THE CO-OPERATIVE BANK OF KENYA LIMITED
AND
SUBSIDIARIES
ANNUAL REPORT
AND
FINANCIAL STATEMENTS
31 DECEMBER 2002
ERNST & YOUNG
THE CO-OPERATIVE BANK OF KENYA LIMITED
AND SUBSIDIARIES
ANNUAL REPORT AND FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2002
CONTENTS PAGE
Bank Information 1 – 4
Report of the Directors5
Statement of Directors’ Responsibilities6
Report of the Independent Auditors 7
Consolidated Balance Sheet 8
Consolidated Profit and Loss Account 9
Balance Sheet of the Bank10
Profit and Loss Account for the Bank11
Consolidated Statement of Changes in Equity12
Consolidated Cash Flow Statement 13
Notes to the Financial Statements 14 - 34
THE CO-OPERATIVE BANK OF KENYA LIMITED
AND SUBSIDIARIES
BANK INFORMATION
YEAR ENDED 31 DECEMBER 2002
BOARD OF DIRECTORS S. C. Muchiri- Chairman
J.Riungu- Vice Chairman
H. Kiplagat
G. Mwobobia
P. K. Githendu
R. L. Kimanthi
S. Ogamba
J .B. Nthuku
A. Khangati
G.J.S. Wakasiaka, Rtd Major
D.C. Kuria
E.K. Mbogo
D. Kiura
PS Ministry of Finance S.Bundotich (representing PS, Ministry of Finance-Retired 02.01.2003)
J. Mackenzi (representing PS, Ministry of Finance Appointed 02.01.2003)
MANAGING DIRECTORG. M. Muriuki
SECRETARYR. M. Githaiga (Mrs)
REGISTERED OFFICECo-operative House,
AND HEAD OFFICEHaile Selassie Avenue
P O Box 48231,
Tel: 32076000
NAIROBI
SUBSIDIARIESCo-optrust Investment Services Ltd
P O Box 48231
Tel: 32076000
NAIROBI
Co-operative Consultancy Services Ltd
P O Box 48231,
Tel: 32076000
NAIROBI
BRANCHESCo-operative House Branch
P O Box 67881, Tel. 32076000
NAIROBI
Cannon House Branch
P O Box 67881, Tel. 228974/5
NAIROBI
Kisumu Branch
Oginga Odinga Road
P O Box 1511, Tel.41823/5
KISUMU
Co-op Card Centre
P O Box 21831, Tel 222271/222505
NAIROBI
Mombasa Branch
Nkrumah Road
P O Box 87771, Tel. 315375/6/7
MOMBASA
THE CO-OPERATIVE BANK OF KENYA LIMITED
AND SUBSIDIARIES
BANK INFORMATION
YEAR ENDED 31 DECEMBER 2002
Meru Branch
Tom Mboya Street
P O Box 1328, Tel.20461/2
MERU
Nakuru Branch
Geoffrey Kamau Road
P O Box 2982, Tel. 211574/5
NAKURU
Industrial Area Branch
Nanyuki Road
P O Box 18119, Tel. 530881/2
NAIROBI
Kisii Branch
P O Box 2469, Tel. 21134
KISII
Machakos Branch
Syo Kimau Road
P O Box 1250, Tel. 20215/6
MACHAKOS
Nyeri Branch
P O Box 12253, Tel.30815/30751
NYERI
Kerugoya Branch
P O Box 635, Tel.21586/7
KERUGOYA
Ukulima Branch
Haile Selassie Avenue
P O Box 74956, Tel. 221240
NAIROBI
Nyahururu Branch
P O Box 307, Tel. 22330/1
NYAHURURU
Kiambu Branch
P O Box 1064, Tel.22720
KIAMBU
Eldoret Branch
P O Box 2948, Tel.61167/62717
ELDORET
THE CO-OPERATIVE BANK OF KENYA LIMITED
AND SUBSIDIARIES
BANK INFORMATION
YEAR ENDED 31 DECEMBER 2002
Homa Bay Branch
P O Box 406, Tel.22329/32
HOMA BAY
Bungoma Branch
P O Box 1964, Tel.30459/60
BUNGOMA
Embu Branch
P O Box 1337, Tel.30363/4
EMBU
Kericho Branch
P O Box 1742, Tel.30414/6
KERICHO
Murang'a Branch
P O Box 954, Tel. 31174, 30503/4
MURANG'A
Karatina Branch
P O Box 931, Tel. 72855/6/7
NYERI
University Way Branch
P O Box 60800, Tel. 225400/11
NAIROBI
Chuka Branch
