uniCredit Annual Report 2014 - uniCredit Ghana Limited · uniCredit Annual Report 2014 12 Dear Shareholders, It is my pleasure to present to you the performance of the Company for

uniCredit Annual Report 2014

3


1

Corporate Information 2

Chairman's Statement 8

Chief Executive Officer’s Statement 12

Directors’ Report 15

Auditors’ Report 17

Statement of Profit or Loss and Comprehensive Income 19

Statement of Financial Position 20

Statement of Changes in Equity 21

Statement of Cash Flows 22

Notes to the Financial Statements 23

Schedule to the Statement of Profit or Loss 61

Contents


2

Mr. Frank Oppong-Yeboah - ChairmanMr. Simeon Tawiah - Non-Executive DirectorMrs. Boatemaa D. Barfour-Awuah - Non-Executive DirectorDr. Kwabena Duffuor II - Non-Executive DirectorMr. Benjamin Kwame Ofori - Non-Executive DirectorMrs. Akosua Duffuor - Executive DirectorMr. Samuel Sakyi-Hyde - Chief Executive Officer

Directors

Anthony Marshall ArpohCompany Secretary

PKFAccountants and Business AdvisersValley View, Farrar AvenueP. O. Box GP 1219,Accra.

Auditors

uniBank (Ghana) LimitedBankers

Anthony Marshall ArpohP. O. Box 18729,Accra.

Solicitor

uniCredit Ghana Limited(Savings and Loans Company)No.3 North Ridge Lane, North Ridge, AccraP. O. Box GP 18729, Accra

Registered Office

Corporate Information

uniCredit Ghana Limited is a Savings & Loans Company licensed by the BOG underthe Non-Bank Financial Institution’s Act 2008(Act 774). The company isheadquartered at No.3 North Ridge Lane, Accra with an Annex Head Office at TarzanHouse, Kantamanto.

Since 2007, the footprints of uniCredit on the (Financial/Banking) landscape of Ghanahas been solid and huge, with 13 fully networked branches in 3 Regions of Ghana.

We envision becoming the most efficient and effective Savings and Loans Companyoperating in the SME Banking market. In furtherance of this, we seek to provide ouresteemed customers with convenient, tailored and reliable banking products andservices through our state of the art IT infrastructure and dedicated team ofprofessionals deployed across all our branches.

uniCredit gives you a reason to own any of our deposit and credit products. We keepto our brand promise in going the extra mile to delight you, our esteemed customer.Other services provided to Clients include:

Business Advisory ServicesBusiness PlanningFinancial PlanningStock Management andCash Flow Forecasts

About Us


3

Corporate Information

4

To develop Financial Products and Services and make them easily accessible

to our target market.

To be the most efficient and effectiveSavings & Loans Company operating

in the SME Banking Market.

CaringFlexibilityEfficiencyIntegrity

TeamworkAccountabilityProfessionalism

MISSION

VISION

CORE VALUES


3

6. Mr. Simeon Tawiah7. Mr. Benjamin Kwame Ofori8. Anthony Marshall Arpoh

1 2

543

876

1. Mr. Frank Oppong-Yeboah2. Mr. Samuel Sakyi-Hyde3. Akosua Duffuor (Mrs.)4. Dr. Kwabena Duffuor II5. Boatemaa D. Barfour-Awuah (Mrs.)


FRANK OPPONG-YEBOAHBoard Chairman

Distinguished Shareholders,I am pleased to welcome you to the 2nd Annual General Meeting of your Company, uniCredit GhanaLimited; and present to you the Company’s Annual Report and Financial Statements for the year 2014.

Operating EnvironmentThe year 2014 was particularly challenging. Ghana’s overall macroeconomic conditions furtherdeteriorated with a large budget deficit; rising government debt and inflation; a sharp depreciationof its currency; and a weaker pace of economic growth. Macroeconomic challenges continued to bedriven by the high wage bill and rising interest costs. The fiscal deficit declined only slightly to anestimated 9.4% of Gross Domestic Product (GDP) in 2014 from 10.4% in 2013.

The government scrapped costly fuel subsidies and continued to add to its stock of public debt torestore fiscal stability. Ghana’s public debt reached an estimated 67.6% of GDP in 2014 throughborrowing, both domestically (33.8% of GDP) and externally (33.2% of GDP).The inflation rate stoodat 17% at the end of 2014 compared to 13.50% at the end of 2013.

The monetary policy rate went up twice in 2014 and stood at 21% at the end of the year comparedto 16% as at the end of the year 2013. Real GDP growth slowed down sharply in 2014 to an estimated4.20% from 7.30% in 2013 as domestic activity was hampered by the gas supply volatility fromNigeria; a sharp fall in the currency; and rising inflation, which required policy tightening.

During the last quarter of the year, the country’s gross international reserves level was boosted bythe Ghana Cocoa Board (COCOBOD) loan of $1.7 billion. Ghana also issued a Eurobond of $1 billionin September 2014. Despite these two inflows, the Ghana Cedi recovered only slightly, finishing theyear with 33% depreciation against the US Dollar after already depreciating by 14.4% in 2013.

2014 Financial PerformanceLadies and Gentlemen, in spite of the challenges that characterised the year under review, yourCompany, uniCredit Ghana Limited, recorded an impressive financial performance.

Total operating income recorded a significant increase of 45% over the previous year’s performance.An amount of GH¢34.7 million was realized, compared with GH¢23.9 million achieved in the previousyear.

The Company made a modest growth in Loans and Advances by 4.87% from GH¢82.1million in 2013to GH¢86.7 million in 2014; while customer deposits recorded a growth of 32% from GH¢123.2 millionin 2013 to GH¢162.6 million by the close of the year 2014.

Investments recorded a significant growth of 84% from GH¢39.87 million in 2013 to GH¢73.49 millionin 2014, culminating in a 30% growth of the total assets of the Company from GH¢156.8 million in2013 to GH¢203.7 million in 2014. The Company’s net worth also grew from GH¢18.4 million in 2013to GH¢30.3 million at the end of the year 2014.

AppropriationsThe Company’s operations resulted in a Profit before Tax (PBT) of GH¢4.262million, registering agrowth of 42% over 2013’s position of GH¢2.998 million. After making provision for Corporate Tax

Chairman’s letteruniCredit Annual Report 2014

8

and National Stabilization Levy of GH¢1.046million, Profit after Tax (PAT) transferred to shareholders’funds was GH¢3.216 million, representing a 40% increase over 2013’s performance ofGH¢2.293million.

DividendThe Board does not intend to recommend any dividend to shareholders. In furtherance of continuouslydelivering value to shareholders, the Board of Directors recommends that the income surplus balanceshould be ploughed back into the Company’s operations.

Stated CapitalTo support the growth of the Company, GH¢8.7million was received from shareholders to increaseour Stated Capital from GH¢8.79miilion to GH¢17.49million at the end of the year. The Board,Management and Staff are grateful to you, our dear shareholders, for your financial contributions thatpropelled the Company’s financial performance and expansion to the success attained.

Corporate GovernanceIn 2014, your Company exhibited good corporate governance culture in line with regulatoryrequirements. We remained accountable to shareholders as well as other stakeholders in all ouroperations. The Board through its Committees worked to ensure sound business practices and goodinternal processes to maintain compliance with regulatory requirements and provisions. ManagementCommittees also worked to ensure sound business operations of the Company during the past yearBoard and Management Changes

During the year, Mr. Stephen Ameyaw retired as the Managing Director of the Company on 31stAugust, 2014; having served the Company for eight (8) years. We appreciate his contribution to thegrowth of the Company during his tenure. Subsequently, Mr. Samuel Sakyi-Hyde was appointed asChief Executive Officer to take over from Mr. Stephen Ameyaw. Mr. Samuel Sakyi-Hyde comes with awealth of experience and exposure in Financial Services Management, Credit Risk Management,Domestic Operations and Retail Banking. We welcome Mr. Sakyi-Hyde and expect that his rich andvaried experience, in addition to his expertise, will further enhance the Company’s growth.

AcknowledgementsWe wish to express our profound gratitude to all our valued customers who have continuously shownfaith in us and given us the opportunity to do business with them.We also appreciate our shareholders for your investments, which remain critical to the Company’soperations.

To my colleagues on the Board who continue to provide critical counsel and direction; we cherishthe effort you put in to ensure that the Company remains focused on its goals.

I want to acknowledge the contribution of our hardworking management and staff as well and theirdedication to the course of the Company.

Finally, we thank the Almighty God who blessed us with all heavenly wisdom to direct the affairs ofyour Company in the year 2014. Thank you.

Frank Oppong–YeboahBoard Chairman


9

SAMUEL SAKYI-HYDEChief Executive Officer

P.V. YEBOAH-ASIAMAHGeneral Manager

SETH OFORI-LARBIHead, Finance & Administration

EXECUTIVE MANAGEMENT

SAMUEL SAKYI-HYDEChief Executive Officer


12

Dear Shareholders,It is my pleasure to present to you the performance of the Company for the financial year ended 31stDecember, 2014.

Financial Performance for 2014

Balance Sheet AnalysisOur Company’s operations and financial performance over the past five years indicate the consistentgrowth and expansion of uniCredit Ghana Limited during the period. We have improved every yearwith 2014 operating results doing so significantly in line with budgeted estimates.

Customer deposits increased substantially, rising by 32% from GH¢123.2 million in 2013 toGH¢162.6million in 2014. The total assets of the Company recorded a 30% growth from GH¢156.8million in 2013 to GH¢203.7 million in 2014. Loans and advances increased from GH¢82.1million in2013 to GH¢86.7million in 2014 representing a 4.87% growth. Investments – which contributed 36%of total assets – amounted to GH¢73.4million in 2014 from 2013’s position of GH¢39.86million,registering growth of 84%.

Income Statement AnalysisThe Company continued to post profit during the year under review as it recorded a pre-tax profit ofGH¢4.262 million, representing 42% growth over the 2013 figure of GH¢2.998 million. After makinga provision of GH¢1.046million for Corporate Tax and National Stabilization Levy, an amount of GH¢3.2million became available for transfer to the Income Surplus Account. An amount of GH¢1.6millionwas also transferred from the Income Surplus Account to the Statutory Reserve Fund in compliancewith section 29 of the Banking Act, 2004 (Act 673) as amended by the Banking Act, 2007 (Act 738).

CEO’s letter

PERFORMANCE INDICATORS OVER THE PAST FIVE YEARSSUMMARY OF COMAPNY’S PERFORMANCE OVER THE PAST FIVE YEARS

Total AssetsTotal DepositsLoans & AdvancesInvestmentsShareholders FundsProfit before TaxProfit after TaxReturn on Equity

2011GHC'000

78,12064,46937,47218,804

7,1254,1492,623

37.0%

2012GHC'000

104,73089,93557,62725,045

9,3022,5611,781

20.0%

2013GHC'000

156,835123,201

82,10339,86818,4062,998 2,294

8%

2014GHC'000

203,672162,63086,73473,48830,3214,2623,216

10.60%

2010GHC'000

47,77238,96821,178

9,8564,6311,140

71615.5%

Report on the Financial StatementsWe have audited the accompanying financial statements of uniCredit Ghana Limited which comprisethe statement of financial position as of December 31, 2014, and the statement of profit or loss andother comprehensive income, statement of changes in equity and statement of cash flows for theyear then ended, and a summary of significant accounting policies and other explanatory notes.

Directors’ Responsibility for the Financial StatementsThe Directors are responsible for the preparation and fair presentation of these financial statementsin accordance with International Financial Reporting Standards and in the manner required by theCompanies Act, 1963 (Act 179), the Banking Act, 2004 (Act 673) as amended by Banking(Amendment) Act, 2007 (Act 738), and the Non Bank Financial Institution Act 2008, Act 774.Thisresponsibility includes: designing, implementing and maintaining internal control relevant to thepreparation and fair presentation of financial statements that are free from material misstatement,whether due to fraud or error; selecting and applying appropriate accounting policies; and makingaccounting estimates that are reasonable in the circumstances.

Auditors’ ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. Weconducted our audit in accordance with International Standards on Auditing. Those standards requirethat we comply with ethical requirements and plan and perform the audit to obtain reasonableassurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor’s judgment, includingthe assessment of the risks of material misstatement of the financial statements, whether due to fraudor error. In making those risk assessments, the auditor considers internal control relevant to the entity’spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of accounting estimates made by Directors, aswell as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our audit opinion.

OpinionIn our opinion, the financial statements give a true and fair view of the financial position of uniCreditGhana Limited as of December 31, 2014, and of its financial performance and its cash flows for theyear then ended in accordance with International Financial Reporting Standards and comply with theCompanies Act, 1963 (Act 179), the Banking Act, 2004 (Act 673) as amended by Banking(Amendment) Act, 2007 (Act 738), and the Non Bank Financial Institution Act 2008, (Act 774).

