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
seven area banks established within and outside
Addis Ababa, four Foreign Exchange Bureaux, four
hundred nine Point of Sale (PoS) terminals and
twenty 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 2008
(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 |
240,980,409 |
139,308,450 |
|
Foreign currency |
23,038,541 |
9,682,736 |
|
Travelers' cheques
|
3,172,773 |
1,175,073 |
|
Ethiopian Millennium commemorative coins |
1,048,200 |
|
|
|
268,239,923 |
150,166,259 |
|
| |
|
DEPOSIT WITH NATIONAL BANK
OF ETHIOPIA |
|
|
|
Statutory reserve balance |
920,078,993 |
250,078,993 |
|
Payment and settlement
account |
852,654,551 |
611,105,647 |
|
|
1,772,733,544 |
861,184,640 |
|
| |
|
INVESTMENTS |
|
|
|
|
|
2007 |
|
Investment in Tana Building (i) |
22,801,795 |
22,801,795 |
|
Investment in Nyala Insurance
S.Co. (ii) |
5,584,000 |
5,584,000 |
|
|
28,385,795 |
28,385,795 |
|
|
|
(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:
| |
|
|
|
|
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 has 5,584 shares 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
|
229,764,380 |
206,155,142 |
| Outward bills purchased
|
1,342,844 |
3,137,448 |
| Outward documentary bills purchased
|
19,370,059 |
25,690,632 |
| MT/TT received-foreign |
47,375 |
3,378 |
|
Western Union Money Transfer paid and
outstanding |
24,049,012 |
13,095,818 |
| |
274,573,670 |
234,986,600 |
|
LOANS AND ADVANCES TO
CUSTOMERS |
|
|
|
|
|
2007 |
|
Agriculture |
162,016,125 |
147,260,219 |
|
Manufacturing |
1,012,829,639 |
802,573,013 |
|
Domestic trade and services |
969,349,846 |
713,141,465 |
|
Export |
338,025,125 |
297,906,024 |
|
Import |
516,411,835 |
457,598,660 |
|
Building and construction |
801,434,024 |
872,891,344 |
|
Transport |
368,830,219 |
462,268,977 |
|
Advances on letters of credits |
98,459,236 |
93,546,501 |
|
Personal |
1,242,892 |
820,997 |
|
Loans in litigation |
82,528,751 |
92,258,145 |
|
Loans under re-activation |
7,186,585 |
10,581,636 |
|
Staff housing loans |
43,101,534 |
36,911,192 |
|
Less: Provision for doubtful debts and advances |
(101,548,280) |
(88,498,270) |
|
Suspended interest account |
(8,163,055) |
(10,256,292) |
|
|
4,291,704,476 |
3,889,003,611 |
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 |
802,598 |
|
1,030,690 |
|
- passbooks, drafts and CPOs
|
472,240 |
|
987,616 |
|
- cheque books |
958,523 |
|
1,373,883 |
|
- advertising materials
|
- |
|
926 |
|
- fixed assets |
3,584,078 |
|
4,012,359 |
|
- cleaning and sanitation |
39,212 |
|
21,327 |
|
- entertainment supplies |
1,122 |
|
869 |
|
- uniforms |
56,361 |
|
93,528 |
|
- sundry materials |
25,541 |
|
20,719 |
|
|
|
|
|
|
Debit card |
520,357 |
|
898,171 |
|
Pin
mailer |
16,199 |
|
24,968 |
|
Prepayments |
|
25,633,990 |
14,185,265 |
|
Staff advances |
|
24,599,435 |
10,233,466 |
|
Western Union |
|
204,214 |
191,140 |
|
Suspense account (National Bank of
Ethiopia) |
|
707,400 |
707,400 |
|
Other non-current assets (see below 1) |
|
35,551,987 |
15,751,864 |
|
Sundry debtors (see below
2)
|
|
142,650,576 |
64,362,292 |
|
|
|
238,081,411 |
116,154,061 |
|
Less: provision for doubtful
receivable (National
Trading Enterprise) |
|
(2,257,578) |