P O Box 101, Tel. 30461/2/3
CHUKA
Mumias Branch
P O Box 905, Tel. 41463, 41258/9
MUMIAS
Athi River Branch
P O Box 321, Tel 22880/22875/6
ATHI RIVER
Stima Plaza Branch
P O Box 38764, Tel. 751049/751104
NAIROBI
Thika Branch
P.O. Box 815, Tel. 21658/21815/8
THIKA
THE CO-OPERATIVE BANK OF KENYA LIMITED
AND SUBSIDIARIES
BANK INFORMATION
YEAR ENDED 31 DECEMBER 2002
NACICO Branch
P O Box 866, Tel. 228659
NAIROBI
Staff Training Centre
P O Box 15355, Tel. 891187/890132
LANGATA, NAIROBI
AGENCIESMagwagwa Agency
c/o Kisii Branch
P O Box 2469
KISII
Muhoroni Agency
c/o Kisumu Branch
P O Box 1511
KISUMU
Kariobangi Agency
P O Box 252, Tel. 781258
NAIROBI
Kawangware Agency
P O Box 46904, Tel. 576587
NAIROBI
Makutano Agency
c/o Meru Branch
P O Box 1328, Tel.20421
MERU
Maua Agency
c/o Meru Branch
P O Box 1328, Tel.21548
MERU
BANKERSCentral Bank of Kenya
P O Box 60000
NAIROBI
LAWYERSVarious
A list is available at the Bank
AUDITORSErnst & Young
Kenya-Re Towers, Upperhill
Off Ragati Road
P O Box 44286
00100 NAIROBI GPO
THE CO-OPERATIVE BANK OF KENYA LIMITED
AND SUBSIDIARIES
REPORT OF THE DIRECTORS
YEAR ENDED 31 DECEMBER 2002
The directors submit their report together with the audited financial statements for the year ended 31 December 2002, which show the state of the Group and the Bank’s affairs.
1.PRINCIPAL ACTIVITIES
The Bank offers banking and related services and is licensed under the Banking Act.
- GROUP OPERATIONS
The operations of the Bank were merged with those of its subsidiary, Co-operative Merchant Bank Limited during the year. The operations, except for the financial advisory services, are included together with those of the Bank. A subsidiary company Co-operative Consultancy Services Limited was formed during the year 2002, to carry out the financial advisory services that were being carried out by Co-operative Merchant Bank Limited.
3.RESULTS
The results of the Group for the year are set out on page 9.
4.DIVIDEND
The directors do not recommend the payment of a dividend.
5.BONUS
The directors do not recommend the issuance of bonus shares.
6.RESERVES
The movement in the Bank’s reserves is shown in note 19 to these financial statements.
7.DIRECTORS
The directors who served during the year and to the date of this report were: -
S. C. Muchiri- Chairman
J. Riungu- Vice Chairman
G. M. Muriuki-Managing Director
G. Mwobobia
P. K. Githendu
H. Kiplagat
R. L. Kimanthi
S. Ogamba
J.B. Nthuku
A. Khangati
G.J.S. Wakasiaka, Rtd Major
D.C. Kuria
E.K. Mbogo
D. Kiura
PS Ministry of Finance S.Bundotich (representing PS, Ministry of Finance-Retired 02.01.2003)
J.Mackenzi (representing PS, Ministry of Finance- Appointed 02.01.2003)
8.AUDIT COMMITTEE
The Bank’s audit committee consists of:-
J. Riungu-Chairman
J.B. Nthuku
J.Mackenzi-Appointed 02.01.2003
S.Bundotich-Retired 02.01.2003
9.AUDITORS
The auditors, Ernst & Young, have expressed their willingness to continue in office in accordance with Section 25(3) of the Co-operative Societies Act and subject to section 24(1) of the Banking Act.