Report on Other Legal and Regulatory RequirementsThe Companies Act, 1963, (Act 179) requires that in carrying out our audit we consider and report toyou on the following matters. We confirm that:

Independent Auditor’s Report To TheMembers Of Unicredit Ghana LimitedOn The Financial Statements For The Year Ended 31 December 2014

Total Assets

2010

47,77250,000

100,000

150,000

200,000

250,000

78,120

104,730

156,835

203,672

2011 2012 2013 2014

Total Deposits

2010

38,96850,000

100,000

150,000

200,000

64,469

89,935

123,201

162,630

2011 2012 2013 2014

Loans & Advances

2010

21,178

10,000

40,000

30,000

20,000

60,000

70,000

50,000

80,000

90,000

100,000

37,472,

57,627

82,10386,734

2011 2012 2013 2014

Shareholders Funds

2010

4,6315,000

10,000

15,000

20,000

25,000

30,000

35,000

7,1259,302

18,406

30,321

2011 2012 2013 2014

Profit before Tax

2010

1,140

5,000

2,000

1,500

1,000

3,000

3,500

2,500

4,000

4,5004,149

2,561

2,998

4,262

2011 2012 2013 2014

Profit after Tax

2010

716500

1,000

1,500

2,000

2,500

3,000

3,500

2,623

1,781

2,294

3,216

2011 2012 2013 2014


13

Strategic Focus and Outlook for 2014The year 2014 saw the implementation of the New Dawn Strategy upon the change in Managementof the Company, which focused on improving our efficiency, profitability and service delivery. Thishas resulted in several dynamic and innovative initiatives that have already begun to show muchpromise.

As part of the New Dawn Strategy, Management carried out an operational realignment exercise toclearly define the roles and responsibilities of each department to ensure maximum efficiency in allaspects of our operations. We sought to improve the efficiency of our internal processes and ourutilisation of resources; as well as enhance our response to customers’ requests and instructions inparticular and all other aspects of our operations in general. As a result, we expect your Companyto emerge as an efficient customer–focused partner in the Savings and Loans and S.M.E BankingIndustry.

Our strategic focus for the year also entailed pursuing our branch expansion programme in order tobroaden the scope of our operations and take our services closer to our customers and the unbankedpopulace. To this end, the Tafo Branch was completed and banking services opened to the generalpublic during the year. The proposed Dr. Mensah Branch in Kumasi in the Ashanti Region will becommissioned within the first quarter of 2015. Additional locations have also been secured at Kasoa,Techiman, Kokomlemle, Kantamanto and North Ridge in Accra to widen the current branch networkin line with our target to operate twenty (20) branches by the close of the year 2015.

A vital aspect of the New Dawn Strategy is engaging all staff in a Current and Savings Accounts(CASA) deposit mobilisation drive. The objective of this is to reduce interest expense and diffuseundue concentration on fixed deposits to obtain a diversified deposit portfolio.

The Company intends to progressively penetrate new market space by using relevant products andan attractive branch distribution network. This is aimed towards not only increasing the sustainabilityof our deposit base and securing our liquidity, but also at effectively reducing our cost of funds. Inaddition, a 15% growth of our staff from 391 in 2013 to 450 in 2014 amply equips us with the neededpersonnel to achieve this; and we have developed a comprehensive human capital developmentplan to furnish all staff with the requisite knowledge and skills to project the uniCredit brand.Technological infrastructure remains pivotal to our delivery of excellent customer service, as well asto our provision of novel products and business solutions to support our operations. To this end, theCompany is in the process of acquiring and deploying a more robust and proficient software toenhance its banking operations.

ConclusionOur dedicated Board and supportive shareholders have been pillars of strength to the Company andwe wish to thank them immensely.

Our sincere appreciation also goes to our dedicated and hardworking staff; and especially to ouresteemed customers who have done business with us over the years. We will continue to improveon our service delivery by reviewing and improving our processes to make them more relevant so asto sustain the partnership we have with you.

We are in the New Dawn of Unlocking the Full Potential of uniCredit Ghana Limited.

Thank you.

Samuel Sakyi-HydeChief Executive Officer


14


Directors’ ReportFor The Year Ended 31 December 2014

The Directors have pleasure in submitting to the shareholders, the annual reports together with thefinancial statements of the company for the year ended 31 December, 2014 in accordance with theCompanies Act 1963, Section 132 (Act 179), the Banking Act, 2004 (Act 673) as amended by Banking(Amendment) Act, 2007 (Act 738), and the regulations governing the Non-Bank Financial InstitutionAct 2008, Act (774).

2. DirectorsThe Directors who held office during the year were as follows:

2013

GH¢

43,988,126

2,997,686

(636,504)

(67,188)

2,293,994

522,631

2,816,625

(344,100)

(298,947)

2,173,578

2014

GH¢

58,701,377 4,262,530

(833,091)(213,127)3,216,312 2,173,5785,389,890

(1,608,156)(6,749)

3,774,985

Name

Frank Oppong-YeboahSimeon TawiahBoatemaa D. Barfour-Awuah (Mrs.)Dr. Kwabena Duffuor IIBenjamin Kwame OforiAkosua Duffuor (Mrs.)Samuel Sakyi-HydeStephen AmeyawAnthony Marshall Arpoh

Designation

Non-Executive Director Non-Executive DirectorNon-Executive DirectorNon-Executive DirectorNon-Executive DirectorExecutive DirectorChief Executive OfficerManaging DirectorSecretary

Date Appointed

05.02.2009 12.09.2005 01.01.200903.07.201303.07.201326.01.2006 01.09.201409.08.2006 18.07.2013

Date Retired

-------31.08.2014-

1. Results

Total Income

Profit before tax

from which is deducted;

provision for estimated income tax expense of

provision for national stabilisation levy of

leaving a profit after tax of

which is to be added to the surplus brought forward of

leaving a balance of

from which is deducted transfer to statutory reserve fund

and a transfer to regulatory credit risk reserve of

resulting in a balance to be carried forward on the

Income Surplus account at December 31 of

15


3. Principal activitiesThe principal activities of the company was in accordance with its regulations and there was nochange in the principal activities of the company during the year.

4. AuditorsIn accordance with the Companies Act 1963, Act 179 (1963), Section 134 (5), PKF, CharteredAccountants will continue as auditors of the company.

5. Events after the reporting periodThe Directors confirm that no matters have arisen since 31 December 2014, which affect the financialstatements of the company for the year ended on that date.By order of the Board

……………………………. …………………………Chairman Director

11th June, 2015.

16

Report on the Financial StatementsWe have audited the accompanying financial statements of uniCredit Ghana Limited which comprisethe statement of financial position as of December 31, 2014, and the statement of profit or loss andother comprehensive income, statement of changes in equity and statement of cash flows for theyear then ended, and a summary of significant accounting policies and other explanatory notes.

Directors’ Responsibility for the Financial StatementsThe Directors are responsible for the preparation and fair presentation of these financial statementsin accordance with International Financial Reporting Standards and in the manner required by theCompanies Act, 1963 (Act 179), the Banking Act, 2004 (Act 673) as amended by Banking(Amendment) Act, 2007 (Act 738), and the Non Bank Financial Institution Act 2008, Act 774.Thisresponsibility includes: designing, implementing and maintaining internal control relevant to thepreparation and fair presentation of financial statements that are free from material misstatement,whether due to fraud or error; selecting and applying appropriate accounting policies; and makingaccounting estimates that are reasonable in the circumstances.

Auditors’ ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. Weconducted our audit in accordance with International Standards on Auditing. Those standards requirethat we comply with ethical requirements and plan and perform the audit to obtain reasonableassurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor’s judgment, includingthe assessment of the risks of material misstatement of the financial statements, whether due to fraudor error. In making those risk assessments, the auditor considers internal control relevant to the entity’spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of accounting estimates made by Directors, aswell as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our audit opinion.

OpinionIn our opinion, the financial statements give a true and fair view of the financial position of uniCreditGhana Limited as of December 31, 2014, and of its financial performance and its cash flows for theyear then ended in accordance with International Financial Reporting Standards and comply with theCompanies Act, 1963 (Act 179), the Banking Act, 2004 (Act 673) as amended by Banking(Amendment) Act, 2007 (Act 738), and the Non Bank Financial Institution Act 2008, (Act 774).

Report on Other Legal and Regulatory RequirementsThe Companies Act, 1963, (Act 179) requires that in carrying out our audit we consider and report toyou on the following matters. We confirm that:

Independent Auditor’s Report To TheMembers Of uniCredit Ghana LimitedOn The Financial Statements For The Year Ended 31 December 2014


17

I. We have obtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit.II. In our opinion proper books of accounts have been kept by the company, so far as appears fromour examination of those books, andIII. The company’s statement of financial position and statement of profit or loss and comprehensiveincome are in agreement with the books of accounts.The Non Bank Financial Institution Act 2008, Act 774, section 27 requires that we state certain mattersin our report. We hereby state that;I. The statements of financial position give a true and fair view of the state of affairs of the Companyand its results for the period under review,II. We were able to obtain all the information and explanation required for the efficient performanceof our duties as auditors,III. The company’s transactions are within its powers, andIV. The Company has complied with the provisions of the Non Bank Financial Institution Act 2008, (Act 774).

…………………………………………….Signed by: F. Bruce-Tagoe (ICAG/P/1087)For and on behalf ofPKF: (ICAG/F/2015/039)Chartered AccountantsFarrar Avenue P. O. Box GP 1219,Accra.

11th June, 2015.


18


Statement Of Profit Or Loss And OtherComprehensive IncomeFor The Year Ended 31 December 2014

Interest IncomeInterest Expense

Net Interest IncomeCommission and feesOther Income

Operating IncomeOperating Expenses

Net operating Profit before charge for Credit impairment lossCredit impairment loss

Profit before taxNational stabilisation levyIncome tax expense

Profit after tax attributable to Equity Shareholders

Other comprehensive incomeItems that will not be reclassified subsequently to profit or loss:Revaluation gains on propertyTax effect

Total items never reclassified to profit or lossTotal other comprehensive income for the yearTotal profit and other comprehensive income for the year

2013GH¢

43,606,526(20,038,109)

23,568,417198,303183,297

23,950,017(19,844,727)

4,105,290(1,107,604)

2,997,686(67,188)

(636,504)

2,293,994

6,246,408(936,961)5,309,4475,309,447

7,603,441

2,173,578

2014GH¢

58,197,981(23,969,888)34,228,093

321,640181,756

34,731,489(29,601,215)

5,130,274 (867,744)4,262,530(213,127)(833,091)3,216,312

- - - -

3,216,312

3,774,985

Notes

67

89

10

11

12.412.1

19


Statement Of Financial PositionAs At 31 December 2014

AssetsCash and bank balancesHeld-to maturity financial assetsLoans and advances Other assetsAvailable-for-sale financial assetsProperty, plant and equipment

Total assets

LiabilitiesCustomer depositsBorrowingsCurrent tax payableNational stabilisation levyCreditors and accrualsDeferred income tax

Total liabilities

Shareholders' FundStated capitalCapital surplusStatutory reserve fundRegulatory credit risk reserveIncome surplus

Total Shareholders' Funds

Total liabilities and shareholders' funds

2013GH¢

5,742,72039,868,21682,103,41813,907,9512,468,495

12,744,562

156,835,362

123,200,7355,000,000

9,78967,188

8,996,2871,155,831

138,429,830

8,790,9815,309,4471,256,460

875,0662,173,578

18,405,532

156,835,362

2014GH¢

7,906,362 73,488,390 86,734,842 21,426,995

- 14,115,736

203,672,325

162,630,365 -

12,853 109,755

9,623,056 974,452

173,350,481

17,490,981 5,309,447 2,864,616

881,815 3,774,985

30,321,844

203,672,325

Notes

131415161718

1920

12.312.4

2112.5

2223242526

Approved by the Board of Directors on 11th June, 2015

Chairman Director 20

2014

Balance as at 1 January Profit for the yearTransactions with ownersAdditional Capital Introduced

Transfers within equityTransfer to Statutory Reserve FundTransfer to/(from) Regulatory creditrisk reserveTotal transfers within equity

Balance as at 31 December

2013Balance as at 1 January Profit for the yearOther comprehensive incomeRevaluation gains on propertiesTax effectTotal other comprehensive income

Transactions with ownersAdditional Capital Introduced

Transfers within equityTransfer to statutory reserve fundTransfer to/(from) regulatory creditrisk reserveTotal transfers within equity

Balance as at 31 December

Statement of Changes in EquityFor The Year Ended 31 December 2014


CapitalSurplus

GH¢

5,309,447 -

-

-

- -

5,309,447

- -

6,246,408 (936,961)5,309,447

-

-

- -

5,309,447

Statedcapital

GH¢

8,790,981 -

8,700,000

-

- -

17,490,981

7,290,981 -

- - -

1,500,000

-

- -

8,790,981

StatutoryReserve

FundGH¢

1,256,460 -

-

1,608,156

- 1,608,156

2,864,616

912,360 -

- - -

-

344,100

- 344,100

1,256,460

IncomeSurplus

GH¢

2,173,578 3,216,312

-

(1,608,156)

(6,749)(1,614,905)

3,774,985

522,631 2,293,994

- - -

-

(344,100)

(298,947)(643,047)

2,173,578

RegulatoryCredit Risk

ReserveGh¢

875,066 -

-

-

6,749 6,749

881,815

576,119 -

- - -

-

-

298,947 298,947

875,066

Total

GH¢

18,405,532

3,216,312

8,700,000

-

-

-

30,321,844

9,302,091

2,293,994

6,246,408

(936,961)

