GetBucks Microfinance Bank : April 20, 20222021 FY Financial Results & Audit Report

April 20, 2022 at 01:45 am EDT

Incorporated in Zimbabwe on 17 January 2012 and converted to a public company limited by shares on 4 November 2015 (Registration number 322/2012)

AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2021

The board of directors of GetBucks Microﬁnance Bank Limited (the "Bank") present the audited ﬁnancial results of the Microﬁnance Bank for the year ended 31 December 2021.

Financial Highlights of the Bank

The inﬂation adjusted audited full year ﬁnancial results (the "ﬁnancial results") when compared to the prior year ended 31 December 2020 ("comparative period"), are set out below:

- Revenue for the year increased by 206% to ZWL588 million compared to ZWL192million for the comparative period;
- Total comprehensive income for the year increased by 366% to ZWL$191million compared to a loss of ZWL$72 million for the comparative period;
- Headline earnings per share increased by 445% to a headline of 17.93 cents per share compared to the headline loss per share of 5.19 cents for the comparative period;
- Earnings per share increased by 367% to 16.5 cents per share compared to the loss per share of 6.19 cents per share for the comparative period; and
- Net assets increased by 68% to ZWL474 million compared to ZWL282 million for the comparative period.

No dividends were declared or paid during the period under review.

This short announcement should be read in conjunction with the complete set of ﬁnancial statements for the year ended 31 December 2021 which have been audited by Grant Thornton Chartered Accountants (Zimbabwe) in accordance with International Standards on Auditing (ISAs). The auditors have issued an adverse audit opinion on the ﬁnancial statements with respect to non-compliance with International Accounting Standard (IAS) 21 - The Effect of Changes in Foreign Exchange Rates and International Accounting Standard (IAS) 29 - Financial Reporting in Hyperinﬂationary Economies on accounting for comparatives and transactions for the period, and the extent to which fair values for assets, transactions and liabilities presented in the ﬁnancial statements are affected by the prevailing economic environment.

The Auditors have included a section on key audit matters. The key audit matters were with respect to the recognition of revenue and loan advances.

This short form announcement is the responsibility of the Board and does not contain full or complete details. Any investment decisions by investors and/or shareholders should be based as a whole on consideration of the audited ﬁnancial results for the full year ended 31 December 2021 which may be downloaded from the Company's website at:http://www.getbuckszw.comand may also be viewed, at no cost, at the Zimbabwe Stock Exchange website.

By Order of the Board of Directors,

Wimbayi Chigumbu

Chief Finance Ofﬁcer 14 April 2022

Directors:

Dr. R. Mbire (Board Chairman), E. Chavora* (Acting Managing Director), W. Chigumbu* (Chief Finance Ofﬁcer), M. Madamombe* (Chief Operating Ofﬁcer), J. Machiva, P. Soko, P. Matute, T. Munowenyu, S. Chibaya. * Executive.

Chairman's Statement Dear Stakeholders,

I am pleased to present the results for the year ended 31 December 2021, which showed that GetBucks Microﬁnance Bank Limited ('the Microﬁ-nance Bank'') has been very resilient, in the face of the Covid-19 pandemic and inﬂationary pressures in the operating environment.

tered oﬃce.

The engagement partner on the audit resulting in the auditor's report is Mr. Edmore Chimhowa (PAAB Number 0470).

The operating environment continued to be characterised by signiﬁcant challenges in the year 2021, with the Covid-19 pandemic continuing to aﬀect businesses both globally and locally. Whilst the annual inﬂation rate closed at 60.74% in December 2021 from 348.6% in December 2020, the operating environment continued to experience signiﬁcant increases in prices of goods and services. The Foreign Exchange Auction Trading System introduced by the Reserve Bank of Zimbabwe in June 2020 continued to operate in 2021 addressing the foreign currency challenges but the market continued to suﬀer from inadequate foreign currency allocations as the auction system could not fully meet the market foreign cur-rency demand. Despite these challenges, the Microﬁnance Bank showed resilience.

Operational Results

The Microﬁnance Bank recorded a net proﬁt of ZWL192 million representing a 366% increase from prior year loss of ZWL 72 million. This was large-ly as a result of a reduction in the net monetary loss from ZWL48 million in 2020 to close at net monetary proﬁt of ZWL 25 million in 2021, largely due to the Microﬁnance Bank's assets being predominantly monetary. Operating expenses increased by 55% during the year under review from ZWL258million to ZWL399million. The increase was lower than the average inﬂation for the year under review.