By order of the Board
G.M. Muriuki
Managing Director
…………………………....2003
THE CO-OPERATIVE BANK OF KENYA LIMITED
AND SUBSIDIARIES
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The Co-operative Societies Act requires the directors to prepare financial statements for each financial year, which give a true and fair view of the state of affairs of the Group and the Bank as at the end of the financial year and of its operating results for that year. It also requires the directors to ensure the Group and the Bank keep proper accounting records which disclose with reasonable accuracy the financial position of the Group and the Bank. They are also responsible for safeguarding the assets of the Group and the Bank.
The directors accept responsibility for the annual financial statements, which have been prepared using appropriate accounting policies supported by reasonable and prudent judgments and estimates, in conformity with International Financial Reporting Standards and in the manner required by the Co-operative Societies Act. The directors are of the opinion that the financial statements give a true and fair view of the state of the financial affairs of the Group and the Bank and of its operating results. The directors further accept responsibility for the maintenance of accounting records which may be relied upon in the preparation of financial statements, as well as adequate systems of internal financial control.
Nothing has come to the attention of the directors to indicate that the Group and the Bank will not remain a going concern for at least the next twelve months from the date of this statement.
………………………………………………………………….
CHAIRMANVICE CHAIRMAN
…………………………………………………………………
DateDate
……………………………………………………………
MANAGING DIRECTORCOMPANY SECRETARY
……………………………………………………………
DateDate
REPORT OF THE INDEPENDENT AUDITORS
TO THE MEMBERS OF
THE CO-OPERATIVE BANK OF KENYA LIMITED
AND SUBSIDIARIES
We have audited the financial statements on pages 8 to 34, which have been prepared on the basis of the accounting policies set out on pages 14 and 16. We obtained all the information and explanations which we considered necessary for our audit.
RESPECTIVE RESPONSIBILITIES OF THE DIRECTORS AND THE INDEPENDENT AUDITORS
As stated on page 6, the directors are responsible for the preparation of financial statements which give a true and fair view of the state of the affairs of the Group and the Bank and of their operating results. Our responsibility is to express an independent opinion on the financial statements based on our audit and to report our opinion to you.
BASIS OF OPINION
We conducted our audit in accordance with International Standards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance that the financial statements are free from material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. It also includes assessing the accounting principles used and significant estimates made by the directors, as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion.
OPINION
In our opinion, proper books of account have been kept and the financial statements, which are in agreement therewith, give a true and fair view of the state of the financial affairs of the Group and the Bank at 31 December 2002 and of the profit and cash flows of the Group and the Bank for the year then ended and comply with International Financial Reporting Standards, the Co-operative Societies Act and the Companies Act.
Nairobi
...... …………………...... 2003
THE CO-OPERATIVE BANK OF KENYA LIMITED
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
31 DECEMBER 2002
2002 / 2001Note / KShs’000 / KShs’000
ASSETS
Cash and balances with Central Bank
of Kenya / 3 / 2,745,281 / 2,353,269
Deposits and balances due from other
banking institutions / 4 / 782,742 / 719,430
Government securities and other investments / 5 / 3,066,682 / 1,814,876
Amounts due from subsidiary companies / 6 / 28,002 / -
Equity investments / 7 / 113,699 / 85,099
Advances to customers / 8 / 17,896,572 / 14,801,097
Tax recoverable / 9(b) / 114,946 / 114,924
Other assets / 10 / 681,671 / 372,754
Intangible assets / 11 / 167,937 / 160,213
Fixed assets / 12(a) / 2,502,259 / 2,495,769
Deferred tax / 13 / 857,319 / 682,187
TOTAL ASSETS / 28,957,110 / 23,599,618
LIABILITIES
Deposits and balances due to other banking
institutions / 14 / 2,361,556 / 1,452,556
Other customers’ deposits / 15 / 20,828,414 / 17,220,051
Loans / 16 / 1,893,661 / 1,894,692
Other liabilities / 17 / 1,267,544 / 1,418,722
TOTAL LIABILITIES / 26,351,175 / 21,986,021
SHAREHOLDERS’ FUNDS
Share capital / 18 / 1,210,931 / 1,210,324
Reserves / 19 / 589,168 / (240,720)
Capital grants / 20 / 805,836 / 643,993
TOTAL SHAREHOLDERS’ FUNDS / 2,605,935 / 1,613,597
TOTAL LIABILITIES AND SHAREHOLDERS’
FUNDS / 28,957,110 / 23,599,618
The financial statements were approved by the Board of Directors on…………….………… ……….2003 and signed on its behalf by:-
S.C. Muchiri-Chairman…………………………………………………
J. Riungu-Vice-Chairman……………………………………………
G.M. Muriuki-Managing Director………………………………………..