5,309,447

1,500,000

-

-

-

18,405,532

21

Statement of Cash FlowsFor The Year Ended 31 December 2014


Cash flow from operating activitiesProfit before taxationAdjustment for:Depreciation and amortisationCharge for credit impairmentInterest in suspenseProfit on asset disposalOperating profit before working capital changesChanges in held-to-maturity financial assetsChanges in advancesChanges in other assetsChanges in other investmentsChanges in customer depositsChanges in creditors and accrualsCash flow from operating activities

Tax paidNet cash flow from operating activities

Cash flow from investing activitiesPurchase of property, plant and equipmentProceeds from disposal of assetsNet cash used in investing activities

Cash flow from financing activitiesChanges in borrowingsIncrease in stated capitalNet cash from financing activities

Net increase in cash and cash equivalents

Cash and cash equivalents at 1 JanuaryCash and cash equivalents at 31 December

Cash and cash equivalentsCash in handBank balance

2013GH¢

2,997,686

916,0791,107,604

147,911(6,560)

5,162,720(14,823,603)(25,731,803)(3,588,760)

(59,255)33,264,875

3,610,989(2,164,837)

(514,838)(2,679,675)

(3,580,833)8,865

(3,571,968)

5,000,0001,500,0006,500,000

248,357

5,494,3635,742,720

4,206,7071,536,013 5,742,720

2014GH¢

4,262,530

2,408,827 867,744 (54,438)

(830)7,483,833

(33,620,174)(5,444,730)(7,519,044)

2,468,495 39,429,630

626,769 3,424,779

(1,181,966)2,242,813

(3,780,777)1,606

(3,779,171)

(5,000,000)8,700,000 3,700,000

2,163,642

5,742,720 7,906,362

4,823,262 3,083,100 7,906,362

22

1. Reporting EntityuniCredit Ghana Limited was incorporated as a limited liability company and domiciled in Ghanaunder the Company’s Act of 1963 (Act 179) in 1995. It was granted a license to operate as a financialinstitution in 1984 in accordance with the Banking Law of 1989 (PNDC Law 225).

uniCredit Ghana Limited is a non-bank financial institution which has been in operation since 1995.The Institution was formerly called Kantamanto Savings and Loans Co. Ltd, but had a change ofname in June 2007. The ownership of the Institution changed in April 2005. The Institution isheadquartered at Tarzan House, Kantamanto-Accra.

The primary focus of uniCredit is to provide financial services that are specifically tailored to theneeds of personal customers and micro, small and medium scale enterprises.

2. Summary of Significant Accounting PoliciesThe significant accounting policies adopted by uniCredit Ghana Limited under the InternationalFinancial Reporting Standards (IFRSs) are set out below:

2.1 Statement of ComplianceThe financial statements of the Institution have been prepared in accordance with InternationalFinancial Reporting Standards (IFRS) as issued by the International Accounting Standards Board(IASB).

2.2 Basis of preparationThe financial statements have been prepared on a historical cost basis, except for the followingmaterial items in the statement of financial position:

assets and liabilities held for trading are measured at fair value; financial instruments designated at fair value through profit or loss are measured at fair value;investments in equity instruments are measured at fair value;other financial assets not held in a business model whose objective is to hold assets to collect contractual cash flows or whose contractual terms do not give rise solely to payments of principal and interest are measured at fair value; andavailable-for-sale financial assets are measured at fair value.

Functional and presentation currencyThese financial statements are presented in Ghana cedi, which is the Institution’s functional currency.Except as otherwise indicated, financial information presented in Ghana cedi has been rounded tothe nearest one Ghana cedi.

Preparation of the financial statementsThe preparation of financial statements in conformity with IFRS requires the use of certain criticalaccounting estimates. It also requires management to exercise its judgement in the process ofapplying the Company’s accounting policies. Changes in assumptions may have a significant impacton the financial statements in the period the assumptions changed. Management believes that theunderlying assumptions are appropriate. The areas involving a higher degree of judgement orcomplexity, or areas where assumptions and estimates are significant to the financial statements are

Notes to the Financial StatementsFor The Year Ended 31 December 2014


23

disclosed in Note 4.

Income and statement of cash flowsThe Company has elected to present a single statement of profit or loss and other comprehensiveincome and presents its expenses by function of expense method.

The Company reports cash flows from operating activities using the indirect method. Interestreceived is presented within investing cash flows; interest paid is presented within operating cashflows.

The principal accounting policies are set out below:

2.3 Revenue recognitionRevenue is recognised to the extent that it is probable that the economic benefits will flow to theInstitution and the revenue can be reliably measured, regardless of when the payment is beingmade. Revenue is measured at the fair value of the consideration received or receivable, taking intoaccount contractually defined terms of payment and excluding taxes or duty. The Institution assessesits revenue arrangements against specific criteria in order to determine if it is acting as principal oragent. The Institution has concluded that it is acting as a principal in all of its revenue arrangements.The following specific recognition criteria must also be met before revenue is recognised:

Our revenues are primarily derived from the following sources: (1) interest income on loans issuedto clients; (2) commission and fees on providing financial advisory services: and (3) other revenueswhich are ancillary to our operations. Generally, revenues are recognised when the services havebeen rendered. The following is a description of the composition of our revenues:

InterestInterest income and expense are recognised in profit or loss using the effective interest method.The effective interest rate is the rate that exactly discounts the estimated future cash payments andreceipts through the expected life of the financial asset or liability (or, where appropriate, a shorterperiod) to the carrying amount of the financial asset or liability. When calculating the effective interestrate, the Institution estimates future cash flows considering all contractual terms of the financialinstrument, but not future credit losses.

The calculation of the effective interest rate includes all transaction costs and fees and points paidor received that are an integral part of the effective interest rate. Transaction costs includeincremental costs that are directly attributable to the acquisition or issue of a financial asset or liability.Interest income and expense presented in the statement of comprehensive income include:

interest on financial assets and financial liabilities measured at amortised cost calculated on an effective interest basis;the effective portion of fair value changes in qualifying hedging derivatives designated in cash flow hedges of variability in interest cash flows, in the same period that the hedged cash flows affect interest income/expense;the ineffective portion of fair value changes in qualifying hedging derivatives designated in



24

cash flow hedges of interest rate risk; andfair value changes in qualifying derivatives, including hedge ineffectiveness, and related

Interest income and expense on all trading assets and liabilities are considered to be incidental tothe Group’s trading operations and are presented together with all other changes in the fair value oftrading assets and liabilities in net trading income.

Commission and fees Fees and commission income and expense that are integral to the effective interest rate on a financialasset or liability are included in the measurement of the effective interest rate. Other fees andcommission income, including account servicing fees, investment management fees, salescommission, placement fees and syndication fees, are recognised as the related services areperformed. When a loan commitment is not expected to result in the draw-down of a loan, the relatedloan commitment fees are recognised on a straight-line basis over the commitment period. Otherfees and commission expense relate mainly to transaction and service fees, which are expensedas the services are received.

Net trading incomeNet trading income comprises gains less losses related to trading assets and liabilities, and includesall realised and unrealised fair value changes, interest, dividends and foreign exchange differences.

Net income from other financial instruments at fair value through profit or lossNet income from other financial instruments at fair value through profit or loss relates to non-tradingderivatives held for risk management purposes that do not form part of qualifying hedgerelationships, financial assets mandatorily measured at fair value through profit or loss other thanthose held for trading, and financial assets and liabilities designated at fair value through profit orloss. It includes all realised and unrealised fair value changes, interest, dividends and foreignexchange differences.

DividendsRevenue is recognised when the Institution’s right to receive the payment is established.

2.4 Taxes

Current income taxCurrent income tax assets and liabilities for the current period are measured at the amount expectedto be recovered from or paid to the taxation authorities. The tax rates and tax laws used to computethe amount those that are enacted or substantively enacted, at the reporting date in the countrieswhere the Institution operates and generates taxable income.

Current income tax relating to items recognised directly in equity is recognised in equity and not inthe statement of profit or loss. Management periodically evaluates positions taken in the tax returnswith respect to situations in which applicable tax regulations are subject to interpretation andestablishes provisions where appropriate.



25

Deferred taxDeferred tax is provided using the liability method on temporary differences at the reporting datebetween the tax bases of assets and liabilities and their carrying amounts for financial reportingpurposes. Deferred tax liabilities are recognised for all taxable temporary differences, except:

Where the deferred tax liability arises from the initial recognition of goodwill or of an asset orliability in a transaction that is not a business combination and, at the time of the transaction, affectsneither the accounting profit nor taxable profit or loss

In respect of taxable temporary differences associated with investments in subsidiaries, associatesand interests in joint ventures, where the timing of the reversal of the temporary differences can becontrolled and it is probable that the temporary differences will not reverse in the foreseeable future

Deferred tax assets are recognised for all deductible temporary differences, carry forward of unusedtax credits and unused tax losses, to the extent that it is probable that taxable profit will be availableagainst which the deductible temporary differences, and the carry forward of unused tax creditsand unused tax losses can be utilised, except:

Where the deferred tax asset relating to the deductible temporary difference arises from the initialrecognition of an asset or liability in a transaction that is not a business combination and, at the timeof the transaction, affects neither the accounting profit nor taxable profit or loss

In respect of deductible temporary differences associated with investments in subsidiaries,associates and interests in joint ventures, deferred tax assets are recognised only to the extent thatit is probable that the temporary differences will reverse in the foreseeable future and taxable profitwill be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to theextent that it is no longer probable that sufficient taxable profit will be available to allow all or part ofthe deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at eachreporting date and are recognised to the extent that it has become probable that future taxableprofits will allow the deferred tax asset to be recovered. Deferred tax assets and liabilities aremeasured at the tax rates that are expected to apply in the year when the asset is realised or theliability is settled, based on tax rates (and tax laws) that have been enacted or substantively enactedat the reporting date.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss.Deferred tax items are recognised in correlation to the underlying transaction either in othercomprehensive income or directly in equity.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to setoff current tax assets against current income tax liabilities and the deferred taxes relate to the sametaxable entity and the same taxation authority. Tax benefits acquired as part of a businesscombination, but not satisfying the criteria for separate recognition at that date, would be recognisedsubsequently if new information about facts and circumstances changed. The adjustment wouldeither be treated as a reduction to goodwill (as long as it does not exceed goodwill) if it is incurredduring the measurement period or in profit or loss.



26

Value added tax and National Health Insurance Levy (VAT & NHIL)Revenues, expenses and assets are recognised net of the amount of VAT & NHIL, except:

Where the taxes and levies incurred on a purchase of assets or services are not recoverablefrom the taxation authority, in which case the taxes are recognised as part of the cost of acquisitionof the asset or as part of the expense item as applicable

Receivables and payables are stated with the amount of taxes and levies included the net amountof taxes and levies recoverable from, or payable to, the taxation authority is included as part ofreceivables or payables in the statement of financial position.

2.5 Non-current assets held for sale and discontinued operationsNon-current assets and disposal Companies classified as held for sale are measured at the lowerof their carrying amount and fair value less costs to sell. Non-current assets and disposal Companiesare classified as held for sale if their carrying amounts will be recovered principally through a saletransaction rather than through continuing use. This condition is regarded as met only when the saleis highly probable and the asset or disposal Institution is available for immediate sale in its presentcondition. Management must be committed to the sale, which should be expected to qualify forrecognition as a completed sale within one year from the date of classification.

Property, plant and equipment and intangible assets once classified as held for sale are notdepreciated or amortised.

2.6 Property, plant and equipmentProperty, plant and equipment is stated at cost, net of accumulated depreciation and/or accumulatedimpairment losses, if any. Such cost includes the cost of replacing component parts of the property,plant and equipment and borrowing costs for long-term construction projects if the recognitioncriteria are met.

When significant parts of property, plant and equipment are required to be replaced at intervals, theInstitution derecognises the replaced part, and recognises the new part with its own associateduseful life and depreciation. Likewise, when a major inspection is performed, its cost is recognisedin the carrying amount of the plant and equipment as a replacement if the recognition criteria aresatisfied. All other repair and maintenance costs are recognised in the statement of profit or loss asincurred. The present value of the expected cost for the decommissioning of the asset after its useis included in the cost of the respective asset if the recognition criteria for a provision are met.

Land and buildings are measured at cost less accumulated depreciation on buildings andimpairment losses recognised. Valuations are performed with sufficient frequency to ensure that thefair value of a revalued asset does not differ materially from its carrying amount.

Any revaluation surplus is recognised in other comprehensive income and accumulated in equity inthe asset revaluation reserve, except to the extent that it reverses a revaluation decrease of the sameasset previously recognised in the statement of profit or loss, in which case the increase isrecognised in the statement of profit or loss. A revaluation deficit is recognised in the statement ofprofit or loss, except to the extent that it offsets an existing surplus on the same asset recognised inthe asset revaluation reserve.