(2,257,578) |
|
|
|
235,823,833 |
113,896,483 |
|
|
|
|
|
|
|
|
|
2007 |
|
Other
non-current assets - above 1 |
|
|
|
|
Constructions in progress * |
|
2,681,199 |
8,130,686 |
|
Constructions in progress * |
|
31,602,978 |
6,512,348 |
|
Cash
collateral to VISA |
|
1,058,903 |
899,923 |
|
Deposit for
Multimedia Broad-band |
|
194,907 |
194,907 |
|
Deposit for
signboards and logo |
|
14,000 |
14,000 |
|
|
|
35,551,987 |
15,751,864 |
|
Unpaid capital
commitments for constructions in progress
at Head Office, Nazareth and Bedele sites
amounted to approximately Birr 68,018,829. |
|
Sundry
debtors - above 2 |
|
|
|
|
Credit cards |
|
11,468 |
31,002 |
|
Counterfeit cash notes holding (National
Bank of Ethiopia) |
|
8,334 |
80,600 |
|
Fraudulent acts and related court fees |
|
972,587 |
702,250 |
|
Wrong payments and overdrawn accounts |
|
115,966 |
124,763 |
|
Charge back |
|
83,569 |
261,017 |
|
2% withholding tax |
|
3,818 |
3,483 |
|
2% withholding tax (Tana Building) |
|
87,945 |
88,612 |
|
Advance paid for construction |
|
10,243,355 |
1,278,384 |
|
Payment card |
|
393,088 |
596,942 |
|
Blocked balance for land lease of Head
Office |
|
4,000,000 |
4,000,000 |
|
Correspondent banks |
|
255,424 |
5,390,555 |
|
Merchant control accounts |
|
- |
283 |
|
Area bank encashment |
|
- |
2,710 |
|
Local banks |
|
124,207,434 |
49,704,988 |
|
Miscellaneous |
|
2,267,588 |
2,096,703 |
|
|
|
142,650,576 |
64,362,292 |
|
|
FIXED ASSETS |
|
|
|
|
Adjustments/ |
|
Cost
|
30/06/07 |
Additions
|
Disposals |
30/06/08 |
|
|
|
|
|
Premises
|
35,135,945 |
|
- |
35,135,945 |
|
Furniture
and fixtures |
18,919,275 |
3,557,952 |
(606,768) |
21,870,459 |
|
Office and
other equipment |
17,039,406 |
6,808,598 |
(12,648) |
23,835,356 |
|
Computers
hard and software |
64,156,872 |
7,120,588 |
- |
71,277,460 |
|
Motor
vehicles |
29,970,966 |
6,469,608 |
(2,376,269) |
34,064,305 |
|
|
165,222,464 |
23,956,746 |
(2,995,685) |
186,183,525 |
|
Accumulated depreciation |
|
|
|
|
|
|
|
|
|
|
|
Premises
|
772,390 |
1,756,797 |
- |
2,529,187 |
|
Furniture
and fixtures |
10,881,481 |
2,196,453 |
(472,436) |
12,605,498 |
|
Office and
other equipment |
9,387,902 |
2,888,970 |
(7,429) |
12,269,443 |
|
Computers
hard and software |
36,198,108 |
8,768,990 |
- |
44,967,098 |
|
Motor
vehicles |
18,833,797 |
3,046,072 |
(1,916,342) |
19,963,527 |
|
|
76,073,678 |
18,657,282 |
(2,396,207) |
92,334,753 |
|
Net Book
values |
|
|
|
|
|
|
|
|
|
|
|
Premises |
34,363,555 |
|
|
32,606,758 |
|
Furniture
and fixtures |
8,037,794 |
|
|
9,264,961 |
|
Office and
other equipment |
7,651,504 |
|
|
11,565,913 |
|
Computers
and software |
27,958,764 |
|
|
26,310,362 |
|
Motor
vehicles |
11,137,169 |
|
|
14,100,778 |
|
|
89,148,786 |
|
|
93,848,772 |
|
OTHER LIABILITIES |
|
Outstanding
transfers |
139,952,859 |
99,231,119 |
| CPOs and
certified cheques issued |
163,753,171 |
82,565,888 |
|
Exchange
payable to National Bank of Ethiopia |
21,697,215 |
13,508,830 |
|
MTs/TTs
payable |
35,239,636 |
15,890,551 |
|
Blocked
current and saving accounts |
17,285,500 |
7,344,212 |
|
Demand
drafts payable |
390,100 |
213,110 |
|
Accrued
interest payable on fixed deposits |
17,455,101 |
12,261,394 |
|
Accrued
leave pay |
7,324,242 |
4,433,551 |