Borrowings increased from ZWL161 million to ZWL284 million as the Microﬁnance Bank managed to mobilise new lines of credit. However, cus-tomer deposits shrunk by 58% to close at ZWL79.2 million from ZWL187 million due to the general market's reluctance to hold on to monetary assets considering the inﬂationary pressure and fear of real monetary loss due to currency depreciation. The loan book grew from ZWL132million in 2020 to close at ZWL179 million in 2021.

STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2021

ASSETS

Cash and cash equivalents

Loans and advances to customers

Other assets

Tax receivable

Investment properties

Right of use asset

Property and equipment

Notes

INFLATION ADJUSTED	HISTORICAL COST
2021	2021
ZWL	ZWL

2020 ZWL

4 207 083 544
5.1 179 544 277
6.2
7
47 807 486 5 775 729
9 138 440 000
10
8 826 970
11 418 068 634
2020 ZWL
239 891 582
207 083 544
149 243 059
132 306 554
179 544 277
82 311 495
22 732 579
38 151 136
9 705 640
7 690 575
1 122 554
1 066 589
245 576 821
138 440 000
152 780 000
9 116 960
445 185
669 912
42 333 202
322 979 205
3 674 919
Intangible assets
12
5 537 487
4 849 361
804 850
294 654
Financial Position
The Microﬁnance Bank grew its total assets by 44%, from ZWL70 million to ZWL 1 billion, as a result of a diversiﬁed asset portfolio made up of property carried at fair value and monetary assets in the form of loans. This portfolio mix is in line with the value preservation strategy of the Microﬁnance Bank which saw the property assets counter the eroding eﬀect of inﬂation on monetary assets.
The Bank does not have material foreign currency denominated commitments.
Capital
The Microﬁnance Bank's net equity position was ZWL474 million translating to USD4.4 million at the oﬃcial exchange rate as at 31 December 2021. To ensure compliance with the regulatory minimum capital requirement extended deadline of 31 December 2022, the Microﬁnance Bank is working on a recapitalisation plan as detailed in the Outlook section below.
Total assets
EQUITY AND LIABILITIES
Equity attributable to the owners of the Company
Share capital
Share premium
Revaluation reserve
(Accumulated loss)/Retained earnings
1 011 084 127
13.1
7 362
13.2 431 599 303 162 717 851
(120 030 564)
704 497 634
7 362 431 599 303
-
(149 178 355)
888 570 751
116
8 562 235
158 927 372
227 661 885
399 746 268
116 8 562 235
-
120 639 726
Dividend
No dividend has been declared for the period under review.
Directorate
During the reporting period, Mr. Patrick Matute, Ms. Marjorie Madamombe, and Mr. Wimbayi Chigumbu, were appointed to the board.
Ms. Ledwin Magara, Ms. Ruvimbo Matsika, and Mr. Walter Kambwanji who were Non-Executive Directors resigned during the same period.
George Nheweyembwa will be stepping down as the managing director of the Microﬁnance Bank on 31 March 2022. Edwin Chavora, the Head of Treasury, will be taking over until a substantive appointment is made.
Total equity
LIABILITIES
Deposits from customers
Other ﬁnancial liabilities
Borrowings
Deferred tax liability
474 293 952
14
79 245 137
15 103 840 590
16 283 963 393

282 428 310

187 648 383

41 520 412

160 908 417

69 741 055

395 151 608

79 245 137

103 840 590

283 963 393

31 992 112

129 202 077

116 741 148

25 830 974

100 105 490

26 370 023

27 866 579

The Board of Directors wished to extend its gratitude to the outgoing directors and wish Edwin every success in the new role.

Total liabilities

536 790 175

422 069 324

493 419 143

270 544 191

Outlook

The Microﬁnance Bank is carrying out a rights issue as part of its capital raise initiative. The capital raised will help the Microﬁnance Bank address the regulatory minimum capital requirement of USD 5million equivalent. The raised capital will reduce the Microﬁnance Bank's cost of funding, as well as capacitating the Microﬁnance Bank's expansion drive.

Investments in technology will continue to be the core focus of the Microﬁnance Bank's strategy to deliver ﬁnancial services.

The local currency continues to be buﬀeted by inﬂation and exchange loss against all the major currencies. As an institution, the Microﬁnance Bank will continue to implement capital preservation initiatives to preserve shareholder value.

