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NITL Malawi 2009 annual report

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The National Investment Trust Limited Malawi 2009 annual report

The National Investment Trust Limited Malawi 2009 annual report

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NITL Malawi 2009 annual report NITL Malawi 2009 annual report Document Transcript

  • Annual Report 2009The National Investment Trust Limited (Incorporated in Malawi on 20 September 2001 under registration number 6024) Annual Report 2009
  • Annual Report 2009
  • Annual Report 2009ContentsInvestment policy 2Fund Manager’s report 3Directors’ report 5Statement of Directors’ responsibilities 8Independent Auditor’s report 9Statement of comprehensive income 10Statement of financial position 11Statement of changes in equity 12Statement of cash flows 13Notes to the financial statements 14Details of shareholders 32Notice of Annual General Meeting 33Form of Proxy 35 01
  • Annual Report 2009Investment PolicyThe principal objective of the Company is to provide a vehicle to facilitate broad publicparticipation in a diverse portfolio of equity investments in Malawi.The Company’s investment portfolio is managed by an independent fund manager, FirstMerchant Bank Limited, whose management is subject to the overall direction of the Board ofDirectors of the Company. First Merchant Bank Limited has day-to-day control and discretion inthe management of the investment portfolio in accordance with the investment policy. Theinvestment portfolio is managed with a view to providing shareholders with a return by way ofboth annual income and capital growth. Subject to cash flow considerations, net after tax income,other than income from investment switches and unrealised net gains on the investment portfolio,is distributed to shareholders.The Board of Directors recognizes there will always be risk present in any portfolio of investmentsbut has adopted an investment policy which seeks to minimize that risk by defining permittedinvestments and placing limits on the extent of exposure to individual investments as follows:-EquitiesUp to 100% of the investment portfolio may be invested in equities provided that no more than40% of the portfolio may be invested in any single listed company and no more than 10% of theportfolio may be invested in any single unlisted company. Further limitations on investment inequities of property companies are set out below.BondsUp to 25% of the investment portfolio may be invested in public or private sector bonds providedthat no more than 10% of the portfolio may be invested in any single bond issue or series of bondsof a single private sector issuer. It is a requirement that bonds must have a fixed redemption dateand period to redemption of not more than ten years. Private sector bonds must be fully securedand public sector bonds must be guaranteed by the Government of Malawi.Property and Equity of Property CompaniesUp to 25% of the investment portfolio may be invested in properties or equity of propertycompanies provided that no more than 10% of the investment portfolio may be invested in anysingle property investment.Cash EquivalentsNo restrictions are placed on short-term investments in the form of Treasury Bills, Reserve BankBills or deposits with licensed financial institutions.RestrictionsThe Fund Manager may not without the consent of the majority of the Board of Directors: acquireor dispose of any unlisted equities or bonds or enter into a contract on behalf of the Company toacquire or dispose of any unlisted equities or bonds, borrow money in the name of the Company,or pledge any property or assets belonging to the Company or create charges or mortgagesthereon. 02
  • Annual Report 2009Fund Manager’s ReportReview of the YearThe year under review has seen a prolonged bear run on the Malawi equity market. The effect ofthe turmoil in international financial markets was initially delayed as the inherent illiquidity of themarket slowed the anticipated disinvestment by foreign institutional investors. Unfortunately thislack of liquidity has resulted in market overhangs persisting even to date in many counters andthere is, as yet, little sign of the recovery experienced in other African markets. An unprecedented(for Malawi) level of stagging of the TNM IPO during the year has also contributed to the overalldis – equilibrium in the supply demand equation for Malawi equities.The domestic share index decreased by 16% over the year to 30th September 2009. The NITLportfolio performed somewhat better than the index but net fund value still declined by 10% overthis period. The market prices of some of our historically best performing investments which hadattracted significant foreign investor interest were particularly affected by the global downturn.In general the performance of our underlying investments has been more than satisfactory. On thedownside, Dairibord Malawi Limited continues to incur losses on its canning operations,Packaging Industries Limited is facing constraints due to non availability of foreign exchange andcomposite insurer, Nico Holdings, has been adversely impacted by the downturn in the equitymarket. Our banking sector investments, particularly Standard Bank, have performed beyondexpectations, diversified conglomerate Press Corporation Limited continues to show stronggrowth and Illovo Sugar returned record profits on the back of high sugar output levels and strongdomestic and international sugar markets. Auction Holdings group profits increased ten – fold,albeit off a low base, due to much improved tobacco auction proceeds. Our property investments,MPICO and Kang’ombe Investments, both performed satisfactorily.Dividend income grew broadly in line with the trends in profitability of the companies in ourportfolio. The reduction in the level of dividends received from Press Corporation is a factor oftiming of dividend declarations rather than the quantum of payout. The directors of NBS Bankelected not to declare an interim dividend for 2009 due to ongoing capital expenditure projectswhich resulted in a K5 million fall in the level of dividend income from that counter. Total grossdividend income grew by 16% from K100 million to K116 million. This represents a yield of 4.6%on the year end investment portfolio valuation and is considerably better than the 3.9% MSEdomestic weighted average dividend yield at 30 September 2009.OutlookThe Malawi equity market remains weak with overhangs persisting in a number of