R.M. Githaiga (Mrs.)-Company Secretary……………………………………….
THE CO-OPERATIVE BANK OF KENYA LIMITED
AND SUBSIDIARIES
CONSOLIDATED PROFIT AND LOSS ACCOUNT
YEAR ENDED 31 DECEMBER 2002
2002 / 2001Note / KShs’000 / KShs’000
Interest income / 21 / 2,217,383 / 2,271,010
Interest expense / 22 / 1,133,438 / 1,313,677
Net interest income / 1,083,945 / 957,333
Commissions / 1,015,737 / 880,597
Foreign exchange gain / 93,622 / 36,078
Other / 23 / 729,507 / 181,310
2,922,811 / 2,055,318
Operating expenses
Provision for bad and doubtful debts / 8(d) / 411,409 / 847,015
Administration / 24 / 2,407,858 / 2,011,204
2,819,267 / 2,858,219
PROFIT/(LOSS) BEFORE TAXATION / 25 / 103,544 / (802,901)
TAX CREDIT / 9(a) / 174,131 / 151,892
PROFIT/(LOSS) AFTER TAXATION / 277,675 / (651,009)
Earnings/(loss) per share / 26 / 22.93 / (53.81)
THE CO-OPERATIVE BANK OF KENYA LIMITED
BANK BALANCE SHEET
31 DECEMBER 2002
2002 / 2001Note / KShs’000 / KShs’000
ASSETS
Cash and balances with Central Bank
of Kenya / 3 / 2,745,281 / 2,100,412
Deposits and balances due from other banking
institutions / 4 / 782,796 / 1,055,843
Government and other securities / 5 / 3,048,617 / 1,800,993
Amount due from subsidiary company / 6 / 28,002 / 863
Equity investments / 7 / 133,699 / 307,599
Advances to customers / 8 / 17,896,572 / 13,097,333
Tax recoverable / 9(b) / 114,936 / 83,649
Other assets / 10 / 676,661 / 329,884
Intangible assets / 11 / 162,483 / 152,477
Fixed assets / 12(b) / 2,502,153 / 2,486,539
Deferred tax / 13 / 858,238 / 683,389
TOTAL ASSETS / 28,949,438 / 22,098,981
LIABILITIES
Deposits and balances due to other banking
institutions / 14 / 2,361,556 / 1,733,884
Other customers’ deposits / 15 / 20,828,414 / 15,094,224
Loans / 16 / 1,893,661 / 1,894,692
Other liabilities / 17 / 1,266,092 / 1,384,085
TOTAL LIABILITIES / 26,349,723 / 20,106,885
SHAREHOLDERS’ FUNDS
Share capital / 18 / 1,210,931 / 1,210,324
Reserves / 19 / 582,948 / 137,779
Grants / 20 / 805,836 / 643,993
SHAREHOLDERS’ FUNDS / 2,599,715 / 1,992,096
TOTAL LIABILITIES AND SHAREHOLDERS’
FUNDS / 28,949,438 / 22,098,981
The financial statements were approved by the Board of Directors on………………....………..…………....2003
and signed on its behalf by:-
S. C. Muchiri-Chairman…………………………………………
J. Riungu-Vice Chairman…………………………………………
G. M. Muriuki-Managing Director…………………………………………
R. M. Githaiga (Mrs)-Company Secretary…………………………………………
THE CO-OPERATIVE BANK OF KENYA LIMITED
BANK PROFIT AND LOSS ACCOUNT
YEAR ENDED 31 DECEMBER 2002
2002 / 2001Note / KShs’000 / KShs’000
Interest income / 21 / 2,215,119 / 2,085,360
Interest expense / 22 / 1,133,438 / 1,129,076
Net interest income / 1,081,681 / 956,284
Commissions / 1,015,737 / 850,145
Foreign exchange gain / 93,622 / 36,078
Other income / 23 / 719,825 / 181,310
2,910,865 / 2,023,817
Operating expenses
Provision for bad and doubtful debts / 8(d) / 411,409 / 510,288
Administration expenses / 24 / 2,397,245 / 1,952,808
2,808,654 / 2,463,096
OPERATING PROFIT/(LOSS) BEFORE TAXATION / 25 / 102,211 / (439,279)
TAX CREDIT / 9(a) / 174,212 / 152,765
PROFIT/(LOSS) AFTER TAXATION / 276,423 / (286,514)
Earnings/(loss) per share / 26 / 22.83 / (23.69)
1
THE CO-OPERATIVE BANK OF KENYA LIMITED
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
YEAR ENDED 31 DECEMBER 2002
Sharecapital / Capital
reserve / Co-operative
development
fund / General
reserve / Share
transfer
fund / Share
fractions / Revenue
reserve / Total
KShs’000 / KShs’000 / KShs’000 / KShs’000 / KShs’000 / KShs’000 / KShs’000 / KShs.’000
(Note 18) / (Note19) / (Note19) / (Note19) / (Note19) / (Note19) / (Note19)
Balance at 1 January 2001