27

Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets asfollows:

Freehold land NilBuildings 2%Improvement on rented premises 20%Plant and machinery 20%Motor vehicles 20%Computers 33.33%Office equipment 20%Furniture and fittings 20%

An item of property, plant and equipment and any significant part initially recognised is derecognisedupon disposal or when no future economic benefits are expected from its use or disposal. Any gainor loss arising on derecognition of the asset (calculated as the difference between the net disposalproceeds and the carrying amount of the asset) is included in the statement of profit or loss whenthe asset is derecognised. The assets’ residual values, useful lives and methods of depreciation arereviewed at each financial year end and adjusted prospectively, if appropriate.

2.7 LeasesThe determination of whether an arrangement is, or contains, a lease is based on the substance ofthe arrangement at the inception date, whether fulfillment of the arrangement is dependent on theuse of a specific asset or assets or the arrangement conveys a right to use the asset, even if thatright is not explicitly specified in an arrangement. For arrangements entered into prior to 1 January2011, the date of inception is deemed to be 1 January 2011 in accordance with the IFRS 1.

The Institution as a lesseeFinance leases which transfer to the Institution substantially all the risks and benefits incidental toownership of the leased item, are capitalised at the commencement of the lease at the fair value ofthe leased property or, if lower, at the present value of the minimum lease payments. Lease paymentsare apportioned between finance charges and reduction of the lease liability so as to achieve aconstant rate of interest on the remaining balance of the liability. Finance charges are recognised infinance costs in the statement of profit or loss. A leased asset is depreciated over the useful life ofthe asset. However, if there is no reasonable certainty that the Institution will obtain ownership bythe end of the lease term, the asset is depreciated over the shorter of the estimated useful life of theasset and the lease term.

Operating lease payments are recognised as an operating expense in the statement of profit or losson a straight-line basis over the lease term.

The Institution as a lessorLeases in which the Institution does not transfer substantially all the risks and benefits of ownershipof the asset are classified as operating leases. Initial direct costs incurred in negotiating an operatinglease are added to the carrying amount of the leased asset and recognised over the lease term on the



28

same bases as rental income. Contingent rents are recognised as revenue in the period in which they areearned.

2.8 Borrowing costsBorrowing costs directly attributable to the acquisition, construction or production of an asset thatnecessarily takes a substantial period of time to get ready for its intended use or sale are capitalisedas part of the cost of the respective assets. All other borrowing costs are expensed in the periodthey occur. Borrowing costs consist of interest and other costs that an entity incurs in connectionwith the borrowing of funds.

2.9 Investment propertiesInvestment properties are measured initially at cost, including transaction costs. Subsequent to initialrecognition, investment properties are stated at fair value, which reflects market conditions at thereporting date. Gains or losses arising from changes in the fair values of investment properties areincluded in the statement of profit or loss in the period in which they arise. Fair values are evaluatedannually by an accredited external, independent valuer, applying a valuation model recommendedby the International Valuation Standards Committee.Investment properties are derecognised when either they have been disposed of or when theinvestment property is permanently withdrawn from use and no future economic benefit is expectedfrom its disposal. The difference between the net disposal proceeds and the carrying amount of theasset is recognised in the statement of profit or loss in the period of derecognition.

Transfers are made to or from investment property only when there is a change in use. For a transferfrom investment property to owner-occupied property, the deemed cost for subsequent accountingis the fair value at the date of change. If owner-occupied property becomes an investment property,the Institution accounts for such property in accordance with the policy stated under property, plantand equipment up to the date of change.

2.10 Intangible assetsIntangible assets acquired separately are measured on initial recognition at cost. The cost ofintangible assets acquired in a business combination is their fair value as at the date of acquisition.Following initial recognition, intangible assets are carried at cost less accumulated amortisation andaccumulated impairment losses, if any. Internally generated intangible assets, excluding capitaliseddevelopment costs, are not capitalised and expenditure is reflected in the statement of profit or lossin the year in which the expenditure is incurred.

The useful lives of intangible assets are assessed as either finite or indefinite. Intangible assets withfinite lives are amortised over their useful economic lives and assessed for impairment wheneverthere is an indication that the intangible asset may be impaired. The amortisation period and theamortisation method for an intangible asset with a finite useful life is reviewed at least at the end ofeach reporting period. Changes in the expected useful life or the expected pattern of consumptionof future economic benefits embodied in the asset is accounted for by changing the amortisationperiod or method, as appropriate, and are treated as changes in accounting estimates. Theamortisation expense on intangible assets with finite lives is recognised in the statement of profit or lossin the expense category consistent with the function of the intangible assets.



29

Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually,either individually or at the cash-generating unit level. The assessment of indefinite life is reviewedannually to determine whether the indefinite life continues to be supportable. If not, the change inuseful life from indefinite to finite is made on a prospective basis. Gains or losses arising fromderecognition of an intangible asset are measured as the difference between the net disposalproceeds and the carrying amount of the asset and are recognised in the statement of profit or losswhen the asset is derecognised.

2.11 Financial instruments — initial recognition and subsequent measurement

i) Financial assetsInitial recognition and measurementFinancial assets within the scope of IAS 39 are classified as financial assets at fair value throughprofit or loss, loans and receivables, held-to-maturity investments, available-for-sale financial assets,or as derivatives designated as hedging instruments in an effective hedge, as appropriate. TheInstitution determines the classification of its financial assets at initial recognition.

All financial assets are recognised initially at fair value plus, in the case of assets not at fair valuethrough profit or loss, directly attributable transaction costs.

Purchases or sales of financial assets that require delivery of assets within a time frame establishedby regulation or convention in the marketplace (regular way trades) are recognised on the tradedate, i.e., the date that the Institution commits to purchase or sell the asset.

The Institution’s financial assets include cash and short-term deposits, trade and other receivables,loans and other receivables, quoted and unquoted financial instruments and derivative financialinstruments.

Subsequent measurementThe subsequent measurement of financial assets depends on their classification as follows:

Financial assets at fair value through profit or lossFinancial assets at fair value through profit or loss include financial assets held for trading andfinancial assets designated upon initial recognition at fair value through profit or loss. Financial assetsare classified as held for trading if they are acquired for the purpose of selling or repurchasing inthe near term. This category includes derivative financial instruments entered into by the Institutionthat are not designated as hedging instruments in hedge relationships as defined by IAS 39.Derivatives, including separated embedded derivatives are also classified as held for trading unlessthey are designated as effective hedging instruments. Financial assets at fair value through profitand loss are carried in the statement of financial position at fair value with changes in fair valuerecognised in finance income or finance costs in the statement of profit or loss.

The Institution has not designated any financial assets upon initial recognition as at fair value throughprofit or loss.



30

The Institution evaluates its financial assets held for trading, other than derivatives, to determinewhether the intention to sell them in the near term is still appropriate. When the Institution is unableto trade these financial assets due to inactive markets and management’s intention to sell them inthe foreseeable future significantly changes, the Institution may elect to reclassify these financialassets in rare circumstances. The reclassification to loans and receivables, available-for-sale or heldto maturity depends on the nature of the asset. This evaluation does not affect any financial assetsdesignated at fair value through profit or loss using the fair value option at designation.

Derivatives embedded in host contracts are accounted for as separate derivatives and recorded atfair value if their economic characteristics and risks are not closely related to those of the hostcontracts and the host contracts are not held for trading or designated at fair value though profit orloss. These embedded derivatives are measured at fair value with changes in fair value recognisedin the statement of profit or loss. Reassessment only occurs if there is a change in the terms of thecontract that significantly modifies the cash flows that would otherwise be required.

Loans and receivablesLoans and receivables are non-derivative financial assets with fixed or determinable payments thatare not quoted in an active market. After initial measurement, such financial assets are subsequentlymeasured at amortised cost using the effective interest rate method (EIR), less impairment.Amortised cost is calculated by taking into account any discount or premium on acquisition andfees or costs that are an integral part of the EIR. The EIR amortisation is included in finance incomein the statement of profit or loss. The losses arising from impairment are recognised in the statementof profit or loss in finance costs.

Held-to-maturity investmentsNon-derivative financial assets with fixed or determinable payments and fixed maturities areclassified as held-to-maturity when the Institution has the positive intention and ability to hold themto maturity. After initial measurement, held-to-maturity investments are measured at amortised costusing the effective interest method, less impairment. Amortised cost is calculated by taking intoaccount any discount or premium on acquisition and fees or costs that are an integral part of theEIR. The EIR amortisation is included in finance income in the statement of profit or loss. The lossesarising from impairment are recognised in the statement of profit or loss in finance costs.

Available-for-sale financial investmentsAvailable-for-sale financial investments include equity and debt securities. Equity investmentsclassified as available-for-sale are those, which are neither classified as held for trading nordesignated at fair value through profit or loss. Debt securities in this category are those which areintended to be held for an indefinite period of time and which may be sold in response to needs forliquidity or in response to changes in the market conditions.

After initial measurement, available-for-sale financial investments are subsequently measured at fairvalue with unrealised gains or losses recognised as other comprehensive income in the available-for-sale reserve until the investment is derecognised, at which time the cumulative gain or loss isrecognised in other operating income, or determined to be impaired, at which time the cumulativeloss is reclassified to the statement of profit or loss in finance costs and removed from the available-



31

for-sale reserve. Interest income on available-for-sale debt securities is calculated using the effectiveinterest method and is recognised in profit or loss.

The Institution evaluates its available-for-sale financial assets to determine whether the ability andintention to sell them in the near term is still appropriate. When the Institution is unable to trade thesefinancial assets due to inactive markets and management’s intention to do so significantly changesin the foreseeable future, the Institution may elect to reclassify these financial assets in rarecircumstances. Reclassification to loans and receivables is permitted when the financial assets meetthe definition of loans and receivables and the Institution has the intent and ability to hold theseassets for the foreseeable future or until maturity. Reclassification to the held-to-maturity category ispermitted only when the entity has the ability and intention to hold the financial asset accordingly.

For a financial asset reclassified out of the available-for-sale category, any previous gain or loss onthat asset that has been recognised in equity is amortised to profit or loss over the remaining life ofthe investment using the EIR. Any difference between the new amortised cost and the expectedcash flows is also amortised over the remaining life of the asset using the EIR. If the asset issubsequently determined to be impaired, then the amount recorded in equity is reclassified to thestatement of profit or loss.

DerecognitionA financial asset (or, where applicable a part of a financial asset or part of a group of similar financialassets) is derecognised when:

The rights to receive cash flows from the asset have expiredThe Institution has transferred its rights to receive cash flows from the asset or has assumed an

obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Institution has transferred substantially all the risks andrewards of the asset, or (b) the Institution has neither transferred nor retained substantially all therisks and rewards of the asset, but has transferred control of the asset.

When the Institution has transferred its rights to receive cash flows from an asset or has entered intoa pass-through arrangement, and has neither transferred nor retained substantially all of the risksand rewards of the asset nor transferred control of it, the asset is recognised to the extent of theInstitution’s continuing involvement in it.

In that case, the Institution also recognises an associated liability. The transferred asset and theassociated liability are measured on a basis that reflects the rights and obligations that the Institutionhas retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured atthe lower of the original carrying amount of the asset and the maximum amount of considerationthat the Institution could be required to repay.

ii) Impairment of financial assetsThe Institution assesses at each reporting date whether there is any objective evidence that a



32

financial asset or a group of financial assets is impaired. A financial asset or a group of financialassets is deemed to be impaired if, and only if, there is objective evidence of impairment as a resultof one or more events that has occurred after the initial recognition of the asset (an incurred ‘lossevent’) and that loss event has an impact on the estimated future cash flows of the financial assetor the group of financial assets that can be reliably estimated. Evidence of impairment may includeindications that the debtors or a group of debtors is experiencing significant financial difficulty,default or delinquency in interest or principal payments, the probability that they will enter bankruptcyor other financial reorganisation and where observable data indicate that there is a measurabledecrease in the estimated future cash flows, such as changes in arrears or economic conditionsthat correlate with defaults.

Financial assets carried at amortised costFor financial assets carried at amortised cost, the Institution first assesses whether objectiveevidence of impairment exists individually for financial assets that are individually significant, orcollectively for financial assets that are not individually significant. If the Institution determines thatno objective evidence of impairment exists for an individually assessed financial asset, whethersignificant or not, it includes the asset in a group of financial assets with similar credit riskcharacteristics and collectively assesses them for impairment. Assets that are individually assessedfor impairment and for which an impairment loss is, or continues to be, recognised are not includedin a collective assessment of impairment.

If there is objective evidence that an impairment loss has been incurred, the amount of the loss ismeasured as the difference between the assets carrying amount and the present value of estimatedfuture cash flows (excluding future expected credit losses that have not yet been incurred). Thepresent value of the estimated future cash flows is discounted at the financial asset’s original effectiveinterest rate. If a loan has a variable interest rate, the discount rate for measuring any impairmentloss is the current effective interest rate.

