FMBcapital : FMBCH plc 2022 Annual Report

2022 Annual financial statements

Belief comes first

CONTENTS

3 Directors' report

• Directors' responsibilities

• Certificate from the Secretary
  7 Independent auditor's report

1. Statements of financial position
2. Statements of profit or
   loss and other comprehensive income
3. Statements of changes in equity

1. Statements of cash flows
2. Notes to the financial statements

1	Reporting entity	16
2	Basis of preparation	16
3	Adoption of new and
	revised International
	Financial Reporting
	Standards	18
4	Segment reporting	22

• Significant accounting judgements, estimates

and assumptions

26

• Significant accounting

	policies	29
7	Risk management	44
8	Fair value	68

• Cash and balances with

	central banks	71
10	Money market investments	71
11	Loans and advances to
	customers	72
12	Repurchase agreements	73
13	Current tax	73
14	Assets held for sale	74
15	Investments at fair value
	through profit or loss	74

16 Investments at fair value through other comprehensive

income75

17 Investments in subsidiary

companies75

18	Investment in joint
	venture	76
19	Other assets	77
20	Investment property	78
21	Intangible assets	78
22	Leases	79
23	Property and equipment	80
24	Deferred tax	83
25	Balances due to other
	banks	84
26	Customer deposits	85
27	Other payables	86
28	Provisions	86
29	Loans payable	86
30	Subordinated debt	87
31	Convertible preferences
	shares	87
32	Share capital	88
33	Restructuring reserve	88
34	Property revaluation
	reserve	88
35	Loan loss reserve	89
36	Other reserves	89
37	Foreign currency translation
	reserve	89
38	Group subsidiaries	89
39	Interest	94

40	Net fee and commission
	income	94
41	Income from investments	95
42	Gain on foreign exchange
	transactions	95
43	Other operating income	95
44	Staff and training costs	95
45	Premises and equipment
	costs	95
46	Depreciation and
	amortisation	96
47	Administration and
	general expenses	96
48	Impairment loss on
	financial assets	96
49	Basic and diluted
	earnings per share	97
50	Contingent liabilities	98
51	Capital commitments	98
52	Related party transactions	99
53	Directors' fees and
	expenses	102
54	Events after the
	reporting date	102

55 Exchange rates used for translating the Group's

foreign operations

102

Abbreviations and acronyms 103

2

Directors' report

for the year ended 31 December 2022

The Directors are pleased to submit their report together with the audited consolidated and separate financial statements of FMBcapital Holdings Plc (the Company) and its subsidiaries (the Group) for the year ended 31 December 2022.

Nature of Business

The Company is a public limited liability Company incorporated in Mauritius, registered as a Global Business Licence Company with the Financial Services Commission (FSC) in Mauritius, and listed on the Malawi Stock Exchange (MSE).

The Company owns and manages a portfolio of direct and indirect subsidiary investments, which are principally involved in the provision of commercial banking services. Details of Group subsidiaries, including their countries of domicile, are set out in Note 38 of the financial statements.

Directors' interests in the Company

As at 31 December 2022, the total direct and indirect interests of the Directors and parties related thereto in the issued

ordinary share capital of the Company were as follows:	2022		2021
Name		Shares	%	Shares	%
Premier Capital (Mauritius) Limited	(i)	766 266 044	31.17	766 266 044	31.17
Prime Bank Limited		262 500 000	10.68	262 500 000	10.68
Prime Capital Holdings Limited		262 500 000	10.68	262 500 000	10.68
Magni Holdings Limited	(i)	232 000 000	9.44	232 000 000	9.44
Hitesh N. Anadkat	(i)	62 797 891	2.55	61 710 170	2.51
NG Anadkat Limited	(i)	27 067 289	1.10	27 067 289	1.10
Livingstone Exports Limited	(i)	16 446 961	0.66	16 446 961	0.66
Livingstone Holdings Limited	(i)	13 116 970	0.53	13 116 970	0.53
Thomas Kadantot	(ii)	1 587 600	0.06	1 587 600	0.06
Omega O'Neill	(iii)	1 309 391	0.05	1 309 391	0.05
Shaun Anadkat	(iv)	700 000	0.03	700 000	0.03
Sheena Anadkat	(iv)	500 000	0.02	500 000	0.02
Dillon Anadkat	(iv)	400 000	0.02	400 000	0.02

1. Mr. H. N Anadkat and members of his immediate family have beneficial interest in Premier Capital (Mauritius) Limited, NG Anadkat Limited, Livingstone Exports Limited, Magni Holdings Limited and Livingstone Holdings Limited.
2. Mr. T. Kadantot is a director of FCB Malawi, a wholly owned subsidiary of the Company.
3. Ms.Omega O'Neill is an immediate family member of Mr. J. M. O'Neill. Mr. J.M. O'Neill resigned from the Board of the Company effective May 2022.
4. Mr. Shaun Anadkat, Ms. Sheena Anadkat and Mr. Dillon Anadkat are immediate family members of Mr. H. N. Anadkat.

The Board of Directors and Directors' remuneration

As at 31 December 2022, the Board comprised:
Terence Michael Davidson - Chairman	Hitesh Natwarlal Anadkat
Busisa Moyo (Appointed July 2022)	Gavin John Chapman
Johannes Christoffel Els	Mahendra Gursahani
Priscilla Balgobin-Bhoyrul	Rajkamal Taposeea
Susanne Alfs	John Michael O'Neill (Resigned May 2022)

The Board is responsible for directing the affairs of the Company in the best interests of its Shareholders, in conformity with legal and regulatory frameworks, and consistent with its constitution and best governance practices.