as previously stated / 1,209,771 / 526,343 / 10,304 / 3,100 / 551 / 68 / (1,525,238) / 224,899
Reclassification of revenue grants / - / - / - / - / - / - / 1,175,570 / 1,175,570
Prior year adjustment (note27) / - / - / - / - / - / - / (282,624) / (282,624)
As restated / 1,209,771 / 526,343 / 10,304 / 3,100 / 551 / 68 / (632,292) / 1,117,846
Revenue grants for the year / - / - / - / - / - / - / 502,233 / 502,233
Issue of new shares / 553 / - / - / - / - / - / - / 553
Write back of excess depreciation on revalued fixed assets / - / (4,368) / - / - / - / 4,368 / -
Movement in Co-operative development fund / - / - / (12) / - / - / (12)
Net movement in share transfer fractions / - / - / - / - / - / (6) / (6)
Loss for the year / - / - / - / - / - / - / (651,009) / (651,009)
Balance at 31 December 2001 / 1,210,324 / 521,975 / 10,292 / 3,100 / 551 / 62 / (776,700) / 969,604
Balance at 1 January 2002 / 1,210,324 / 521,975 / 10,292 / 3,100 / 551 / 62 / (776,700) / 969,605
Revenue grants for the year / - / - / - / - / - / - / 552,212 / 552,212
Net transfer of shares / 607 / - / - / - / 1 / - / 608
Profit for the year / - / - / - / - / - / - / 277,675 / 277,675
Balance at 31 December 2002 / 1,210,931 / 521,975 / 10,292 / 3,100 / 551 / 63 / 53,187 / 1,800,100
1
THE CO-OPERATIVE BANK OF KENYA LIMITED
AND SUBSIDIARIES
CONSOLIDATED CASH FLOW STATEMENT
YEAR ENDED 31 DECEMBER 2002
2002 / 2001KShs’000 / KShs’000
CASH FLOWS FROM OPERATING ACTIVITIES:-
Profit/(loss) before taxation / 103,544 / (802,901)
Adjustments for:
Depreciation / 273,911 / 225,668
Provision for diminution in value of investment / 1,400 / -
Amortisation of intangible assets / 48,802 / 35,902
Amortisation of capital grants / (27,285) / (17,329)
Gain on disposal of fixed assets / (1,590) / (6,905)
Foreign exchange gain / (93,622) / (36,078)
Dividends income / (92) / -
Impairment of fixed assets / 107,795 / 11,863
Tax adjustment / - / 25,265
Cash flows from operating activities before working capital changes / 412,863 / (564,515)
Advances to customers / (3,095,475) / (1,482,131)
Other assets / (308,916) / 1,156,722
Deposits from customers / 4,517,363 / 337,558
Other liabilities / (151,178) / (420,444)
Amount due from subsidiary companies / (28,002) / -
Central Bank of Kenya cash ratio / (431,141) / 261,004
Government securities maturing after 91 days / (2,079,341) / (172,880)
Cash consumed by operating activities / (1,163,827) / (884,686)
Tax paid / - / (798))
Net cash flows from operating activities / (1,163,827) / (885,484)
CASH FLOWS FROM INVESTING ACTIVITIES:-
Purchase of fixed assets / (470,795) / (99,143)
Proceeds from disposal of fixed assets / 27,833 / 8,058
Dividends received / 92 / -
Investment in subsidiary company / (30,000) / -
Net cash flows from investing activities:- / (472,870) / (91,085)
CASH FLOWS FROM FINANCING ACTIVITIES:-
Proceeds on issue of share capital / 753 / 553
Proceeds from grants / 739,116 / 502,233
Co-operative Development Fund / - / (12)
Share transfer fund / (146) / -
Share fractions / - / (6)
Net cash flows from financing activities / 739,723 / 502,768
Net movement in cash and cash equivalents / (896,974) / (473,801)
Cash and cash equivalents at the beginning of the year / 2,640,817 / 3,078,540
Foreign exchange gain / 93,622 / 36,078
Cash and cash equivalents at the end of the year (Note 28) / 1,837,465 / 2,640,817
1
THE CO-OPERATIVE BANK OF KENYA LIMITED
AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2002
1.ACCOUNTING POLICIES
a)Basis of preparation
The consolidated financial statements are prepared in accordance with and comply with International Financial Reporting Standards.