The carrying amount of the asset is reduced through the use of an allowance account and theamount of the loss is recognised in the statement of profit or loss. Interest income continues to beaccrued on the reduced carrying amount and is accrued using the rate of interest used to discountthe future cash flows for the purpose of measuring the impairment loss. The interest income isrecorded as part of finance income in the statement of profit or loss. Loans together with theassociated allowance are written off when there is no realistic prospect of future recovery and allcollateral has been realised or has been transferred to the Institution. If, in a subsequent year, theamount of the estimated impairment loss increases or decreases because of an event occurringafter the impairment was recognised, the previously recognised impairment loss is increased orreduced by adjusting the allowance account. If a future write-off is later recovered, the recovery iscredited to finance costs in the statement of profit or loss

Available-for-sale financial investmentsFor available-for-sale financial investments, the Institution assesses at each reporting date whetherthere is objective evidence that an investment or a group of investments is impaired.In the case of equity investments classified as available-for-sale, objective evidence would includea significant or prolonged decline in the fair value of the investment below its cost. ‘Significant’ is



33

evaluated against the original cost of the investment and ‘prolonged’ against the period in whichthe fair value has been below its original cost. Where there is evidence of impairment, the cumulativeloss — measured as the difference between the acquisition cost and the current fair value, less anyimpairment loss on that investment previously recognised in the statement of profit or loss — isremoved from other comprehensive income and recognised in the statement of profit or loss.Impairment losses on equity investments are not reversed through the statement of profit or loss;increases in their fair value after impairments are recognised directly in other comprehensive income.

In the case of debt instruments classified as available-for-sale, impairment is assessed based onthe same criteria as financial assets carried at amortised cost. However, the amount recorded forimpairment is the cumulative loss measured as the difference between the amortised cost and thecurrent fair value, less any impairment loss on that investment previously recognised in the statementof profit or loss.

Future interest income continues to be accrued based on the reduced carrying amount of the asset,using the rate of interest used to discount the future cash flows for the purpose of measuring theimpairment loss. The interest income is recorded as part of finance income. If, in a subsequent year,the fair value of a debt instrument increases and the increase can be objectively related to an eventoccurring after the impairment loss was recognised in the statement of profit or loss, the impairmentloss is reversed through the statement of profit or loss.

iii) Financial liabilitiesInitial recognition and measurementFinancial liabilities within the scope of IAS 39 are classified as financial liabilities at fair value throughprofit or loss, loans and borrowings, or as derivatives designated as hedging instruments in aneffective hedge, as appropriate. The Institution determines the classification of its financial liabilitiesat initial recognition.

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings,carried at amortised cost. This includes directly attributable transaction costs.

The Institution’s financial liabilities include trade and other payables, bank overdrafts, loans andborrowings, financial guarantee contracts, and derivative financial instruments.

Subsequent measurementThe measurement of financial liabilities depends on their classification as follows:

Financial liabilities at fair value through profit or lossFinancial liabilities at fair value through profit or loss include financial liabilities held for trading andfinancial liabilities designated upon initial recognition as at fair value through profit or loss. Financialliabilities are classified as held for trading if they are acquired for the purpose of selling in the near term.This category includes derivative financial instruments entered into by the Institution that are notdesignated as hedging instruments in hedge relationships as defined by IAS 39. Separated embeddedderivatives are also classified as held for trading unless they are designated as effective hedginginstruments.



34

Gains or losses on liabilities held for trading are recognised in the statement of profit or loss.The Institution has not designated any financial liabilities upon initial recognition as at fair valuethrough profit or loss.

Loans and borrowingsAfter initial recognition, interest bearing loans and borrowings are subsequently measured atamortised cost using the effective interest rate method. Gains and losses are recognised in thestatement of profit or loss when the liabilities are derecognised as well as through the effectiveinterest rate method (EIR) amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition andfees or costs that are an integral part of the EIR. The EIR amortisation is included in finance costs inthe statement of profit or loss.

DerecognitionA financial liability is derecognised when the obligation under the liability is discharged or cancelledor expires.

When an existing financial liability is replaced by another from the same lender on substantiallydifferent terms, or the terms of an existing liability are substantially modified, such an exchange ormodification is treated as a derecognition of the original liability and the recognition of a new liability,and the difference in the respective carrying amounts is recognised in the statement of profit or loss.

iv) Offsetting of financial instrumentsFinancial assets and financial liabilities are offset and the net amount reported in the statement offinancial position if, and only if, there is a currently enforceable legal right to offset the recognisedamounts and there is an intention to settle on a net basis, or to realise the assets and settle theliabilities simultaneously.

v) Fair value of financial instrumentsThe fair value of financial instruments that are traded in active markets at each reporting date isdetermined by reference to quoted market prices or dealer price quotations (bid price for longpositions and ask price for short positions), without any deduction for transaction costs.

For financial instruments not traded in an active market, the fair value is determined usingappropriate valuation techniques. Such techniques may include using recent arm’s length markettransactions; reference to the current fair value of another instrument that is substantially the same;a discounted cash flow analysis or other valuation models.

2.12 InventoriesInventories are valued at the lower of cost and net realisable value.Net realisable value is the estimated selling price in the ordinary course of business, less estimatedcosts of completion and the estimated costs necessary to make the sale.



35

2.13 Impairment of non-financial assetsThe Institution assesses at each reporting date whether there is an indication that an asset may beimpaired. If any indication exists, or when annual impairment testing for an asset is required, theInstitution estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher ofan asset’s or cash-generating unit’s (CGU) fair value less costs to sell and its value in use and isdetermined for an individual asset, unless the asset does not generate cash inflows that are largelyindependent of those from other assets or Institution’s of assets.

Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset isconsidered impaired and is written down to its recoverable amount. In assessing value in use, theestimated future cash flows are discounted to their present value using a pre-tax discount rate thatreflects current market assessments of the time value of money and the risks specific to the asset.In determining fair value less costs to sell, recent market transactions are taken into account, ifavailable. If no such transactions can be identified, an appropriate valuation model is used. Thesecalculations are corroborated by valuation multiples, quoted share prices for publicly tradedsubsidiaries or other available fair value indicators.

The Institution bases its impairment calculation on detailed budgets and forecast calculations whichare prepared separately for each of the Institution’s cash-generating units to which the individualassets are allocated. These budgets and forecast calculations are generally covering a period offive years. For longer periods, a long term growth rate is calculated and applied to project futurecash flows after the fifth year.

Impairment losses of continuing operations, including impairment on inventories, are recognised inthe statement of profit or loss in those expense categories consistent with the function of the impairedasset, except for a property previously revalued where the revaluation was taken to othercomprehensive income. In this case, the impairment is also recognised in other comprehensiveincome up to the amount of any previous revaluation.

For assets excluding goodwill, an assessment is made at each reporting date as to whether thereis any indication that previously recognised impairment losses may no longer exist or may havedecreased. If such indication exists, the Institution estimates the asset’s or cash-generating unit’srecoverable amount. A previously recognised impairment loss is reversed only if there has been achange in the assumptions used to determine the asset’s recoverable amount since the lastimpairment loss was recognised. The reversal is limited so that the carrying amount of the assetdoes not exceed its recoverable amount, nor exceed the carrying amount that would have beendetermined, net of depreciation, had no impairment loss been recognised for the asset in prior years.Such reversal is recognised in the statement of profit or loss unless the asset is carried at a revaluedamount, in which case the reversal is treated as a revaluation increase.

Intangible assetsIntangible assets with indefinite useful lives are tested for impairment annually as at 31 Decembereither individually or at the cash-generating unit level, as appropriate and when circumstancesindicate that the carrying value may be impaired.



36

2.14 Cash and short-term depositsCash and short-term deposits in the statement of financial position comprise cash at banks and onhand and short-term deposits with a maturity of three months or less.For the purpose of the statement cash flows, cash and cash equivalents consist of cash and short-term deposits as defined above, net of outstanding bank overdrafts.

2.15 Translation of Foreign CurrenciesThe Institution’s functional currency is the Ghana Cedi. In preparing the statement of financial positionof the Institution, transactions in currencies other than Ghana Cedis are recorded at the rates ofexchange prevailing on the dates of the transactions. At the end of each reporting period, monetaryitems denominated in foreign currencies are retranslated at the rates prevailing at the end of thereporting period. Non-monetary items carried at fair value that are denominated in foreign currenciesare retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are notretranslated.

Exchange differences arising on the settlement of monetary items, and on the retranslation ofmonetary items, are included in the statement of comprehensive income. Exchange differencesarising on the retranslation of non-monetary items carried at fair value are included in the statementof comprehensive income for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised directly in shareholders’ equity.For such non-monetary items, any exchange component of that gain or loss is also recogniseddirectly in the shareholders’ equity.

2.16 Provisions

GeneralProvisions are recognised when the Institution has a present obligation (legal or constructive) as aresult of a past event, it is probable that an outflow of resources embodying economic benefits willbe required to settle the obligation and a reliable estimate can be made of the amount of theobligation. Where the Institution expects some or all of a provision to be reimbursed, for exampleunder an insurance contract, the reimbursement is recognised as a separate asset but only whenthe reimbursement is virtually certain. The expense relating to any provision is presented in thestatement of profit or loss net of any reimbursement.

If the effect of the time value of money is material, provisions are discounted using a current pre-taxrate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, theincrease in the provision due to the passage of time is recognised as a finance cost.

Restructuring provisionsRestructuring provisions are only recognised when general recognition criteria for provisions arefulfilled. Additionally, the Institution needs to have in place a detailed formal plan about the businessor part of the business concerned, the location and number of employees affected, a detailedestimate of the associated costs and appropriate time-line. The people affected have a validexpectation that the restructuring is being carried out or the implementation has been initiated already.



37

2.17 Employee Benefits

Defined Contribution PlansDefined contribution plans are post-employment benefit plans under which the Institution pays fixedcontributions into a separate fund and has no legal or contractual obligation to pay furthercontributions if the fund does not hold sufficient asset to pay all employee benefits relating toemployee service in the current and prior periods. Obligation for contributions to defined contributionplans are recognised as an expense in the statement of comprehensive income when they are due.

Short-Term BenefitsShort-term employee benefits are amount payable to employees that fall due wholly within twelvemonths after the end of the period in which the employee renders the related service.

The cost of short-term employee benefits are recognised as an expense in the period when theeconomic benefit is given, as an employment cost. Unpaid short-term employee benefits as at theend of the accounting period are recognised as an accrued expense and any short-term benefitpaid in advance are recognised as prepayment to the extent that it will lead to a future cash refunda reduction in future cash payment.Wages and salaries payable to employees are recognised as an expense in the statement ofcomprehensive income at gross. The Institution’s contribution to social security fund is also chargedas an expense.

Termination BenefitsTermination benefits are recognised as an expense when the Institution is demonstrably committed,without realistic possibility of withdrawal, to a formal detailed plan to terminate employment beforethe normal retirement date. Termination benefits for voluntary redundancies are recognised if theInstitution has made an offer encouraging voluntary redundancy, it is probable that the offer will beaccepted, and the number of acceptance can be estimated reliably.

2.18 Events after the Reporting PeriodThe Institution adjusts the amounts recognised in its financial statements to reflect events thatprovide evidence of conditions that existed at the end of the reporting period.

Where there are material events that are indicative of conditions that arose after the reporting period,the Institution discloses, by way of note, the nature of the event and the estimate of its financialeffect, or a statement that such an estimate cannot be made.

2.19 Stated capitalStated capital is classified as equity when there is no obligation to transfer cash or other assets.Incremental costs directly attributable to the issue of equity instruments are shown in equity as adeduction from the proceeds, net of tax. Incremental costs directly attributable to the issue of equityinstruments as consideration for the acquisition of a business are included in the cost of acquisition



38

3. Standards and interpretations in issue not yet adopted

New and revised standards, amendments and interpretationsThe standards and interpretations that are issued, but not yet effective, up to the date of issuanceof the Company’s financial statements are disclosed below. The company intends to adopt thesestandards, if applicable, when they become effective.

IFRS 9 Financial InstrumentsIn July 2014, the IASB issued the final version of IFRS 9 Financial Instruments which reflects allphases of the financial instruments project and replaces IAS 39 Financial Instruments: Recognitionand Measurement and all previous versions of IFRS 9. The standard introduces new requirementsfor classification and measurement, impairment, and hedge accounting. IFRS 9 is effective for annualperiods beginning on or after 1 January 2018, with early application permitted. Retrospectiveapplication is required, but comparative information is not compulsory. Early application of previousversions of IFRS 9 (2009, 2010 and 2013) is permitted if the date of initial application is before 1February 2015. The adoption of IFRS 9 will have an effect on the classification and measurement ofthe company’s financial assets, but no impact on the classification and measurement of thecompany’s financial liabilities. The company is still assessing the impact of this standard.

IFRS 14 Regulatory Deferral AccountsIFRS 14 is an optional standard that allows an entity, whose activities are subject to rate-regulation,to continue applying most of its existing accounting policies for regulatory deferral account balancesupon its first-time adoption of IFRS. Entities that adopt IFRS 14 must present the regulatory deferralaccounts as separate line items on the statement of financial position and present movements inthese account balances as separate line items in the statement of profit or loss and othercomprehensive income. The standard requires disclosures on the nature of, and risks associatedwith, the entity’s rate-regulation and the effects of that rate-regulation on its financial statements.IFRS 14 is effective for annual periods beginning on or after 1 January 2016. There is no impact ofthis standard on the company.