Remuneration paid by the Company and its subsidiaries to Directors of the Company has been disclosed in Note 53 of the annual financial statements.

The individual remuneration of the Directors is disclosed below:

USD	2022	2021
Name of Non-executive Director
Terence M. Davidson	60 000	57 500
Hitesh N. Anadkat	18 000	15 500
Busisa Moyo	9 000	-
Johannes C. Els	18 000	15 000
Mahendra Gursahani	18 000	-
Priscilla Balgobin-Bhoyrul	18 000	16 000
Rajkamal Taposeea	18 000	16 000
Susanne Alfs	18 000	16 500
John M. O'Neill	9 000	16 500
	186 000	153 000

Gavin J. Chapman is not remunerated as agreed with Barclays and Mahendra Gursahani was not remunerated as a Non-executive Director in 2021 as he was acting as interim Group Managing Director.

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2022 ANNUAL FINANCIAL STATEMENTS (continued)

Directors' report (continued)

for the year ended 31 December 2022

Dividend

During 2022 a final dividend in respect of the financial year ended 31 December 2021 of USD 2 458 250 (0.1 US cents per ordinary share) was approved by the Shareholders at the Annual General Meeting in June 2022 and paid in July 2022. An interim dividend in respect of the financial year ended 31 December 2022 of USD 3 687 375 (0.15 US cents per ordinary share) was approved by the Directors in August 2022 and paid in September 2022.

The directors have approved a second interim dividend in respect of the financial year ended 31 December 2022 of USD 8 312 625 (0.34 US cents per ordinary share). The financial statements for the current financial year do not reflect this dividend. The dividend will be accounted for in equity as an appropriation of accumulated profits in the financial year ending 31 December 2023.

Therefore, the dividend in relation to the 2022 financial year will amount to USD 12 000 000 (2021: USD 4 424 850), comprising a settled first interim dividend of USD 3 687 375, or 0.15 US cents per share (2021: USD 1 966 600, or 0.08 US cents) and a second interim dividend of USD 8 312 625, or 0.34 US cents per share (2021: USD 2 458 250, or 0.1 US cents per share). This will equate to a 30% dividend pay out against profit attributable to owners of the Company (2021: 16%).

Going concern

The Directors have no reason to believe that the Group will not be a going concern in the period ahead. The going concern assessment was performed through a review of the economic conditions in which the Group is expected to perform over the next 12 months, its ability to adapt its strategy, business and operating models to the projected macro environment, financial forecasts and business underwriting capacity. The Group has sufficient capital, human and physical resources, as well as sources of sustainable deposits which are well diversified and is, therefore, able to address short-term stress factors within reasonable parameters.

The effects of the Covid-19 pandemic on the Group's ability to continue as a going concern were also considered, given the uncertainty around further mutations and variations to the virus, as well as the impact on the Group's future results. As 2022 progressed, the infection and mortality statistics were assessed as not being material to the Group's financial results, position and cash flows.

Financial risk factors

The consideration of major financial risks impacting on the Group's operations has been set out in Note 7 of the financial statements.

Donations

During the year, no donation for political purposes was made by the Company or any of its subsidiaries.

Ethical standards

The Board is fully committed to ensuring the Group's affairs are conducted with integrity and that the highest ethical standards are maintained. All employees of the Group are required to abide by a code of conduct containing detailed guidelines governing ethics and integrity in the workplace.

Auditor's report and financial statements

The independent auditor's report is set out on pages 7 to 9 and the financial statements are set out on pages 10 to 102.

On behalf of the Board

Terence Davidson	Busisa Moyo
Director	Director

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Directors' responsibilities

for the year ended 31 December 2022

The Directors are responsible for the preparation and fair presentation of the consolidated and separate annual financial statements of FMBcapital Holdings Plc, comprising the consolidated and separate statements of financial position as at 31 December 2022 and the statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows for the year ended 31 December 2022, and the notes to the financial statements which include a summary of significant accounting policies and other explanatory notes, in accordance with International Financial Reporting Standards. The consolidated and separate financial statements comply with the Mauritius Companies Act,

2001 as far as it is applicable to companies holding a Global Business Licence. In addition, the Directors are responsible for preparing the Directors' Report.

The Mauritius Companies Act, 2001 requires the Directors to ensure that the Group and Company maintain proper accounting records which disclose with reasonable accuracy at any time the financial position of the Group and Company and ensure the financial statements comply with the Mauritius Companies Act, 2001.

In preparing the consolidated and separate financial statements, the Directors accept responsibility for the following:

• Maintenance of proper accounting records
• Selection of suitable accounting policies and applying them consistently
• Making judgements and estimates that are reasonable and prudent
• Compliance with applicable accounting standards, when preparing financial statements, subject to any material departures being disclosed and explained in the consolidated and separate financial statements; and
• Preparation of financial statements on a going concern basis unless it is inappropriate to presume the Company will continue to operate for the foreseeable future.

The Directors are also responsible for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and for maintaining adequate accounting records and an effective system of risk management.

The directors confirm that they have complied with the above requirements in preparing the consolidated and separate financial statements.

Approval of financial statements

The consolidated and separate financial statements of FMBcapital Holdings Plc as identified in the first paragraph, were approved by the Board of Directors on 17 May 2023 and are signed on its behalf by:

Terence Davidson	Busisa Moyo
Director	Director

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