ESTABLISHMENT |
|
|
The Bank is
a privately owned company established in 1995 in
accordance with the “Licensing and Supervision of
Banking Business Proclamation No. 84/1994” of
Ethiopia to undertake commercial banking activities.
The Bank obtained its license from the National Bank
of Ethiopia on 20 September 1995 and started normal
business activities on the first of January 1996. It
operates through its head office in Addis Ababa and
forty two area banks established within and outside
Addis Ababa, four Foreign Exchange Bureaux and ten
Automatic Teller Machines (ATMs) installed at
different places within and outside Addis Ababa.
|
ACCOUNTING POLICIES |
|
|
The significant
accounting policies adopted by the bank are
summarized hereunder:
(a) Accounting convention
These financial statements are prepared under the
historical cost convention.
(b) Interest income and expenses
Interest income and interest expenses are accounted
for on the accrual basis. However, no interest is
accounted for unpaid past due loans and advances.
(c) Other income
All other income is accounted for at the time of
completion of related banking transactions.
(d) Conversion of foreign currencies
(i) Foreign currencies denominated transactions are
converted into Birr at the prevailing rates of
exchange and realized foreign exchange gains or
losses are reflected in the profit and loss account.
(ii) Year–end balances of foreign currencies on hand
and with correspondent banks are converted into Birr
at the mean of the buying and selling rates ruling
at the balance sheet date.
DASHEN BANK S.C.
NOTES FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2007
(e) Provision for doubtful debts
The provision is maintained at a level adequate to
cover possible losses. Management determines the
adequacy of the provision based upon reviews of
individual credits and other related factors, and
pursuant to the Directives of the National Bank of
Ethiopia.
(f) Fixed assets
Fixed assets are stated at cost, net of depreciation
calculated on the following basis at their
respective rates per annum.
i) Building is depreciated based on the
straight-line method at a rate of 5% per annum.
ii) The
following categories of business assets are
depreciated based on the declining balance method:
|
Furniture and fixtures
|
20% |
| Office and other
equipment
|
20% |
| Motor vehicles
|
20% |
| Computer hardware
and software
|
25% |
The
depreciation base is the book value as recorded in
the opening balance sheet of the tax period
including assets acquired during the tax period and
excluding net book value of assets disposed of.
|
CASH ON HAND |
|
|
|
Local currency |
139,308,450 |
109,787,166 |
|
Foreign currency |
9,682,736 |
9,747,892 |
|
Travelers' cheques
|
1,175,073 |
911,990 |
|
|
150,166,259 |
120,447,048 |
|
| |
|
DEPOSIT WITH NATIONAL BANK
OF ETHIOPIA |
|
|
|
Statutory reserve balance |
250,078,993 |
183,078,993 |
|
Payment and settlement
account |
611,105,647 |
298,970,273 |
|
|
861,184,640 |
482,049,266 |
|
| |
|
INVESTMENTS |
|
|
|
|
|
2006 |
|
Investment in Tana Building (i) |
22,801,795 |
22,801,795 |
|
Investment in Nyala Insurance
S.Co. (ii) |
5,584,000 |
5,000,000 |
|
|
28,385,795 |
27,801,795 |
|
|
|
(i) The
Bank and Midroc Ethiopia PLC following their
agreements on 5 October 2001 acquired jointly the
Tana Department Store Building in Addis Ababa, as a
result of a tender procedure instituted by the
Commercial Bank of Ethiopia.
According to the terms of the agreement between the
two joint venture parties:
a) The
contributions for the acquisition are:
| |
|
|
2005 |
|
Midroc Ethiopia PLC
|
60% |
34,202,693 |
34,202,693 |
| Investment in Nyala Insurance
S.Co.(ii) |
40% |
22,801,795
|
22,801,795 |
| |
|
57,004,488 |
57,004,488
|
b) Dashen
Bank S.C. is appointed to manage and administer the
affairs of the building.
c) The results of operations are to be shared
pro-rata to the respective contributions.