|
Bonus
payable |
8,146,528 |
5,673,740 |
|
Accruals
|
3,382,344 |
8,478,896 |
|
Taxes |
2,256,763 |
1,490,277 |
|
Unearned
revenue |
4,014,523 |
1,753,198 |
|
Special
reserve, Article 28 of Proclamation 84/1994 |
22,742,422 |
15,532,101 |
|
Tana
Department Store building |
5,255,389 |
5,623,279 |
|
Payment and
settlement account |
123,174,078 |
69,520,661 |
|
Special
clearance |
130,043,213 |
68,373,685 |
|
Loan
accounts |
- |
1,417,372 |
|
ATM rejected
note control |
26,120 |
1,295 |
|
Sundries (see
below) |
8,710,063 |
6,747,256 |
|
|
710,849,267 |
419,230,188 |
Sundries
|
National
Motors Corporation |
126,500 |
126,500 |
|
Office rent
payable |
303,382 |
303,382 |
|
Payable to
correspondent banks |
2,081,875 |
4,295,699 |
|
Retention on
construction work |
1,967,891 |
1,112,016 |
|
Agent
commission on credit cards |
8,906 |
18,084 |
|
Payable to
Midroc Ethiopia PLC |
52,767 |
53,167 |
|
Federal
Inland Revenue Authority cost sharing |
1,195 |
4,629 |
|
Deposit for
guarantees |
1,045,903 |
- |
|
Adjustment
and refund account |
980 |
3,552 |
|
Payable to shareholders |
450,897 |
- |
|
Adjustment
and refund account |
2,669,767 |
- |
|
|
8,710,063 |
5,917,029 |
|
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 |
453,993,000 |
282,210,000 |
|
|
The bank
declared a share dividend of Birr 169,283,000 and
issued an additional share capital of Birr 2,500,000 at
the 11th extraordinary shareholders’ meeting on 22
April 2008. \
|
SERVICE INCOME |
|
|
|
Service charges - foreign |
27,942,784 |
22,620,528 |
| Service charges - local |
2,359,101 |
2,367,740 |
|
30,301,885 |
24,988,268 |
|
INVESTMENT INCOME |
|
|
|
Tana Building |
1,694,306 |
1,540,686 |
| Nyala Insurance S.C. |
1,284,851 |
1,878,334 |
| Treasury bills |
- |
4,692 |
| |
2,979,157 |
3,423,712 |
|
SUNDRY INCOME |
|
|
|
Telecommunications |
7,419,914 |
6,654,958 |
|
Postage |
224,604 |
259,361 |
|
Estimation fees |
338,117 |
271,184 |
|
Correspondent bank charges |
157,480 |
587 |
|
Legal fees |
7,345 |
5,071 |
|
Miscellaneous |
3,934,897 |
3,089,014 |
| |
12,082,357 |
10,280,175 |
|
GENERAL AND ADMINISTRATIVE
EXPENSES |
|
|
|
Stationery and printing |
4,262,486 |
2,824,452 |
Telecommunications
|
9,665,782 |
5,018,504 |
Postage
|
227,737 |
230,897 |
Advertisements
|
4,795,724 |
4,997,349 |
Correspondent and bank charges
|
440,293 |
493,329 |
Entertainment
|
428,906 |
315,822 |
Insurance
|
1,148,651 |
891,701 |
Fuel and lubricants
|
1,654,761 |
1,210,354 |
Perdiems
|
1,171,255 |
880,322 |
Representation allowance
|
954,876 |
875,051 |
Transport
|
811,080 |
673,459 |
Water and light
|
1,078,400 |
837,142 |
Special reserve, Article 28 of Proclamation 84/1994
|
7,210,321 |
5,400,000 |
Maintenance and repairs
|
2,352,694 |
1,781,632 |
Donations and contributions
|
25,000 |
1,279,000 |
Professional fees
|
2,552,920 |
2,104,215 |
SWIFT and bank charges
|
510,205 |
345,119 |
Computer supplies
|
1,457,378 |
138,050 |
VISA charge
|
1,177,678 |
491,260 |
POS reimbursement charge
|
34,960 |
46,252 |
Fixed assets
|
379,131 |
121,957 |
Sundries
|
2,276,357 |
3,556,113 |
|
44,616,595 |
39,267,852 |
|
PROVISION FOR TAXATION |
|
|
Profit before
provision for taxation
|
|
332,570,355 |
259,147,659 |
Add: Depreciation
as per bank's policy