COVID-19 Update

The country is still suﬀering from the eﬀects of the COVID-19 pandemic and the Microﬁnance Bank continues to monitor the impact of the crisis on its operations. The Bank implemented the World Health Organisation ("WHO") guidelines to ensure the health and safety of its valued stakeholders. Several safeguards were introduced, and these included staﬀ being encouraged to get vaccinated and encouraging clients to use digital platforms. The Bank provided adequate protective equipment for staﬀ and will continue to implement WHO guidelines such as the correct wearing of masks and use of sanitisers by staﬀ and customers.

Appreciation

I would like to thank all our valued stakeholders for their continued support to the Bank. I am grateful to my fellow directors, management and staﬀ for their hard work and contribution during the year and the achievement of these results.

DR. R. MBIRE CHAIRMAN

DATE: 13 APRIL 2022

Auditor's Statement

These ﬁnancial results should be read in conjunction with the complete set of ﬁnancial statements for the year ended 31 December 2021 which have been audited by Grant Thornton Chartered Accountants (Zimbabwe) in accordance with International Standards on Auditing (ISAs). The au-ditors have issued an adverse audit opinion on the ﬁnancial statements with respect to non-compliance with International Accounting Standard (IAS) 21 - The Eﬀect of Changes in Foreign Exchange Rates and International Accounting Standard (IAS) 29 - Financial Reporting in Hyperinﬂa-tionary Economies.

The Auditors have included a section on key audit matters. The key audit matters were with respect to the recognition of revenue and loans and advances.

The auditor's report on the ﬁnancial statements which form the basis of these ﬁnancial results is available for inspection at the Company's regis-

Total equity and liabilities

1 011 084 127

704 497 634

888 570 751

399 746 268

The above statement of ﬁnancial position should be read in conjunction with the accompanying notes. The ﬁnancial statements were approved by the Board of Directors on 13 April 2022 and signed on its behalf by:

DR. R. MBIRE	EDWIN CHAVORA
CHAIRMAN	CHIEF EXECUTIVE OFFICER
DATE: 13 APRIL 2022	DATE: 13 APRIL 2022
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME FOR THE YEAR ENDED 31 DECEMBER 2021

Notes

INFLATION ADJUSTED	HISTORICAL COST
2021	2021
ZWL	ZWL

2020 ZWL

Basic and Diluted earnings / (loss) per share (cents)

16.50

(6.19)

The above statement of comprehensive income should be read in conjunction with the accompanying notes.

22.87

6.79

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2021

YEAR ENDED

31 DECEMBER 2021

Balance at 1 January 2020

Loss for the year

Total comprehensive loss for the yearTransactions with owners in their capacity

Transfer to share premium

Balance at 31 December 2020

Balance at 1 January 2021

Proﬁt for the year

Total comprehensive loss for the yearTransactions with owners in their capacity as owners

Revaluation surplus

Balance at 31 December 2021

YEAR ENDED

31 DECEMBER 2021

Notes

INFLATION ADJUSTED

Balance at 1 January 2020

Proﬁt for the year

Total comprehensive income for the year

Transactions with owners in their capacity as owners

Transfer from regulatory and other reserves

Balance at 31 December 2020

YEAR ENDED

31 DECEMBER 2021

Balance at 1 January 2021

Proﬁt for the year

Total comprehensive income for the period

Transactions with owners in their capacity as owners

Revaluation surplus

Balance at 31 December 2021

The above statement of changes in equity should be read in conjunction with accompanying notes.

STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2021

Cash ﬂows from operating activities

Cash (utilised in) / generated from operations

Interest received

Interest paid

Net cash ﬂows generated from /(utilised in) operating activities

Cash ﬂows from investing activities

Proceeds from disposal of property and equipment

Purchase of property and equipment

INFLATION ADJUSTED

HISTORICAL COST

STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2021 (Continued)

Cash ﬂows from operating activities

The above statement of cash ﬂows should be read in conjunction with accompanying notes.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021

1. GENERAL INFORMATION

GetBucks Microﬁnance Bank Limited ("Getbucks" or "the Microﬁnance Bank") is registered as a Deposit Taking Microﬁnance Bank by the Reserve Bank of Zimbabwe, under the MicroFinance Act (Chapter 24:29), and is a subsidiary of GetBucks Limited which holds 53.7%, (December 2020 :53.7%) of the Microﬁnance Bank's ordinary shares. The Microﬁnance Bank was listed on the Zimbabwe Stock Exchange on 15 January 2016 and obtained its deposit taking licence in the same month.