(ii) The bank purchased 5,000 shares and gained 584
share dividends at par value of Birr 1,000 each in
Nyala Insurance Share Company.
|
ITEMS IN COURSE OF
COLLECTION FROM OTHER BANKS |
|
|
| |
|
|
| Un-cleared local cheques
|
206,155,142 |
127,249,026 |
| Outward bills purchased
|
3,137,448 |
5,406,320 |
| Outward documentary bills purchased
|
25,690,632 |
21,085,353 |
| MT/TT received-foreign |
3,378 |
5,823 |
| Foreign demand draft paid
|
- |
117,708 |
| |
234,986,600 |
153,864,230 |
|
LOANS AND ADVANCES TO
CUSTOMERS |
|
|
|
|
|
2006 |
|
Agriculture |
147,260,219 |
133,086,147 |
|
Manufacturing |
802,573,013 |
673,584,057 |
|
Domestic trade and services |
713,141,465 |
580,083,280 |
|
Export |
297,906,024 |
211,898,183 |
|
Import |
457,598,660 |
366,577,386 |
|
Building and construction |
872,891,344 |
534,158,054 |
|
Transport |
462,268,977 |
430,592,471 |
|
Advances on letters of credits |
93,546,501 |
110,813,038 |
|
Personal |
820,997 |
604,204 |
|
Loans in litigation |
92,258,145 |
97,814,465 |
|
Loans under re-activation |
10,581,636 |
7,767,994 |
|
Staff housing loans |
36,911,192 |
20,033,870 |
|
Less: Provision for doubtful debts and advances |
(88,498,270) |
(83,877,287) |
|
Suspended interest account |
(10,256,292) |
(2,872,614) |
|
|
3,889,003,611 |
3,080,263,248 |
7.1 The
Bank is a party to various legal proceedings in
relation to loans and advances, the ultimate
resolution of which is not expected to have a
materially adverse effect on the financial position
of the Bank or the results of its operations.
|
OTHER ASSETS |
|
|
|
National Trading Enterprise, outstanding
deposit for rent |
|
2,257,578 |
2,257,578 |
|
Stocks of
- stationery and supplies |
1,030,690 |
|
2,026,993 |
|
- passbooks, drafts and CPOs
|
987,616 |
|
190,563 |
|
- cheque books |
1,373,883 |
|
737,958 |
|
- advertising materials
|
926 |
|
23,141 |
|
- fixed assets |
4,012,359 |
|
3,442,139 |
|
- cleaning and sanitation |
21,327 |
|
25,910 |
|
- entertainment supplies |
869 |
|
1,000 |
|
- uniforms |
93,528 |
|
6,522 |
|
- sundry materials |
20,719 |
|
7,022 |
|
|
|
7,541,917 |
6,461,248 |
|
Debit card |
|
898,171 |
- |
|
Pin
mailer |
|
24,968 |
- |
|
Prepayments |
|
14,185,265 |
7,425,513 |
|
Staff advances |
|
10,233,466 |
9,566,223 |
|
Western Union |
|
13,286,958 |
6,223,698 |
|
Suspense account (National Bank of
Ethiopia) |
|
707,400 |
707,400 |
|
Other non-current assets (see below 1) |
|
7,621,178 |
15,142,912 |
|
Sundry debtors (see below
2)
|
|
65,867,533 |
28,658,350 |
|
|
|
122,624,434 |
76,442,922 |
|
Less: provision for doubtful
receivable (National
Trading Enterprise) |
|
(2,257,578) |
(2,257,578) |
|
|
|
120,366,856 |
74,185,344 |
|
|
|
|
|
|
|
|
|
2006 |
|
Other
non-current assets - above 1 |
|
|
|
|
Constructions in progress * |
|
6,512,348 |
14,043,009 |
|
Cash
collateral to VISA |
|
899,923 |
899,923 |
|
Deposit for
Multimedia Broad-band |
|
194,907 |
185,980 |
|
Deposit for
signboards and logo |
|
14,000 |
14,000 |
|
|
|
7,621,178 |
15,142,912 |
|
|
FIXED ASSETS |
|
|
|
|
Adjustments/ |
|
Cost
|
30/06/06 |
Additions
|
Disposals |
30/06/07 |
|
|
|
|
|
Premises
|
3,478,130 |
31,657,815
|
- |
35,135,945 |
|
Furniture