b)Income recognition
Interest income on all advances is recognised on the accrual basis. Interest income is not recognised where recoverability of the advances of the Bank's own funds is uncertain. Interest on the Government and Donor funds is recognised as income on acrrual basis. Dividends from equity investments are recognised when received.
c)Fixed assets and depreciation
Fixed assets are stated at cost or valuation less accumulated depreciation. Depreciation on fixed assets is calculated on straight line basis; at annual rates estimated to write off carrying values of the assets over their expected useful lives.
The annual depreciation rates in use are:-%
Leasehold land and buildings 2.5
Fixtures12.5
Furniture and equipment20.0
Motor vehicles20.0
Office machinery20.0
Computers20.0
d)Intangible assets and amortisation
Intangible assets are stated at cost, less accumulated amortization. Amortization is calculated on straight line basis at annual rates estimated to amortise the carrying values of the assets over their expected useful lives.
e)Bad and doubtful debts
i)Specific provision is made in respect of advances from the Bank's own funds considered to be doubtful. A general provision is made at the rate of 1% of net advances over and above the specific provision.
ii)No provision has been made for advances made from Government and Donor funds, since these are disbursed on an agency basis.
iii)Advances are written off/down when the directors are of the opinion that their recoverability will not materialise.
f)Foreign currency transactions
Transactions in foreign currencies are translated at the rates ruling on the transaction dates. Balances in foreign currencies are translated at the Central Bank of Kenya rates ruling on the balance sheet date. Any resulting gains or losses on exchange are dealt with in the profit and loss account in the period in which they arise.
THE CO-OPERATIVE BANK OF KENYA LIMITED
AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2002
1.ACCOUNTING POLICIES (continued)
g)Investments
Equity investments are stated at cost less provision for any permanent diminution in value. Government securities are stated at amortised cost.
h)Consolidation
The results of Co-optrust Investment Services Limited, a wholly owned subsidiary of the Bank, have been incorporated in the financial statements.
i)Employee benefits
The Group contributes to a defined benefits pension scheme for its employees. Pension costs are assessed using the projected unit credit method. Under this method, the cost of providing pensions is charged to the income statement so as to spread the regular cost over the service lives of employees in accordance with the advice of qualified actuaries who value the pension plan once every three years. The pension obligation is measured at the present value of the estimated future cash outflows using interest rates of government securities that have terms to maturity approximating the terms of the related liability. All actuarial gains and losses are spread over the average remaining service lives of the employees.
The Group also contributes to a statutory defined contribution Pension Scheme, the National Social Security Fund (NSSF). Contributions are determined by local statute and are currently limited to KShs 200 per employee per month.
The monetary liability for employees’ accrued annual leave entitlement at the balance sheet date is recognised as an expense accrual.
j)Taxation
Current taxation is provided for on the basis of the results for the year as shown in the financial statements, adjusted in accordance with the tax legislation.
Deferred taxation is provided for using the liability method, for all temporary differences arising between the tax bases of assets and liabilities and their carrying values for financial reporting purposes. Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax losses and unused tax credits to the extent that it is probable that future taxable profit will be available against which deductible temporary differences, unused tax losses and the unused tax credits can be utilised.
k)Grants
Grants related to fixed assets are presented in the Balance Sheet as capital grants and utilised in the reduction of the carrying amounts of the related assets during their useful lives.