The Microﬁnance Bank is a limited liability Company incorporated and domiciled in Zimbabwe. The Microﬁnance Bank's business is conducted in Zimbabwe.

The address of its registered oﬃce is 1st Floor, MIPF House, 5 Central Avenue, Harare, Zimbabwe

SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these ﬁnancial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

2.1

Basis of preparation

The ﬁnancial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") and in the manner required by the Companies and other Business Entities Act (Chapter 24:31), except for non-compliance with International Accounting Standard ("IAS") 21, [The Eﬀects of Changes in Foreign Exchange Rates] described in note 2.2 and International Account-ing Standard ("IAS") 29 [Financial Reporting in Hyperinﬂationary Economies], and interpretations issued by the IFRS Interpretations Committee ("IFRS IC") as issued by the International Accounting Standards Board ("IASB").

The preparation of ﬁnancial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also re-quires management to exercise its judgement in the process of applying the Company's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are signiﬁcant to the ﬁnancial statements are disclosed in note 3.

The ﬁnancial statements have been prepared based on the statutory records that are maintained under the historical cost basis and adjusted for the eﬀects of applying IAS29. The ﬁnancial statements are presented in Zimbabwean dollars and all values are rounded to the nearest dollar.

2.1.1 Changes in accounting policy and disclosures Amended standards and interpretations
At the date of authorisation of these ﬁnancial statements, several new, but not yet eﬀective, Standards and amendments to existing Standards, and Interpretations have been published by the IASB. None of these Standards or amendments to existing Standards have been adopted early by the Company.

Management anticipates that all relevant pronouncements will be adopted for the ﬁrst period beginning on or after the eﬀective date of the pronouncement. New Standards, amendments and Interpretations not adopted in the current year have not been disclosed as they are not expected to have a material impact on the Microﬁnance Bank's ﬁnancial statements.

Covid-19-Related Rent Concessions beyond 30 June 2021 (Amendment to IFRS 16)

In May 2020, the IASB issued Covid-19-Related Rent Concessions (Amendment to IFRS 16). The pronouncement amended IFRS 16 Leases to provide lessees with an exemption from assessing whether a COVID-19-related rent concession is a lease modiﬁcation. On issuance, the practical expedient was limited to rent concessions for which any reduction in lease payments aﬀects only payments

2.2

Foreign currency translation (Continued)

2.1.1 Changes in accounting policy and disclosures (Continued)Covid-19-Related Rent Concessions beyond 30 June 2021 (Amendment to IFRS 16) (Continued)

originally due on or before 30 June 2021. Since lessors continue to grant COVID-19-related rent concessions to lessees and since the eﬀects of the COVID-19 pandemic are ongoing and signiﬁcant, the IASB decided to look into whether to extend the time period over which the practical expedient is available for use.

The Changes in Covid-19-Related Rent Concessions beyond 30 June 2021 (Amendment to IFRS 16) amend IFRS 16 to permit a lessee to apply the practical expedient regarding COVID-19-related rent concessions to rent concessions for which any reduction in lease payments aﬀects only payments originally due on or before 30 June 2022 (rather than only payments originally due on or before 30 June 2021); and specify that, in the reporting period in which a lessee ﬁrst applies the amendment, a lessee is not required to disclose the information required by paragraph 28 (f ) of IAS 8.