and fixtures |
15,011,824 |
4,111,103 |
(203,652) |
18,919,275 |
|
Office and
other equipment |
14,655,959 |
2,884,448 |
(501,001) |
17,039,406 |
|
Computers
hard and software |
56,146,807 |
9,199,122 |
(1,189,057) |
64,156,872 |
|
Motor
vehicles |
25,276,195 |
5,189,871 |
(495,100) |
29,970,966 |
|
Acquired
property |
7,744,086 |
4,341,085 |
(3,954,485) |
8,130,686 |
|
|
122,313,001 |
57,383,444 |
(6,343,295) |
173,353,150 |
|
Accumulated depreciation |
|
|
|
|
|
|
|
|
|
|
|
Premises
|
347,811 |
424,579 |
- |
772,390 |
|
Furniture
and fixtures |
9,043,017 |
1,974,097 |
(135,633) |
10,881,481 |
|
Office and
other equipment |
7,960,710 |
1,815,320 |
(388,128) |
9,387,902 |
|
Computers
hard and software |
28,315,494 |
8,959,661 |
(1,077,047) |
36,198,108 |
|
Motor
vehicles |
16,633,434 |
2,667,480 |
(467,117) |
18,833,797 |
|
|
62,300,466 |
15,841,137 |
(2,067,925) |
76,073,678 |
|
Net Book
values |
|
|
|
|
|
|
|
|
|
|
|
Premises |
3,130,319 |
|
|
34,363,555 |
|
Furniture
and fixtures |
5,968,807 |
|
|
8,037,794 |
|
Office and
other equipment |
6,695,249 |
|
|
7,651,504 |
|
Computers
and software |
27,831,313 |
|
|
27,958,764 |
|
Motor
vehicles |
8,642,761 |
|
|
11,137,169 |
|
Acquired
property |
7,744,086 |
|
|
8,130,686 |
|
|
60,012,535 |
|
|
97,279,472 |
|
OTHER LIABILITIES |
|
Outstanding
transfers |
99,231,119 |
44,245,292 |
| CPOs and
certified cheques issued |
82,565,888 |
71,505,613 |
|
Exchange
payable to National Bank of Ethiopia |
13,508,830 |
16,553,118 |
|
MTs/TTs
payable |
15,890,551 |
18,713,571 |
|
Blocked
current and saving accounts |
7,344,212 |
14,959,314 |
|
Demand
drafts payable |
213,110 |
344,384 |
|
Accrued
interest payable on fixed deposits |
12,261,394 |
3,396,786 |
|
Accrued
leave pay |
4,433,551 |
3,267,448 |
|
Bonus
payable |
5,673,740 |
2,488,207 |
|
Accruals
|
8,478,896 |
10,450,065 |
|
Taxes |
196,482 |
26,774 |
|
Unearned
revenue |
1,753,198 |
1,371,512 |
|
Stamp duty
|
463,568 |
1,171,456 |
|
Merchant
control account |
- |
1,555 |
|
Special
reserve, Article 28 of Proclamation 84/1994 |
15,532,101 |
11,494,984 |
|
Tana
Department Store building |
5,623,279 |
4,942,159 |
|
Payment and
settlement account |
69,520,661 |
- |
|
Special
clearance |
68,373,685 |
61,787,824 |
|
Loan
accounts |
1,417,372 |
- |
|
ATM rejected
note control |
1,295 |
- |
|
Sundries (see
below) |
6,747,256 |
13,646,961 |
|
|
419,230,188 |
280,367,023 |
Sundries
|
National
Motors Corporation |
126,500 |
126,500 |
|
Office rent
payable |
303,382 |
303,383 |
|
5% income
tax on interest paid |
437,007 |
304,689 |
|
Neon Addis |
- |
92,843 |
|
Outstanding
dividends |
- |
498,000 |
|
Payable to
correspondent banks |
4,295,699 |
11,695,739 |
|
Income tax
payable |
393,220 |
304,145 |
|
Retention on
construction work |
1,112,016 |
- |
|
Agent
commission on credit cards |
18,084 |
93,208 |
|
Payable to
Midroc Ethiopia PLC |
53,167 |
47,191 |
|
Federal
Inland Revenue Authority cost sharing |
4,629 |
- |
|
Deposit for
guarantees |
- |
178,450 |
|
Adjustment
and refund account |
3,552 |
2,435 |
|
Franco
valuta payable to National Bank of Ethiopia |
- . |
378 |
|
|
6,747,256 |
13,646,961 |
|
SHARE CAPITAL |
|
|
|
Authorized capital 1,000,000 Ordinary Shares