IFRS 15 Revenue from Contracts with CustomersIFRS 15 was issued in May 2014 and establishes a new five-step model that will apply to revenuearising from contracts with customers. Under IFRS 15 revenue is recognised at an amount thatreflects the consideration to which an entity expects to be entitled in exchange for transferring goodsor services to a customer. The principles in IFRS 15 provide a more structured approach tomeasuring and recognising revenue.

The new revenue standard is applicable to all entities and will supersede all current revenuerecognition requirements under IFRS. Either a full or modified retrospective application is requiredfor annual periods beginning on or after 1 January 2017 with early adoption permitted. Thecompany is currently assessing the impact of IFRS 15.

Amendments to IAS 19 Defined Benefit Plans: Employee ContributionsIAS 19 requires an entity to consider contributions from employees or third parties when accountingfor defined benefit plans. Where the contributions are linked to service, they should be attributed to



39

periods of service as a negative benefit. These amendments clarify that, if the amount of thecontributions is independent of the number of years of service, an entity is permitted to recognisesuch contributions as a reduction in the service cost in the period in which the service is rendered,instead of allocating the contributions to the periods of service. This amendment is effective forannual periods beginning on or after 1 July 2014. It is not expected that this amendment would berelevant to the company.

Amendments to IFRS 11 Joint Arrangements: Accounting for Acquisitions of InterestsThe amendments to IFRS 11 require that a joint operator accounting for the acquisition of an interestin a joint operation, in which the activity of the joint operation constitutes a business must apply therelevant IFRS 3 principles for business combinations accounting. The amendments also clarify thata previously held interest in a joint operation is not remeasured on the acquisition of an additionalinterest in the same joint operation while joint control is retained. In addition, a scope exclusion hasbeen added to IFRS 11 to specify that the amendments do not apply when the parties sharing jointcontrol, including the reporting entity, are under common control of the same ultimate controllingparty.The amendments apply to both the acquisition of the initial interest in a joint operation and theacquisition of any additional interests in the same joint operation and are prospectively effective forannual periods beginning on or after 1 January 2016, with early adoption permitted. Theseamendments are not expected to have any impact to the company.

Amendments to IAS 16 and IAS 38: Clarification of Acceptable Methods of Depreciation andAmortisationThe amendments clarify the principle in IAS 16 and IAS 38 that revenue reflects a pattern ofeconomic benefits that are generated from operating a business (of which the asset is part) ratherthan the economic benefits that are consumed through use of the asset. As a result, a revenue-based method cannot be used to depreciate property, plant and equipment and may only be usedin very limited circumstances to amortise intangible assets.The amendments are effective prospectively for annual periods beginning on or after 1 January2016, with early adoption permitted. These amendments are not expected to have any impact tothe company given that the company has not used a revenue-based method to depreciate its non-current assets.

Amendments to IAS 16 and IAS 41 Agriculture: Bearer PlantsThe amendments change the accounting requirements for biological assets that meet the definitionof bearer plants. Under the amendments, biological assets that meet the definition of bearer plantswill no longer be within the scope of IAS 41. Instead, IAS 16 will apply. After initial recognition, bearerplants will be measured under IAS 16 at accumulated cost (before maturity) and using either thecost model or revaluation model (after maturity). The amendments also require that produce thatgrows on bearer plants will remain in the scope of IAS 41 measured at fair value less costs to sell.For government grants related to bearer plants, IAS 20 Accounting for Government Grants andDisclosure of Government Assistance will apply. The amendments are retrospectively effective forannual periods beginning on or after 1 January 2016, with early adoption permitted. Theseamendments are not expected to have any impact to the company as the company does not haveany bearer plants.



40

Amendments to IAS 27: Equity Method in Separate Financial StatementsThe amendments will allow entities to use the equity method to account for investments insubsidiaries, joint ventures and associates in their separate financial statements. Entities alreadyapplying IFRS and electing to change to the equity method in its separate financial statements willhave to apply that change retrospectively.For first-time adopters of IFRS electing to use the equity method in its separate financialstatements, they will be required to apply this method from the date of transition to IFRS. Theamendments are effective for annual periods beginning on or after 1 January 2016, with earlyadoption permitted. These amendments will not have any impact on the Company’s financialstatements.

Amendments to IAS 32: Offsetting Financial Assets and Financial LiabilitiesAmends IAS 32 Financial Instruments: Presentation to clarify certain aspects because of diversityin application of the requirements on offsetting, focused on four main areas:

the meaning of 'currently has a legally enforceable right of set-off'the application of simultaneous realisation and settlementthe offsetting of collateral amountsthe unit of account for applying the offsetting requirements.

The company has assessed whether certain of its financial assets and financial liabilities qualify foroffset based on the criteria set out in the amendments and concluded that the application of theseamendments has had no impact on the amounts recognised in the Company’s financial statements.

Amendments to IFRS 10, IFRS 12 and IAS 27: Investment EntitiesAmends IFRS 10 Consolidated Financial Statements, IFRS 12 Disclosure of Interests in OtherEntities and IAS 27 Separate Financial Statements to:

provide 'investment entities' (as defined) an exemption from the consolidation of particularsubsidiaries and instead require that an investment entity measure the investment in each eligiblesubsidiary at fair value through profit or loss in accordance with IFRS 9 Financial Instruments or IAS39 Financial Instruments: Recognition and Measurement

require additional disclosure about why the entity is considered an investment entity, details ofthe entity's unconsolidated subsidiaries, and the nature of relationship and certain transactionsbetween the investment entity and its subsidiaries

require an investment entity to account for its investment in a relevant subsidiary in the same wayin its consolidated and separate financial statements (or to only provide separate financialstatements if all subsidiaries are unconsolidated).

As the company is not an investment entity, these amendments do not have any impact on thecompany.



41

Amendments to IAS 36: Recoverable Amount Disclosures for Non-Financial AssetsAmends IAS 36 Impairment of Assets to reduce the circumstances in which the recoverable amountof assets or cash-generating units is required to be disclosed, clarify the disclosures required, andto introduce an explicit requirement to disclose the discount rate used in determining impairment(or reversals) where recoverable amount (based on fair value less costs of disposal) is determinedusing a present value technique.

The application of these amendments has had no material impact on the disclosures in thecompany’s financial statements.

Amendments to IAS 39: Novation of Derivatives and Continuation of Hedge AccountingAmends IAS 39 Financial Instruments: Recognition and Measurement to make it clear that there isno need to discontinue hedge accounting if a hedging derivative is novated, provided certain criteriaare met.

A novation indicates an event where the original parties to a derivative agree that one or moreclearing counterparties replace their original counterparty to become the new counterparty to eachof the parties. In order to apply the amendments and continue hedge accounting, novation to acentral counterparty (CCP) must happen as a consequence of laws or regulations or theintroduction of laws or regulations.

As the company does not have any derivative that are subject to novation, the application of theseamendments has had no impact on the disclosures or on the amounts recognised in the company’sfinancial statements.

Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an Investor and itsAssociate or Joint VentureAmends IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and JointVentures (2011) to clarify the treatment of the sale or contribution of assets from an investor to itsassociate or joint venture, as follows:

require full recognition in the investor's financial statements of gains and losses arising on thesale or contribution of assets that constitute a business (as defined in IFRS 3 Business Combinations)

require the partial recognition of gains and losses where the assets do not constitute a business,i.e. a gain or loss is recognised only to the extent of the unrelated investors’ interests in that associateor joint venture.

These requirements apply regardless of the legal form of the transaction, e.g. whether the sale orcontribution of assets occurs by an investor transferring shares in an subsidiary that holds the assets(resulting in loss of control of the subsidiary), or by the direct sale of the assets themselves.These amendments did not have any impact on the company.

IFRIC 21 LeviesProvides guidance on when to recognise a liability for a levy imposed by a government, both forlevies that are accounted for in accordance with IAS 37 Provisions, Contingent Liabilities and



42

Contingent Assets and those where the timing and amount of the levy is certain.

The Interpretation identifies the obligating event for the recognition of a liability as the activity thattriggers the payment of the levy in accordance with the relevant legislation. It provides the followingguidance on recognition of a liability to pay levies:

The liability is recognised progressively if the obligating event occurs over a period of timeIf an obligation is triggered on reaching a minimum threshold, the liability is recognised when

that minimum threshold is reached.

The application of these amendments has had no material impact on the company’s financialstatements.

Annual Improvements to IFRSs 2010 – 2012 CycleThese improvements are effective from 1 July 2014 and are not expected to have a material impacton the company. They include:

IFRS 2 Share-based PaymentThis improvement is applied prospectively and clarifies various issues relating to the definitions ofperformance and service conditions which are vesting conditions, including:

A performance condition must contain a service conditionA performance target must be met while the counterparty is rendering serviceA performance target may relate to the operations or activities of an entity, or to those of another entity in the same groupA performance condition may be a market or non-market conditionIf the counterparty, regardless of the reason, ceases to provide service during the vesting period, the service condition is not satisfied.

IFRS 3 Business CombinationsThe amendment is applied prospectively and clarified that all contingent consideration arrangementsclassified as liabilities (or assets) arising from a business combination should be subsequentlymeasured at fair value through profit or loss whether or not they fall within the scope of IFRS 9 (orIAS 39, as applicable).

IFRS 8 Operating SegmentsThe amendments are applied retrospectively and clarifies that:

An entity must disclose the judgements made by management in applying the aggregation criteriain paragraph 12 of IFRS 8, including a brief description of operating segments that have been aggregatedand the economic characteristics (e.g., sales and gross margins) used to assess whether the segments aresimilar

The reconciliation of segment assets to total assets is only required to be disclosed if the reconciliation isreported to the chief operating decision maker, similar to the required disclosure for segment liabilities.

IAS 16 Property, Plant and Equipment and IAS 38 Intangible AssetsThe amendment is applied retrospectively and clarifies in IAS 16 and IAS 38 that the asset may be



43

revalued by reference to observable data on either the gross or the net carrying amount. In addition,the accumulated depreciation or amortisation is the difference between the gross and carryingamounts of the asset.

IAS 24 Related Party DisclosuresThe amendment is applied retrospectively and clarifies that a management entity (an entity thatprovides key management personnel services) is a related party subject to the related partydisclosures. In addition, an entity that uses a management entity is required to disclose theexpenses incurred for management services.

Annual improvements 2011-2013 CycleThese improvements are effective from 1 July 2014 and are not expected to have a material impacton the company. They include:

IFRS 3 Business CombinationsThe amendment is applied prospectively and clarifies for the scope exceptions within IFRS 3 that:

Joint arrangements, not just joint ventures, are outside the scope of IFRS 3This scope exception applies only to the accounting in the financial statements of the joint arrangement itself.

IFRS 13 Fair Value MeasurementThe amendment is applied prospectively and clarifies that the portfolio exception in IFRS 13 can beapplied not only to financial assets and financial liabilities, but also to other contracts within thescope of IFRS 9 (or IAS 39, as applicable).

IAS 40 Investment PropertyThe description of ancillary services in IAS 40 differentiates between investment property and owner-occupied property (i.e., property, plant and equipment). The amendment is applied prospectivelyand clarifies that IFRS 3, and not the description of ancillary services in IAS 40, is used to determineif the transaction is the purchase of an asset or business combination.

Annual improvements 2012-2014 CycleThese improvements which were done in September 2014 are effective beginning on or after 1January 2016 and are not expected to have a material impact on the company. They include:

IFRS 5 Non-current Assets Held for Sale and Discontinued OperationsAdds specific guidance in IFRS 5 for cases in which an entity reclassifies an asset from held for saleto held for distribution or vice versa and cases in which held-for-distribution accounting isdiscontinued.

IFRS 7 Financial Instruments: DisclosuresAdditional guidance to clarify whether a servicing contract is continuing involvement in a transferredasset, and clarification on offsetting disclosures in condensed interim financial statements.



44

IAS 19 Employee BenefitsClarify that the high quality corporate bonds used in estimating the discount rate for post-employment benefits should be denominated in the same currency as the benefits to be paid.

IAS 34 Interim Financial ReportingClarify the meaning of 'elsewhere in the interim report' and require a cross-reference.

4. Use of Judgements, Estimates and AssumptionsThe preparation of the Institution’s financial statements in conformity with IFRSs requiresmanagement to make judgments, estimates and assumptions that affect the application of policies,the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingentliabilities, at the end of the reporting period. However, uncertainty about these assumptions andestimates could result in outcomes that require a material adjustment to the carrying amount of theasset or liability affected in future periods.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accountingestimates are recognised in the period in which the estimate is revised and in any future periodsaffected.

4.1 JudgementsIn the process of applying the Institution’s accounting policies, management has made the followingjudgments, which have the most significant effect on the amounts recognised in the consolidatedfinancial statements:

4.2 Estimates and assumptionsThe key assumptions concerning the future and other key sources of estimation uncertainty at thereporting date, that have a significant risk of causing a material adjustment to the carrying amountsof assets and liabilities within the next financial year, are described below. The Institution based itsassumptions and estimates on parameters available when the financial statements were prepared.Existing circumstances and assumptions about future developments, however, may change due tomarket changes or circumstances arising beyond the control of the Institution. Such changes arereflected in the assumptions when they occur.

Estimates and assumptions which are reviewed on a continuous basis are recognised in the periodin which the estimate is revised if the revision affects only that period or in the period of the revisionand future periods if the revision affects both current and future periods.

