to foreign currency gains and losses that are in the income statement. In respect of monetary assets and liabilities in foreign the group ensures that its net exposure is kept to an acceptable level by buying foreign currencies at spot rates when considered appropriate. The bank's recognized currencies, and selling B Risk measurement and control Interest rate, currency, credit, liquidity and other risks are actively managed by management2009-10-08T16:26:55+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=39http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=39to ensure compliance with the bank's risk limits. The bank's risk limits are assessed regularly to ensure their appropriateness given its objectives and strategies and current market conditions. A variety of techniques are used by the bank in measuring the risks inherent in its trading and non-trading positions. 31. ANALYSIS OF CASH AND CASH EQUIVALENTS 2003 Uganda shillings 000 Cash and balances with the Bank of Uganda Balances due from group companies Deposits and balances due from banking institutions Total 8,780,688 8,562,288 15,597,017 32,939,993 2002 Uganda shillings 000 9,162)65 18,799,029 2,680,586 30,641,880 For the purposes of the cash flow statement, which are readily convertible of maturity rediscounted when acquired, at nominal costs. cash equivalents include short term liquid investments three months can be readily securities which into known amounts with the exception of cash and which were within of government 32. ASSETS PLEDGED AS SECURITY As at 31 December 2003, there were no assets pledged to secure liabilities liabilities outstanding. and there were no secured In the normal course of business, the Bank has placed foreign currencies with the parent company, Bank of Baroda, India and its overseas branches at interest rates obtainable The relevant balances are shown in note 14 above. from the open market. Loans to directors There were no loans to Directors Directors] during the period. of the Bank (and their families and companies controlled by the 34. COUNTRY OF INCORPORATION AND REGISTERED OFFICE The Bank is incorporated in the Republic of Uganda under the Companies Act, CAP 110 and has been Statute 1993 to conduct retail banking services. licensed under the Financial Institutions 35. ULTIMATE PARENT COMPANY The ultimate parent company is Bank of Baroda, PLC a company registered in India. 36. CURRENCY These financial statements are presented in Uganda Shillings. At the year end the exchange rate of the Uganda shilling to the US dollar was Ushs 1,936: US$l whilst the closing rate of the Uganda shilling to the Indian Rupee was Ushs 1: IRs 0.02345.2009-10-08T16:26:55+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=40http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=40II We of . . for me I us and on my I our behalf at the Annual General Meeting of the Company, to be held on the 16th June, 2004 and at every adjournment thereof. Note: This form should be deposited with Company Secretary of the Bank within not later than 24 hours of the meeting. Bank of Baroda (U) Ltd. ADMISSION FORM The Shareholders or his I her proxy must produce this admission form in order to obtain admission to the Annual General Meeting.2009-10-08T16:26:55+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=41http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=41Launching of Baroda Business Loans Baroda premiu~ Deposit Scheme Launching of New Business products Bank of Baroda <V) Ltd. Mr. Emmanuel Tumusime Mutebile (Governor of Bonk of Ugonda) delivers a speech on the occasion of launching Baroda Business Loans and Baroda Premium Deposit Scheme at Sasa Hall - Grand Imperial Hotel, Kampala. On his left is Hon. Prof. Peter Kasenene, Mr. P.L. Kagalwala and Mr. F.F. Magezi while on the right is H.E. the High Commissioner of India to Uganda Mr. Deepak Ray and Hon.Joash Mayanja Nkanji. Inauguration of New premises of Jinja Branch VIPs stand for National Anthem on the occasion to inaugurate the New Jinja Branch Premises. Left to Right. Mr. F.F. Magezi (Director) Mr. P.L. Kagalwala (Managing Director) H.E. Mr. Deepak Ray (High CommiSsioner of India) Dr. Anil .K. Khandelwal (Chairman) Dr. Micheal Kyomya, M.P. Ranade (Director) and Mr. A.K. Singla (Senior Branch Manager). Sponsoring of Baroda Badminton Tournament Mr.P.L. Kagalwala (Managing Director) presents a cheque worth Shs. 2.5 million to members of Uganda Badminton Association. Looking on to his left is Mr. S. Rajappa, Mr. N.K. Srivastava and Dr. Ram Jass Yadav.2009-10-08T16:26:55+02:00http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=42http://ipaper.ipapercms.dk/AfricanShareHolder/ug/BOBU/2003/?Page=422009-10-08T16:26:55+02:00