of |
|
|
|
Birr 1,000 each |
1,000,000,000 |
300,000,000 |
|
|
|
|
|
Paid-up capital 282,210 Ordinary shares of
|
|
|
|
Birr 1,000 each |
282,210,000 |
156,190,000 |
|
|
The bank
declared a share dividend of Birr 80,000,000 and
increased its authorized capital to Birr
1,000,000,000 at the 10th extraordinary
shareholders' meeting on 14 June 2007.
|
SUNDRY INCOME |
|
|
|
Telecommunications |
6,654,958 |
6,614,296 |
|
Postage |
259,361 |
306,894 |
|
Estimation fees |
271,184 |
299,393 |
|
Correspondent bank charges |
587 |
3,500 |
|
Legal fees |
5,071 |
2,798 |
|
Miscellaneous |
3,089,014 |
1,025,828 |
| |
10,280,175 |
8,252,709 |
|
GENERAL AND ADMINISTRATIVE
EXPENSES |
|
|
|
Stationery and printing |
2,824,452 |
2,880,178 |
Telecommunications
|
5,018,504 |
8,068,751 |
Postage
|
230,897 |
276,685 |
Advertisements
|
4,997,349 |
4,015,652 |
Correspondent and bank charges
|
493,329 |
211,469 |
Entertainment
|
315,822 |
235,436 |
Insurance
|
891,701 |
871,120 |
Fuel and lubricants
|
1,210,354 |
778,549 |
Perdiems
|
880,322 |
641,699 |
Representation allowance
|
875,051 |
788,971 |
Transport
|
673,459 |
722,768 |
Water and light
|
837,142 |
513,560 |
Special reserve, Article 28 of Proclamation 84/1994
|
5,400,000 |
6,244,068 |
Maintenance and repairs
|
1,781,632 |
2,614,142 |
Donations and contributions
|
1,279,000 |
15,300 |
Professional fees
|
360,079 |
1,109,306 |
SWIFT and bank charges
|
869,071 |
682,633 |
Computer supplies
|
590,032 |
545,986 |
VISA charge
|
138,050 |
- |
POS reimbursement charge
|
491,260 |
- |
Fixed assets
|
46,252 |
- |
Annual hardware and software service fee
|
2,014,216 |
- |
Cost of debit card
|
121,957 |
- |
Tele. DDN services
|
3,641,888 |
- |
Sundries
|
3,286,033 |
1,625,303 |
|
39,267,852 |
32,841,576 |
|
PROVISION FOR TAXATION |
|
|
Profit before
provision for taxation
|
|
259,147,659 |
185,367,401 |
Add: Depreciation
as per bank's policy
|
15,841,137 |
|
- |
Representation allowance in excess of
10% of salary |
87,720 |
|
136,376 |
Donations
and contributions
|
47,000 |
|
300 |
Loss on
disposal of fixed asset
|
247,687 |
|
- |
Entertainment
|
315,822 |
|
235,436 |
Prior
period adjustment
|
15,863 |
|
- . |
|
|
16,555,229 |
372,112 |
Less: Interest on
treasury bills
|
4,692 |
|
15,000 |
Interest
on local deposit
|
- |
|
933,082 |
Gain on
disposal of fixed asset
|
221,482 |
|
- |
Depreciation for tax purpose pursuant to
Proc. No. 286/2002 |
16,321,943 |
|
- |
Interest
on foreign deposit
|
18,699,199 |
|
12,121,645 |
Dividend
earned on shares
|
1,878,334 |
|
881,121 |
Bad debts
written off against
provision held before June 2002
|
4,479,766 |
|
1,216,894 |
|
|
(41,605,416) |
(15,167,742) |
Taxable
profit
|
|
234,097,472 |
170,571,771 |
Taxation
|
|
|
|
(a)@
30%(234,097,472)
|
|
70,229,242 |
51,171,531 |
(b)@
5% (18,699,199) *
|
|
934,960 |
606,082 |
Provision for
taxation
|
|
71,164,202 |
51,777,613 |
Prior year
adjustment (Note 17)
|
|
(4,759) |
- . |
Charge to profit
and loss account
|
|
71,159,443 |
51,777,613 |
|
|
* Profit
tax is computed at the rate of 5% on interest earned
on deposit with foreign banks as per Income Tax
Proclamation No. 286/2002, Article 36, Sub Article
1.