New and revised IFRS Standards in issue but not yet eﬀective

2.1.2 IFRS 10 and IAS 28 (amendments) Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
The amendments to IFRS 10 and IAS 28 deal with situations where there is a sale or contribution of assets between an investor and its associate or joint venture. Speciﬁcally, the amendments state that gains or losses resulting from the loss of control of a subsidiary that does not contain a business in a transaction with an associate or a joint venture that is accounted for using the equity method, are rec-ognised in the parent's proﬁt or loss only to the extent of the unrelated investors' interests in that associate or joint venture. Similarly, gains and losses resulting from the re-measurement of investments retained in any former subsidiary (that has become an associate or a joint venture that is accounted for using the equity method) to fair value are recognised in the former parent's proﬁt or loss only to the extent of the unrelated investors' interests in the new associate or joint venture. The eﬀective date of the amendments has yet to be set by the IASB; however, earlier application of the amendments is permitted. The directors of the Company anticipate that the application of these amendments may have an impact on the Mircoﬁnance Bank's ﬁnancial statements in future periods should such transactions arise. The Group does not at the moment have associates or joint venture arrangements.
Eﬀective date
The eﬀective date of the amendments has yet to be set by the IASB
2.1.3 Reference to Conceptual Framework (Ammendments to IFRS3)
The amendments update IFRS 3 so that it refers to the 2018 Conceptual Framework instead of the 1989 Framework. They also add to IFRS 3 a requirement that, for obligations within the scope of IAS 37, an acquirer applies IAS 37 to determine whether at the acqui-sition date a present obligation exists as a result of past events. For a levy that would be within the scope of International Financial Reporting Interpretations Committee ("IFRIC") 21 Levies, the acquirer applies IFRIC 21 to determine whether the obligating event that gives rise to a liability to pay the levy has occurred by the acquisition date. Finally, the amendments add an explicit statement that an acquirer does not recognise contingent assets acquired in a business combination.
Eﬀective date: January 1, 2022
2.1.4 Annual Improvements to IFRS 9, Financial Instrument
The amendment clariﬁes that in applying the '10 percent' test to assess whether to derecognise a ﬁnancial liability, an entity includes only fees paid or received between the entity (the borrower) and the lender, including fees paid or received by either the entity or the lender on the other's behalf. The amendment is applied prospectively to modiﬁcations and exchanges that occur on or after the date the entity ﬁrst applies the amendment. The amendment is eﬀective for annual periods beginning on or after 1 January 2022, with early application permitted.
2.1.5 Amendments to IAS 16 - Property, Plant and Equipment- Proceeds before Intended Use
The amendments prohibit deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced before that asset is available for use, i.e. proceeds while bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Consequently, an entity recognises such sales proceeds and related costs in proﬁt or loss. The entity measures the cost of those items in accordance with IAS 2 Inventories. The amendments also clarify the meaning of 'testing whether an asset is functioning properly'. IAS 16 now speciﬁes this as assessing whether the technical and physical performance of the asset is such that it is capable of being used in the production or supply of goods or services, for rental to others, or for administrative purposes. If not presented separately in the statement of comprehensive income, the ﬁnancial state-ments shall disclose the amounts of proceeds and cost included in proﬁt or loss that relate to items produced that are not an output of the entity's ordinary activities, and which line item(s) in the statement of comprehensive income include(s) such proceeds and cost. The amendments are applied retrospectively, but only to items of property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after the beginning of the earliest period presented in the ﬁnancial statements in which the entity ﬁrst applies the amendments. The entity shall recognise the cumulative eﬀect of initially applying the amendments as an adjustment to the opening balance of retained earnings (or other component of equity, as appropriate) at the beginning of that earliest period presented.
Eﬀective date: January 1, 2022
2.1.6 Amendments to IAS 37 - Onerous Contracts-Cost of Fulﬁlling a Contract
The amendments specify that the 'cost of fulﬁlling' a contract comprises the 'costs that relate directly to the contract'. Costs that relate directly to a contract consist of both the incremental costs of fulﬁlling that contract (examples would be direct labour or materials) and an allocation of other costs that relate directly to fulﬁlling contracts (an example would be the allocation of the depreciation charge for an item of property, plant and equipment used in fulﬁlling the contract). The amendments apply to contracts for which the entity has not yet fulﬁlled all its obligations at the beginning of the annual reporting period in which the entity ﬁrst applies the amendments. Comparatives are not restated. Instead, the entity shall recognise the cumulative eﬀect of initially applying the amend-ments as an adjustment to the opening balance of retained earnings or other component of equity, as appropriate, at the date of initial application.
Eﬀective date: January 1, 2022

2.2

Foreign currency translation

(a) Functional and presentation currency

Items included in the ﬁnancial statements of the Microﬁnance Bank are measured using the currency of the primary economic envi-ronment in which the entity operates ("the functional currency"). The ﬁnancial statements are presented in Zimbabwe dollar ("ZWL"), which is the Microﬁnance Bank's functional and presentation currency.