Loan loss provisioningThe estimation of the ultimate liability arising from loans and advances is the Institution’s most criticalaccounting estimate. There are several sources of uncertainty that need to be considered in theestimation of the liability that the Institution ultimately recognises as credit impairment allowance.For example loans and advances at any given date expose the Institution to the risk of default andinability to realize the related collateral to adequately cover for the loss.



45

Impairment of available-for-sale financial assetsThe company assesses at each reporting date whether there is objective evidence that available-for-sale financial assets are impaired and impairment loss determined when the fair value of theasset is significantly less than its carrying amount shown in the books of the company. Thisdetermination of what is significant requires judgement. In making this judgement, the companyevaluates among other factors, the normal volatility in share price, the financial health of the investee,industry and sector performance, changes in technology, and operational and financing cash flow.Impairment may be appropriate when there is evidence of deterioration in the financial health of theinvestee, industry and sector performance, changes in technology, and financing and operationalcash flows.

Fair value of financial instrumentsThe fair values of financial instruments where no active market exists or where quoted prices arenot otherwise available are determined by using valuation techniques. In these cases the fair valuesare estimated from observable data in respect of similar financial instruments or using models. Wheremarket observable inputs are not available, they are estimated based on appropriate assumptions.Where valuation techniques (for example, models) are used to determine fair values, they arevalidated and periodically reviewed by qualified personnel independent of those that sourced them.All models are certified before they are used, and models are calibrated to ensure that outputs reflectactual data and comparative market prices. To the extent practical, models use only observabledata; however, areas such as credit risk (both own credit risk and counterparty risk), volatilities andcorrelations require management to make estimates.

TaxesUncertainties exist with respect to the interpretation of complex tax regulations, changes in tax laws,and the amount and timing of future taxable income. Given the wide range of business relationshipsand the long-term nature and complexity of existing contractual agreements, differences arisingbetween the actual results and the assumptions made, or future changes to such assumptions,could necessitate future adjustments to tax income and expense already recorded. The Institutionestablishes provisions, based on reasonable estimates, for possible consequences of audits by thetax authorities. The amount of such provisions is based on various factors, such as experience ofprevious tax audits and differing interpretations of tax regulations by the Institution and the taxauthority.

Deferred tax assets are recognised for all unutilsed capital allowances to the extent that it is probablethat taxable profit will be available against which the capital allowances can be utilised. Significantmanagement judgment is required to determine the amount of deferred tax assets that can berecognised, based upon the likely timing and the level of future taxable profits together with futuretax planning strategies.

Useful economic life of property, plant and equipmentTo a large extent, the financial statements are based on estimates, judgements and models ratherthan exact depictions of reality. Providing relevant information about the Company’s Property, plantand equipment requires estimates and other judgements. This includes, measuring the cost of anitem of Property, plant and equipment including PPE that are self-constructed. The subsequent



46

allocation of depreciation involves further judgements and estimates including:

allocating the cost of the asset to particular major components;determining the most appropriate depreciation method;estimating useful life; andestimating residual value.



47

5. Fulfilling social responsibilitiesAmount spent on fulfilling Social Responsibility Obligations.

6. Interest incomeInterest on AdvancesInterest on Treasury BillsInterest on Commercial PapersInterest on CallInterest on Fixed DepositInterest on Unifund

7. Interest expenseSavings accountsFixed depositsCurrent account

8. Commission and feesCommission on cheque booksCommission on returned chequesCommission on turnoverCommission on remittancesCommission on payment orders

2013GH¢

81,562

37,328,988977,842

2,608,084849,766

1,617,428224,418

43,606,526

2,484,31017,402,007

151,792

20,038,109

25,418-

172,885- -

198,303

2014GH¢

58,086

47,679,185 1,691,356 2,285,084

914,349 5,627,475

532 58,197,981

2,781,087 21,103,077

85,724 23,969,888

28,784 7,433

258,051 25,802

1,570 321,640



48

9. Other incomeSale of passbooks and others Miscellaneous Income Profit on Disposal

10. Operating expensesStaff Cost (Note 10.1)Depreciation and AmortisationDirectors RemunerationDonationAudit FeesOthers

10.1 Staff costsSalaries and wagesAllowancesOther staff costsEmployers social security contributionPAYECommission on Susu

11. Credit impairment lossSpecific impairment lossCollective impairment loss

12. Income tax12.1 Income tax expense

The major components of income tax expense are:Current year charge Under provision for tax

Deferred tax (credit)/charge Income tax reported in the statement of profit or loss

2013GH¢

176,737 6,560

183,297

13,178,790 916,079 269,781 81,562 31,619

5,366,896

19,844,727

5,731,4683,284,4391,633,0391,315,1231,129,108

85,613

13,178,790

1,107,604-

1,107,604

523,266-

523,266 113,238636,504

2014GH¢

180,926 830

181,756

18,610,535 2,408,827

108,400 58,086 45,000

8,370,367 29,601,215

9,426,605 3,928,206 1,427,690 1,927,945 1,816,935

83,154 18,610,535

867,744 -

867,744

952,696 61,774

1,014,470 (181,379)

833,091



49

Accounting profit before income taxStatutory income tax rate of 25% (2013: 25%)Effect of disallowable expenses for tax purposesEffect of non-chargeable incomeEffect of capital allowances utilisedUnder provision for tax in previous yearsDeferred tax (credit)/charge

Income tax expense reported in the statement of profit or lossEffective tax rate (%)

2013GH¢

2,997,686749,422291,319

(348,583)(168,891)

- 113,238636,504

21.2

2014GH¢

4,262,530 1,065,633

339,340 (208,989)(243,288)

61,774 (181,379)

833,091 19.5

12.3 Current tax payable

2010- 20122013

2014

12.4 National stabilisation levy

20132014

Balance at31 Dec.

GH¢

- (1,361)14,21412,853

Balance at31 Dec.

GH¢

- 109,755109,755

Charges forthe year

GH¢

- -

952,696952,696

Charges forthe year

GH¢

- 213,127213,127

Payments/Credits

GH¢

(63,135)(9,789)

(938,482)(1,011,406)

Payments/Credits

GH¢

(67,188)(103,372)(170,560)

Under/(over)Provision

GH¢

61,774 - -

61,774

Balance at1 January

GH¢

67,188 -

67,188

Balance at1 January

GH¢

1,3618,428

- 9,789

12.2 Reconciliation of effective taxA reconciliation between tax expense and the product of accounting profit multiplied by domesticstatutory tax rate for the years ended 31 December 2014 and 2013 is as follows:



50

12. Income tax (continued)12.5 Deferred income tax

The movement on the deferred tax account is as follows:Balance at 1 January

Origination / reversal of temporary differences:recognised in the statement of profit or lossrecognised in equity

Balance at 31 December

12.6 Recognised deferred tax liabilities and assets are as follows:Accelerated tax depreciationLoan Portfolio Impairment

Deferred tax assetsDeferred tax liabilitiesNet deferred tax liabilities

12.7 The deferred tax (credit)/charge in the statement of profit or loss comprises the following:Accelerated tax depreciationLoan Portfolio Impairment

13. Cash and bank balancesCash in handBank balances

14. Held-to maturity financial assetsTreasury billsCommercial paperUnifund accountFixed depositsCall accounts

2013Gh¢

105,632

113,238936,961

1,155,831

437,637(218,767)

218,870(218,767)

437,637

218,870

187,975(74,737)113,238

4,206,707 1,536,013

5,742,720

- 8,708,046

11,2696,723,258

24,425,643

39,868,216

2014Gh¢

1,155,831

(181,379)-

974,452

257,945 (220,454)

37,491 (220,454)

257,945 37,491

(179,692)(1,687)

(181,379)

4,823,262 3,083,100 7,906,362

10,474,229 6,762,141

11,801 56,240,219

- 73,488,390



15. Loans and advancesCustomersStaffOthers

Interest in suspenseLess Unamortised processing fees (note 15.1)Less Credit impairment allowance (note 15.2)

15.1 Unamortised processing feesBalance at 1 JanuaryAdditions during the yearReleased into incomeBalance at 31 December

15.2 Credit impairment allowance accountBalance at 1 JanuaryCharge for the year Balance at 31 December

15.3 Analysis by sector:uSolar loansStaff loansSusu loansOwn a VehicleCommercial loans and advances

16. Other assetsOther debtorsPrepaymentsStationery stockInterest receivable

17. Available-for-sale financial assetsuniPrecisionStarLife Assurance

2013GH¢

83,213,0204,633,615

415,78488,262,419

(917,945)(1,882,845)(3,358,211)

82,103,418

1,323,9501,647,721

(1,088,826)1,882,845

2,250,607 1,107,604 3,358,211

25,8334,633,6152,221,4512,538,101

78,843,41988,262,419

2,352,180 2,502,385

189,802 8,863,584 13,907,951

233,535 2,234,960 2,468,495

2014GH¢

84,980,562 7,185,640 1,481,277

93,647,479 (863,507)

(1,823,175)(4,225,955)

86,734,842

1,882,845 1,493,631

(1,553,301)1,823,175

3,358,211 867,744

4,225,955

43,229 7,182,088 2,745,352 2,164,293

81,512,517 93,647,479

5,238,721 3,588,816

235,489 12,363,969 21,426,995

- - - 51


18.

PRO

PERT

Y, P

LAN

T &

EQ

UIP

MEN

T

2014

Cost

Bal

ance

at 1

Jan

uary

Add

ition

sD

ispo

sals

Bala

nce

at 3

1 D

ecem

ber

Dep

reci

atio

nB

alan

ce a

t 1 J

anua

ryC

harg

e fo

r the

yea

rR

elea

sed

on D

ispo

sals

Bala

nce

at 3

1 D

ecem

ber

Net

Boo

k Va

lues

At 3

1.12

.201

4A

t 31.

12.2

013

Tota

l

GH

¢

16,5

88,0

123,

780,

777

(1,6

06)

20,3

67,1

83

3,84

3,45

02,

408,

827

(830

)

6,25

1,44

7

14,1

15,7

3612

,744

,562

Offi

ceeq

uipm

ent

GH

¢

1,38

8,37

862

3,24

8 -

2,01

1,62

6

664,

139

368,

379 -

1,03

2,51

8

979,

108

724,

239

Furn

iture

& fi

ttin

gs

GH

¢

585,

471

115,

111 -

700,

582

298,

431

128,

277 -

426,

708

273,

874

287,

040

Com

pute

rso

ftw

are

GH

¢

76,4

95- -

76,4

95

71,0

244,

485 -

75,5

09 986

5,47

1

Com

pute

rha

rdw

are

GH

¢

608,

557

601,

196 -

1,20

9,75

3

470,

237

287,

882 -

758,

119

451,

634

138,

320

Mot

orve

hicl

es

GH

¢

840,

511

493,

891

(1,6

06)

1,33

2,79

6

459,

866

258,

498

(830

)

717,

534

615,

262

380,

645

Plan

t &m

achi

nery

GH

¢

591,

356

53,5

36-

644,

892

299,

938

116,

299 -

416,

237

228,

655

291,

418

Impr

ovem

ent

on re

nted

prem

ises

GH

¢

3,72

3,23

41,

878,

095 -

5,60

1,32

9

1,57

9,81

51,

116,

302 -

2,69

6,11

7

2,90

5,21

22,

143,

419

Build

ings

GH

¢

6,72

5,27

2 - -

6,72

5,27

2 - 12

8,70

5 -

128,

705

6,59

6,56

76,

725,

272

Land

GH

¢

2,04

8,73

815

,700

-

2,06

4,43

8 - - - -

2,06

4,43

82,

048,

738

Notes to the F

inancial Stateme

nts

For The Ye

ar Ended 31 D

ecem

ber 2

014

52


18.

PRO

PERT

Y, P

LAN

T &

EQ

UIP

MEN

T (C

ontin

ued)

2013

Cost

Bal

ance

at 1

Jan

uary

Add

ition

sD

ispo

sals

Rev

alua

tion

Bala

nce

at 3

1 D

ecem

ber

Dep

reci

atio

nB

alan

ce a

t 1 J

anua

ryC

harg

e fo

r the

yea

rR

elea

sed

on D

ispo

sals

Rev

alua

tion

Bala

nce

at 3

1 D

ecem

ber

Net

Boo

k Va

lues

At 3

1.12

.201

3A

t 31.