|
18,657,282 |
|
15,841,137 |
Representation allowance in excess of
10% of salary |
- |
|
87,720 |
Donations
and contributions
|
5,000 |
|
47,000 |
Loss on
disposal of fixed asset
|
121,213 |
|
247,687 |
Entertainment
|
428,906 |
|
315,822 |
Prior
period adjustment
|
3,521 |
|
15,863 |
|
|
19,215,922 |
16,555,229 |
Less: Interest on
treasury bills
|
|
|
4,692 |
Gain on
disposal of fixed asset
|
789,110 |
|
221,482 |
Depreciation for tax purpose pursuant to
Proc. No. 286/2002 |
19,005,941 |
|
16,321,943 |
Interest
on foreign deposit
|
16,544,662 |
|
18,699,199 |
Dividend
earned on shares
|
1,284,851 |
|
1,878,334 |
Bad debts
written off against
provision held before June 2002
|
5,198,020 |
|
4,479,766 |
|
|
(42,822,584) |
(41,605,416) |
Taxable
profit
|
|
308,963,693 |
234,097,472 |
Taxation
|
|
|
|
(a)@
30%((308,963,693)
|
|
92,689,108 |
70,229,242 |
(b)@ 5% (16,544,662) *
|
|
827,233 |
934,960 |
Provision for
taxation
|
|
93,516,341 |
71,164,202 |
Prior year
adjustment (Note 19)
|
|
(1,056) |
(4,759) |
Charge to profit
and loss account
|
|
93,515,285 |
71,159,443 |
|
|
* 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 2007 |
|
64,717,354 |
64,709,026 |
|
Add: transfer from retained earning |
|
- |
8,328 |
|
Less: Transfer to paid up capital |
|
(64,700,000) |
- |
|
Transfer to retained earnings |
|
(17,354) |
- |
|
|
|
- |
64,717,354 |
|
|
|
RETAINED EARNINGS |
|
|
|
|
|
|
|
|
Balance, 1 July 2007 |
|
60,571,162 |
75,000,000 |
|
Add: Transfer from profit and loss
account |
|
179,291,302 |
140,991,162 |
|
Prior year adjustment |
|
17,354 |
- |
|
(Net tax
of Br. 1,056) |
|
2,465 |
11,104 |
|
|
|
239,882,283 |
216,002,266 |
|
Less: Dividend paid (2007) |
(55,000,000) |
|
(75,000,000)) |
|
Directors Bonus paid (2008) |
(420,000) |
|
(420,000) |
|
Transfer to Legal Reserve
(2007) |
(616) |
|
(2,776) |
|
Transfer to General Reserve
(2007) |
- |
|
(8,328) |
|
Transfer to paid up capital
(2008) |
(104,583,000) |
|
(80,000,000) |
|
|
|
(160,003,616) |
(155,431,104) |
|
|
|
79,878,667 |
60,571,162 |
|
MEMORANDUM ITEMS |
|
|
|
(a) Contingent and memorandum
assets |
|
|
|
|
Interest on loans and advances
initiation |
|
33,724,636 |
33,338,618 |
|
Interest on loans and advances under
re-activation |
|
954,512 |
373,881 |
|
Outward bills for collection |
|
2,284,786 |
2,603,703 |
| Inward bills for collection
|
|
106,558,473 |
24,292,887 |
|
|
143,522,407 |
60,609,089 |
|
|
|
|
|
(b) Contingent and memorandum
liabilities |
|
|
|
|
Guarantees issued to customers |
|
402,112,786 |
251,979,088 |
|
Letters of credit |
530,290,516 |
- |
420,275,867 |
|
Less: Margin held on letters of
credit |
(153,347,720) |
- |
(145,500,202) |
|
|
|
376,942,796
|
274,775,665
|
|
|
779,055,582 |
526,754,753 |
|
|
|
|
(c) The
un-utilized balances of overdraft facilities granted to
customers as at 30 June 2008 amounted to Birr
434,326,000. It was Birr 260,588,000 in 2007.
|
EMPLOYEE'S BENEFITS
SCHEMES |
|
|
Regarding the provident fund scheme, the Bank
contributes 15% 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 Labour Amendment
Proclamation No. 494/2006. Eligible staff also benefit
from Housing Loan.
|
COMPARATIVE FIGURES
|
|
|
Some accounts comparative figures have been
reclassified.
|