The country pronounced the Zimbabwe Dollar as the sole legal tender on 24 June 2019, moving from a multi currency system that used a basket of foreign currencies as legal tender. The currency has a limited range of local bond notes, coins and various forms of electronic payment platforms. The pronouncement, however, did not aﬀect the opening or operation of foreign currency designated accounts, otherwise known as 'Nostro FCA accounts' which continued to be designated in foreign currencies with which they were opened and were operated.

From an IAS 21 perspective, the separation of the ZWL FCA and Nostro FCA accounts on 1 October 2018 by the RBZ was a strong indicator of a change in functional currency. However, the Microﬁnance Bank maintained the 1:1 parity between the US$ and the ZWL

(a) Functional and presentation currency (Continued)

for accounting purposes for the period to 22 February 2019 in order to comply with laws of Zimbabwe that did not recognise ZWL FCA as currency until 22 February 2019 when SI 33 of 2019 was promulgated. An alternative way of accounting for these changes that complies with IFRS was to use the Old Mutual Implied Rate ("OMIR") for conversion of ZWL FCA denominated numbers to the US Dollar. Though this approach would be IFRS compliant, this would result in non compliance with the laws and regulations of Zimbabwe, prior to the introduction of local currency on 22 February 2019. The above means that prior year comparative ﬁgures are not compliant with IAS 21.

b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuations where items are re-measured. Foreign exchange gains or losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of proﬁt or loss, except when deferred in equity as qualifying cash ﬂow hedges and qualifying net in-vestment hedges. Foreign exchange translation gains or losses are presented on the face of the statement of comprehensive income.

2.3

Cash and cash equivalents

Cash and cash equivalents includes cash on hand, other short-term highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to insigniﬁcant risk of changes in value, and bank overdrafts. There were no overdrafts as at the reporting date.

2.4

Intangible assets Software licenses

Separately acquired software licences are shown at historical cost, less accumulated amortisation. The acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the speciﬁc software. These costs are amortised over their estimated useful lives of three years. Costs associated with maintaining computer software programmes are recognised as an expense as incurred.

2.5

Equipment a) Recognition and measurement

The cost of an item of equipment is recognised as an asset if, and only if; it is probable that future economic beneﬁts associated with the item will ﬂow to the entity and the cost of the item can be measured reliably. Equipment is stated at historical cost less accumulat-ed depreciation and impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing working condition for its intended use, the cost of dismantling the asset and removing items and restoring the site on which they are located. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. Where parts of equipment have diﬀerent useful lives, they are accounted for (major components) as separate equipment.

b) Subsequent measurement

The cost of replacing part of an item of property and equipment is recognised in the carrying amount of the item if it is probable that the future economic beneﬁts embodied within the part will ﬂow to the Microﬁnance Bank and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the statement of proﬁt or loss within 'administrative expenses' during the ﬁnancial period in which they are incurred. Subsequent costs can also be recognised as separate assets.

Depreciation is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives, as follows:

Items

Furniture and ﬁxtures

Motor vehicles

Oﬃce equipment

IT equipment

Leasehold improvements

Shorter of useful life or duration of the lease agreementDepreciation methods, useful lives and residual values are reassessed at each reporting date.

Average useful life

6 years
5 years
5 years
3 yearsGains or losses on disposals are determined by comparing proceeds with carrying amount. These are included in the statement of comprehensive income within other income.

The carrying amounts of the Microﬁnance Bank's items of equipment are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated. An impairment allowance is recognised whenever the carrying amount exceeds its recoverable amount.

An assets' carrying amount is written down immediately to its recoverable amount if the assets' carrying amount is greater than the estimated recoverable amount.

c) Derecognition

The carrying amount of an item of equipment is derecognised on disposal or when no future economic beneﬁts are expected from its use or disposal.

2.6

Investment properties a) Recognition criteria

Investment properties are those properties held for earning rental income and/or for capital appreciation. None of these properties are occupied by the Microﬁnance Bank for its business activities. In the case where property will be partly used for business and partly leased out under an operating lease, the property will be split according to its use if the properties can be sold separately. If the prop-erties cannot be sold separately, the property is investment property only if an insigniﬁcant portion is held for use in the production or supply of goods or services or for administrative purposes.

Investment property is initially measured at cost. The cost includes purchase price and any directly related cost such as (professional or legal charges, property transfer taxes & any other transaction costs).

Subsequent to initial recognition, investment properties are stated at fair value, based on valuations performed by independent professional valuers. Valuations should be carried out at least at each reporting date. Fair value gain or losses are recorded through proﬁt or loss . Where the fair value of the investment property cannot be measured reliably, it is then measured at cost until the fair value becomes determinable.