|
EARNINGS PER SHARE |
|
|
Earnings
per share for the year are calculated on the basis
of the average number of shares outstanding during
the year.
|
GENERAL RESERVE |
|
|
|
Balance, 1 July 2006 |
|
64,709,026 |
39,936,685 |
|
Add: transfer from retained earning |
|
8,328 |
24,772,341 |
|
|
|
64,717,354 |
64,709,026 |
|
|
|
RETAINED EARNINGS |
|
|
|
|
|
|
|
|
Balance, 1 July 2006 |
|
75,000,000 |
86,306,685 |
|
Add: Transfer from profit and loss
account |
|
140,991,162 |
100,192,341 |
|
Prior year adjustment (Net tax
of Br. 4,759) |
|
11,104 |
- . |
|
|
|
216,002,266 |
186,499,026 |
|
Less: Dividend paid (2006) |
(75,000,000) |
|
(46,000,000) |
|
Directors Bonus paid (2007) |
(420,000) |
|
(790,000) |
|
Transfer to Legal Reserve
(2006) |
(2,776) |
|
- |
|
Transfer to General Reserve
(2006) |
(8,328) |
|
(64,709,026) |
|
Transfer to paid up capital
(2007) |
(80,000,000) |
|
- . |
|
|
|
(155,431,104) |
(111,499,026) |
|
|
|
60,571,162 |
75,000.000 |
|
MEMORANDUM ITEMS |
|
|
|
|
|
|
|
a)
Contingent liabilities Guarantees issued to customers
|
|
251,979,088 |
178,150,131 |
|
b) contingent assets |
|
|
|
There
was interest in memorandum accounts accumulated on
loans and advances under litigation amounting to
Birr 33,338,618. It was Birr 32,537,017 in 2006.
|
|
|
|
|
c)
Commitments |
|
|
|
| Letters of credit
|
|
420,275,867
301,672,255
|
471,373,725 |
| Margin held on L/C
|
|
(145,500,202) |
(136,392,485) |
|
|
274,775,665 |
334,981,240 |
| Outward bills for collection
|
|
2,603,703 |
25,879,359
|
| Inward bills for collection
|
|
33,477,131
|
33,477,131
|
|
|
394,337,730 |
394,337,730 |
|
|
|
|
(d) The
un-utilized balances of overdraft facilities granted
to customers at 30 June 2007 amounted to Birr
260,588,000. It was Birr 259,868,000 in 2006.
|
EMPLOYEE'S BENEFITS
SCHEMES |
|
|
Regarding
the provident fund scheme, the Bank contributes 14%
of basic salary while employees contribute 7%. These
contributions are held for each individual in saving
accounts of the Bank. All other employees' benefits
are in accordance with the Labour Proclamation No.
377/2003 and Labor Amendment Proclamation No.
494/2006. Eligible staff also benefit from Housing
Loan.
|
COMPARATIVE FIGURES
|
|
|
Travelers'
cheques' comparative figure has been reclassified to
cash on hand.
|