12.2

012

Furn

iture

& fi

ttin

gs

GH

¢

507,

511

117,

180

(39,

220) -

585,

471

231,

298

105,

255

(38,

122) -

298,

431

287,

040

276,

213

Com

pute

rso

ftw

are

GH

¢

73,5

392,

956 - -

76,4

95

66,5

394,

485 - -

71,0

24

5,47

17,

000

Offi

ceeq

uipm

ent

GH

¢

1,01

1,45

741

5,48

9(3

8,56

8) -

1,38

8,37

8

444,

862

257,

845

(38,

568) -

664,

139

724,

239

566,

595

Com

pute

rha

rdw

are

GH

¢

426,

560

181,

997 - -

608,

557

362,

937

107,

300 - -

470,

237

138,

320

63,6

23

Mot

orve

hicl

es

GH

¢

675,

395

169,

359

(4,2

43) -

840,

511

294,

558

168,

344

(3,0

36) -

459,

866

380,

645

380,

837

Plan

t &m

achi

nery

GH

¢

405,

448

185,

908 - -

591,

356

194,

347

105,

591 - -

299,

938

291,

418

211,

101

Impr

ovem

ent

on re

nted

prem

ises

GH

¢

2,02

7,49

01,

695,

744 -

3,72

3,23

4

1,44

8,50

213

1,31

3 - -

1,57

9,81

5

2,14

3,41

957

8,98

8

Build

ings

GH

¢

1,79

7,28

5 - - 4,

927,

987

6,72

5,27

2

179,

937

35,9

46-

(215

,883

) -

6,72

5,27

21,

617,

348

Land

GH

¢

134,

000

812,

200 -

1,10

2,53

8 2,

048,

738 - - - - -

2,04

8,73

813

4,00

0

Notes to the F

inancial Stateme

nts

For The Ye

ar Ended 31 D

ecem

ber 2

014

Tota

l

GH

¢

7,05

8,68

53,

580,

833

(82,

031)

6,03

0,52

5

16,5

88,0

12

3,22

2,98

091

6,07

9(7

9,72

6)(2

15,8

83)

3,84

3,45

0

12,7

44,5

623,

835,

705

53



19. Customer depositsCurrent accountsSavings accountFixed depositsSusu depositsU - Kid accountStaff savings

20. LoanCommercial paper

2013GH¢

11,831,33418,494,44378,983,99911,919,260

218,7461,752,953

123,200,735

5,000,000

2014GH¢

30,347,792 24,748,932 85,810,102 17,996,549

380,358 3,346,632

162,630,365

-

This represents borrowing from uniBank Ghana Limited, maturing on 31 December 2014 bearinginterest rate of 30% p.a.

Security for the loan is a lien over fixed deposit in the sum of GH¢91,133.81 and the assignment ofinvestment with uniSecurities (to the tune of GH¢5,000,000).

21. Creditors and accrualsUncleared chequesCash surplusInterest payable on depositsGovernment salary suspenseSundry creditorsWithholding taxesAudit fee payableBank payment chequesE-Zwich interbank clearingE-Zwich cash control accountE-Zwich holding accountStaff bonus provisionProvision for professional feesAuction proceeds accountSocial responsibility accountOthers

2,62149,828

6,726,515184

916,1126,430

31,581766,028146,785

2,36359

43,279275,000

15,58213,892

288,996,287

9,059 61,596

6,235,487 184

1,639,534 64,420 41,962

848,085 146,785

2,363 59

128,526 431,939

- 7,255 5,802

9,623,05654

There is no unpaid liability on any share and there are no shares in treasury.

23. Capital surplusThis represents the surplus on the revaluation of properties.

24. Statutory reserve fundThis represents the cumulative amounts set aside as non-distributable reserve from annual net profitafter tax in accordance with the Banking Act, 2004 (Act 673), and section 129 (1) of the Banking(Amendment) Act of 2007, (Act 738). The amount transferred ranges from 15% to 50% of the netprofit after tax, depending on the ratio of the current statutory reserve fund to stated capital.

25. Regulatory credit risk reserveThis represents the excess of provision for bad and doubtful debts in respect of loans as per Bankof Ghana guidelines and loan impairment loss allowance as per IFRS computations.

26. Income surplusThis represents the residual of cumulative annual profits that is available for distribution toshareholders.



55

22. Shares and stated capital

22.1 Shares

Number of Authorised SharesNumber of Issued Shares:

22.2 Proceeds from issueFor cash considerationFor consideration other than cash

2013Number

000

500,000 500,000

GH¢ 7,290,981 1,500,000 8,790,981

2014Number

000

500,000 500,000

GH¢ 15,990,981

1,500,000 17,490,981

27. Related party transactions and balances

27.1 BalancesCommercial paperuniBank (Ghana) Limited

Available-for-sale financial assetsStarlifeuniPrecision

2013GH¢

5,000,000

2,234,960233,535

2,468,495

2014GH¢

-

- - -

28. Contingent liabilities and commitments

28.1 Legal proceedingsAt the reporting date, the Company had neither legal proceedings against it nor against other entities.

28.2 CommitmentsAt the reporting date, the Company had no commitments.

29. Financial risk management

(a) Introduction and OverviewAn organization may be exposed to different types of financial risks depending on the size andcomplexity of business activities. uniCredit (Ghana) Limited, however, is generally exposed to credit,market, liquidity, operational, compliance, legal, regulatory and reputational risks.

The Institution’s risk management framework, objectives, policies, procedures and processes foridentifying, measuring, monitoring and controlling these risks, and regulatory capital management ispresented below;

Risk Management Framework The Board of Directors and Senior Management have developed and established policies andprocedures to facilitate effective risk management. These policies and procedures provide guidanceon risk appetite/tolerance limit, risk identification, monitoring and control and adherence to set risklimits. The risk management policies and procedures are continually reviewed to reflect changes ineconomic and financial landscape as well as products and services offered.

The Board of Directors has the overall responsibility for the establishment and oversight of theInstitution’s risk management framework. The responsibilities of the Board of Directors include; settingout the Institution’s overall risk appetite/tolerance limit, ensuring that the Institution’s overall riskexposure is maintained at prudent levels and consistent with available capital. They also include;ensuring that Management as well as individuals responsible for Risk Management possess soundexpertise and knowledge to accomplish the risk management function and ensuring that appropriatepolicies and procedures for risk management are in place.

The Board’s sub-committees on audit, credit and the appointment and remuneration as a wholeoversee implementation of the broad risk management policies and objectives of the Institution.



56

27.2 Directors, key management and staff compensationDirectors' emolumentsSalaries and other short-term employee benefits of keymanagement and staff

2013GH¢

269,781

13,178,79013,448,571

2014GH¢

108,400

18,610,535 18,718,935

(b) Credit Risk

Credit Risk Management Credit Risk stems from outright default due to inability or unwillingness of a client or counterpart tomeet commitments in relation to lending, trading settlement and other financial transaction. Resultantlosses may result in reduction in portfolio value due to the actual or perceived deterioration in loanportfolio quality.

The Board sub-committee on credit is responsible for implementing the credit risk policy/strategy,monitors credit risk on an institution-wide basis and ensures compliance with credit limits to beapproved by the Board.

29. Financial risk management (continued)Business strategies, policies and procedures for managing credit are determined institution-widewith specific policies and procedures being adopted for small and medium enterprises and salaryloans.

Managing problem loans The Recoveries Unit within the Credit Department manages delinquent facilities including outrightrecoveries or nursing of such problem loans back to health.

At delinquent and past due stages, where recovery efforts are unsuccessful, the Credit Departmentrefers the client to the Institution’s legal department.

Provisioning for loans and advances Credit losses are anticipated and charged in the Statement of Profit or Loss and ComprehensiveIncome on monthly basis. The balance in the impairment allowance account is always equal to atleast the required provisions based on the Institution’s current risk rating profile. If the status of theloan worsens, the balance of the provision account is increased by an additional charge againstearnings.

In conformity with Bank of Ghana‘s directives, the minimum provision that are held are as follows;



57

Credit Risk Rating

StandardSubstandardDoubtfulLoss

Days Past Due

<9091-180181-360Over 360

Minimum Provision Required (%)

12050100

(c) Market RiskMarket risk is the potential for loss resulting from adverse movement in risk factors such as interestrates, and equity and commodity prices. The Institution’s Finance & Administration Department hasoversight for market risk management.

(d) Interest Rate RiskIn order to quantify the Institution’s exposures to structural interest rate risk, assets and liabilities withfixed and floating rates are analyzed to identify any gap. Maturities on outstanding positions aredetermined on the basis of contractual terms governing transactions.

29. Financial risk management (continued)

(e) Liquidity RiskThe Institution’s liquidity risk management systems comprise two main processes;assessment of the Institution’s financing requirements on the basis of budgets and forecasts in orderto plan appropriate funding sources and; analysis of daily cash report to monitor daily cash flowposition.

As at 31 December 2014



58

Financial assetsCash and bank balancesHeld-to maturity financial assetsLoans and advances

Total assets

Financial liabilitiesCustomer depositsCreditors and accruals

Total

Net liquidity gap

3 years andoverGH¢

- - -

-

- -

-

-

> 1 year <3 years

GH¢

- -

20,565,936

20,565,936

- -

-

20,565,936

> 3 months <than 1 year

GH¢

- 73,488,390 39,570,035

113,058,425

63,513,937 9,623,056

73,136,993

39,921,432

3 monthsor less

GH¢

7,906,362 -

33,511,508

41,417,870

99,116,428 -

99,116,428

(57,698,558)

Total

GH¢

7,906,362 73,488,390 93,647,479

175,042,231

162,630,365 9,623,056

172,253,421

2,788,810



59

Financial assetsCash and bank balancesHeld-to maturity financial assetsLoans and advances Available-for-sale financial assets

Total assets

Financial liabilitiesCustomer depositsBorrowingsCreditors and accruals

Total

Net liquidity gap

3 years andoverGH¢

- - -

2,468,495

2,468,495

- - -

-

2,468,495

> 1 year <3 years

GH¢

- -

7,727,006 -

7,727,006

- - -

-

7,727,006

> 3 months <than 1 year

GH¢

- 39,868,216 45,306,533

-

85,174,749

78,989,295 -

8,996,287

87,985,582

(2,810,833)

3 monthsor less

GH¢

5,742,720 -

35,228,880 -

40,971,600

44,211,440 5,000,000

-

49,211,440

(8,239,840)

TotalGH¢

5,742,720 39,868,216 88,262,419 2,468,495

136,341,850

123,200,735 5,000,000 8,996,287

137,197,022

(855,172)

As at 31 December 2013

29. Financial risk management (continued)

(d) Operational RiskOperational risk is the risk of loss resulting from inadequate or failed internal processes, people andsystems or from external events. It is the risk of loss arising from the potential that inadequateinformation systems, breaches of internal controls, fraud, technological failure and unforeseencatastrophes may result in unexpected loss or reputational problems.

Over the past years the Institution has developed a thorough and consistent framework and policiesto control and actively manage its operational risk. The Institution’s framework is aligned with Bank ofGhana’s regulatory requirements.

(e) Compliance and Regulatory Risk In order to strengthen the Institution’s compliance with regulatory requirements, the Institutionorganizes series of dedicated training on a regular basis to equip staff with compliance and regulatoryissues in order to minimize risk emanating there from.

(f) Legal RiskThe Institution is not dependent on any patent or any industrial, commercial or financial contract. TheInstitution’s activities are undertaken in a manner which adequately reduces the Risks which mayarise out of material litigation to be initiated against it (the Institution).



60

(g) Reputational RiskThe Institution conducts its business in a responsible, professional and transparent way. By offeringsimplified products and following the necessary legal and regulatory processes, the Institutionsafeguards the interest of its clients as well as its reputation. Furthermore, the Institution maintainsclose ties with the communities in which it operates by supporting them in various ways. This is aimedat demonstrating our commitment and fostering a long term relationship with our clients and the publicat large. We manage our image and reputation in a professional manner.

(h) Capital ManagementThe primary objectives of the Institution’s capital management are to ensure that the Institutioncomplies with externally imposed capital requirement by the Bank of Ghana and that the Institutionmaintains strong credit ratings and healthy capital ratios in order to support its business and maximizeshareholders’ value. In order to maintain the desired level of capital, the Institution may vary itsdividend policy or issue new shares. The Institution complied with all externally imposed capitalrequirement throughout the period.

Schedule To The Statement Of Profit Or LossFor The Year Ended 31 December 2014


61

Operating Expenses - othersRent, rates and taxesMaintenance of plant /machineryElectricity and waterPostage and telephonePrinting and stationeryInsuranceSecurity costRepairs & maintenance- office equipmentBank chargesRepairs -furniture & fittingsCash shortagesMarketing, publicity and advertsSpecie movementProfessional FeesNewspaper & publicationRefreshment & beveragesCleaning and sanitationSubscription and fees WagesBusiness promotionLicenses and registrationLoan recovery expensesRepairs and maintenance - motor vehiclesRenewals and maintenanceComputer and accessoriesFraud investigationTravelling and transportSME loans insurance premiumMaterials and suppliesSundry/other expensesCashier efficiency allowance

2013 GH¢

487,781400,422341,073159,564226,477

95,391274,489

90,5201,2322,1091,851

719,70516,494

430,14415,789

115,010188,778391,367

44,913150,210

41,00530,494

125,49476,17312,7673,590

851,87318,53726,20517,4899,950

5,366,896

2014 GH¢

761,058 760,126 603,386 264,893 355,490 150,836 480,480 191,541

34,474 5,870 1,355

547,294 19,364

519,357 19,676

181,269 309,437 624,478

77,830 183,065 142,850

45,119 119,632 102,786

16,382 2,000

1,757,383 25,395 40,600 11,591 15,350

8,370,367

Documents

uniCredit Annual Report 2014 - uniCredit Ghana Limited · uniCredit Annual Report 2014 12 Dear Shareholders, It is my pleasure to present to you the performance of the Company for