2.6

Investment properties (Continued)

b) Transfers to and from investment properties

Transfers are made to or from investment property only when there is a change in use and a revaluation is done ﬁrst before the trans-fer. If a signiﬁcant portion of investment property becomes owner occupied where split is not possible, it is reclassiﬁed as property and equipment in accordance with IAS 16 (Property, plant and equipment) and its fair value at the date of its classiﬁcation becomes its cost for subsequent accounting as property and equipment under IAS 16.

c) Derecognition

Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic beneﬁt is expected from its disposal. The diﬀerence between the net disposal proceeds and the carrying amount of the asset is recognised in proﬁt or loss in the period of derecognition.

2.7

Current income and deferred tax Current income tax assets and liabilities

The income tax expense for the year comprises current income and deferred tax. Income tax is recognised in the statement of proﬁt or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the statement of ﬁnancial position date in Zimbabwe. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes liabilities where appropriate on the basis of amounts expect-ed to be paid to the tax authorities.

Deferred tax is recognised, using the liability method, on temporary diﬀerences arising between assets and liabilities and their car-rying amounts in the ﬁnancial statements. However, the deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction aﬀects neither accounting nor taxable proﬁt or loss.

Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the reporting date and are expected to apply when the related deferred income tax asset is realised or the deferred tax liability is settled. Deferred tax assets are recognised only to the extent that it is probable that future taxable proﬁt will be available against which the temporary diﬀerences can be utilised. Deferred income tax is provided on temporary diﬀerences arising on investments in subsidiaries and associates, ex-cept where the timing of the reversal of the temporary diﬀerence is controlled by the Microﬁnance Bank and it is probable that the temporary diﬀerence will not reverse in the foreseeable future.

Deferred tax assets and liabilities are oﬀset when there is a legally enforceable right to oﬀset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or diﬀerent taxable entities where there is an intention to settle the balances on a net basis.

2.8

2.10.1

Revenue within the scope of IFRS 15

The Bank recognises revenue from contracts with customers under the scope of IFRS 15 as it transfers goods or services to customers at an amount that reﬂects the consideration to which the Bank expects to be entitled to in exchange for those services excluding amounts collected on behalf of third parties. For amounts collected on behalf of third parties, the Bank records commission earned. Commission earned represents the net amount the Bank retains from insurance sold and underwritten by insurance companies. The Bank applies the 5 step approach to revenue recognition under IFRS 15. Revenue is recognised when a performance obligation is satisﬁed by transferring a promised asset to the customer or performing the promised service. Control includes the ability to prevent others from directing the use of and obtaining the beneﬁts from the asset. If the Bank does not satisfy its performance obligation over time, it satisﬁes it at a point in time and revenue will be recognised when control is passed or service performed at that point in time. IFRS 15 uses the terms 'contract asset and 'contract liability to describe what might more commonly be known as 'accrued income' and 'deferred income'. However, the Standard does not prohibit an entity from using alternative descriptions. The term 'accrued income' is used with respect to income recorded as a result of amortisation. Revenue is recognised under the scope of IFRS 15 as follows:

2.10.1.1 Fee and commission income
Revenue from fee and commission income includes account maintenance fees, ledger fees, cash withdrawal fees, and point of sale in-come as the related services are performed. Loan commitment fees ("establishment fees") for loans that are drawn down are deferred and revenue earned over the life of the loan. Commission is earned on credit life insurance policies on loans at a point in time when the loan is disbursed. Fee and commission income is generally recognised on an accrual basis when the service has been provided.
Revenue is measured at the transaction price for satisfying a performance obligation. No revenue is recognised if there are signiﬁcant uncertainties regarding the recovery of the consideration due and measurement of the associated costs incurred to earn the revenue. From the business of microﬁnance and related services, revenue comprises interest income and fees and commission income. Interest income is recognised using the eﬀective interest method.
2.10.1.2 Revenue within the scope of IFRS 9
The Microﬁnance Bank's revenue items recognised under the scope of IFRS 9 are as follows:
Interest income
Revenue from loans disbursed is initially recognised at the face value of the amount disbursed in the statement of ﬁnancial position under loans and advances to customers. Once funds are disbursed, the Microﬁnance Bank will not have a performance obligation as amortisation of income will continue until respective counterparties have settled balances outstanding. Interest income and expense are recognised in proﬁt or loss using the eﬀective interest method. The 'eﬀective interest rate' is the rate that exactly discounts esti-mated future cash payments or receipts through the expected life of the ﬁnancial instrument to:
- the gross carrying amount of the ﬁnancial asset; or
- the amortised cost of the ﬁnancial liability.
When calculating the eﬀective interest rate for ﬁnancial instruments other than purchased or originated credit-impaired assets, the Microﬁnance Bank estimates future cash ﬂows considering all contractual terms of respective ﬁnancial assets, but not expected credit losses. The calculation of the eﬀective interest rate includes transaction costs and fees paid or received that are an integral part of the eﬀective interest rate.

2.11

Leases

Transition approach

The Microﬁnance Bank has applied the simpliﬁed transition approach which is outlined below and all of the exemptions and expedi-ents available in IFRS 16 and the adoption of IFRS 16 did not aﬀect the impairment calculations and did not require the recognition of an additional impairment loss as part of the transition adjustments.

Where the Microﬁnance Bank as a lessee applies the simpliﬁed approach, it does not restate any comparative information. Instead, the cumulative eﬀect of applying the standard is recognised as an adjustment to the opening balance of retained earnings (or another component of equity, as appropriate) at the date of initial application. While full retrospective application is optional, if chosen it must be applied to all leases. Selective application of the simpliﬁed transition application of the simpliﬁed transition.

Bank as a lessor

The Microﬁnance Bank has no agreements or contracts where it acts as lessor.

The outstanding principal amounts less unearned ﬁnance charges, are included in advances to customers in the statement of ﬁnancial position.

Lease income from operating leases is recognised in the statement of proﬁt or loss within 'other income' on a straight-line basis over the lease term. Lease receivables are recognised within "other assets" in the statement of ﬁnancial position. There has been no lease income or receivables during the reporting period.

Bank as a lessee

Ordinary shares and Share Premium

Share capital

Ordinary shares are classiﬁed as equity. Share premium is the diﬀerence between the nominal value and issue price paid for shares on subscription by shareholders.

2.9

Share application reserve

Proceeds received from investors for the purchases of shares not yet issued in their name are credited to the share application fund reserve and transferred to stated capital upon formal issue and registration of the purchased shares to the investor. There is no expec-tation that this will become repayable in the future.

The Microﬁnance Bank recognises a lease liability and a right of use asset on all signiﬁcant leases. This excludes all leases relating to lower value assets and leases for periods less than 12 months which will be treated as operating leases. Payments made under oper-ating leases are charged to the statement of proﬁt or loss on a straight-line basis over the period of the lease. Payments made under the ﬁnance leases are deducted from the lease liability.

Right of use assets and lease liabilities are presented on the face of the statement of ﬁnancial position, and the interest charged on lease liability is presented under "Interest expense" in the statement of proﬁt or loss.

IFRS 16 impacts the Microﬁnance Bank by virtue of lease contracts the Microﬁnance Bank holds with third parties relating to prop-erties used for the company's activities. The Microﬁnance Bank has reviewed all its leasing arrangements over the last year in light of the new lease accounting rules in IFRS 16.

2.9.1 Share issue costs
Transaction costs incurred as a necessary part of completing an equity transaction are accounted for as part of that transaction and are deducted from equity. These transaction costs of an equity transaction are accounted for as a deduction from equity to the extent that they are directly attributable to the equity transaction that otherwise would have been avoided.
2.10 Revenue recognition
Revenue is derived substantially from the microﬁnance business, SME business, retail banking and bureau de change trading. This comprises of interest income and non-interest income. Revenue arises from IFRS 9 (Financial instruments) and IFRS 15 (Revenue from contracts with customers).

As at the reporting date, the Microﬁnance Bank had non-cancellable lease commitments of ZWL11 017 150. Of these commitments, approximately ZWL6 231 450 relates to short term leases which were recognised on a straight line basis as expense in proﬁt or loss.

The Microﬁnance Bank does not have any activities as a lessor because the investment property is not leased out. The Microﬁnance Bank only has one lease agreement which has a period greater than one year and qualiﬁes for recognition of a right of use asset. As a result, the Microﬁnance Bank has recorded a right of use assets under the IFRS 16 model.

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GetBucks Ltd. published this content on 20 April 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 20 April 2022 05:44:08 UTC.

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