counters. Witha few exceptions, ratings remain demanding in relation to listed African peers. The current dearthof buyers is likely to persist until foreign institutional investor interest in the market is revived.This may well take some time as considerable negative sentiment was created as the illiquidity ofthe market was exacerbated by further delays experienced by foreign investors in sourcing foreignexchange to remit the proceeds of disinvestment. In the short term, the market is, on balance, likelyto remain flat.The adverse consequences of the prolonged and continuing foreign exchange shortage, hithertomost keenly felt in high import dependent industries such as manufacturing, are becoming morepervasive and affecting most industry sectors. Companies with a strong foreign currency earningsbase, such as Illovo and Auction Holdings, may be more insulated. But even they may see kwachainflation erode margins on foreign exchange denominated sales if the authorities persist with afixed exchange rate policy. 03
  • Annual Report 2009Fund Manager’s Report (cont’d)We believe, however, that, despite what may be a challenging economic environment, ourportfolio of investments is well balanced and sufficiently diversified to ensure continued growthin distributable earnings going forward into 2010. In due course, though perhaps not in the near –term, this growth should translate into appreciation in the capital value of the portfolio.First Merchant Bank Limited10 November 2009 04
  • Annual Report 2009Directors’ ReportNature of BusinessThe Company is a closed end collective investment scheme established with the objective ofproviding investors with the opportunity to invest in a diversified portfolio of equity investmentsin Malawi. The Company’s investment policy, which has been fully complied with during the year,appears on page 2.Share capitalDetails of the current authorised and issued share capital are set out on note 14. An analysis ofshareholders by type and holding is set out on page 32.DividendsAn interim dividend of 22 tambala per share (2008: 22 tambala) was paid on 19th June 2009 toshareholders registered in the Company’s share register on 12th June 2009. The directorsrecommend a final dividend of 27 tambala per share (2008: 17 tambala) for declaration at theforthcoming annual general meeting.DirectorsThe following directors served in office during the year. During the year under review, five Boardmeetings were held. Attendance Attendance Record %D. J. Kamwaza (Chairman) 5/5 100A. T. Konyani 5/5 100R. E. Mdeza 5/5 100V. H. Masikini 5/5 100W. G. Nyengo 5/5 100M. Sosola 2/5 40B. Movete (appointed 6th August 2009) 1/1 100E. Mwapasa (resigned 12th December 2008) 2/2 100All directors are non-executive.The regulations governing collective investment schemes stipulate that the majority of directors ofthe Company must not be affiliated persons. None of the directors are affiliated personsIn terms of the Company’s articles of association Mrs. V.H. Masikini and Miss A.T. Konyani retireat the forthcoming annual general meeting and being eligible offer themselves for re-election. Aresolution will also be put to the meeting seeking confirmation of the appointment of Mrs B.Movete who was co-opted onto the Board to fill a casual vacancy arising during the year. TheNomination and Remuneration Committee of the Board recommends the re-election of the retiringdirectors and confirmation of the appointment of Mrs B. Movete.Other than as disclosed in note 18 to the financial statements, none of the directors held a direct orindirect interest in the shares of the Company as at the reporting date.Statement on corporate governanceThe Company has a unitary Board of directors comprising seven Non-Executive Directors. Thereare no Executive Directors. 05
  • Annual Report 2009Directors’ Report (cont’d)The Board complies with the major principles of modern corporate governance as contained in theCode of Best Practice for Corporate Governance in Malawi and the Cadbury and King reports.The Board meets atleast four times a year. Adequate and efficient communication and monitoringsystems are in place to ensure that the Directors receive all relevant information to guide them inmaking necessary strategic decisions, and providing effective leadership, control and strategicdirection over the Company’s operations, and in ensuring that the Company fully complies withrelevant legal, ethical and regulatory requirements.In accordance with the Code of Best Practice for Corporate Governance in Malawi, the Boardregularly assesses its performance and effectiveness as a whole and that of individual Directors.Board Committeesa) Audit Committee The Audit Committee comprises Mr. R. Mdeza B. Comm, FCCA, CPA(Mw) and Mrs. V. Masikini, CIMA. The Committee, which conducts its business in accordance with detailed terms of reference: monitors the integrity of the financial statements of the Company and any formal announcements relating to the Company’s financial performance, including reviewing significant financial reporting judgements contained in them; reviews the Company’s internal financial controls to ensure the operation of adequate systems and control processes to safeguard the Company’s assets; reviews the Company’s policies and procedures to ensure they adequately address compliance and regulatory issues; monitors and reviews the effectiveness of the Company’s internal audit function; oversees the company’s relationship with its external auditor and reviews and monitors the external auditor’s independence and objectivity and the effectiveness of the audit process; makes recommendations to the Board, for it to put to shareholders for their approval in general meeting, in relation to the appointment and remuneration of external auditors During the year under review the Audit Committee held two meetings and both members of the Committee attended both meetings. There were no disagreements between the Audit Committee and the Board of Directors.b) Investment Committee The Board has appointed an Investment Committee whose role is to supervise and assist the managers of the Company in their investment decisions. Messrs Nyengo and Sosola and Ms Konyani serve on the Investment Committee. The managers report to the Investment Committee on any investment purchases and disposals and they also have to seek prior authorisation from the Committee before undertaking transactions with a value in excess of K20 million. Transactions with a value in excess of K40 million require approval of the Board of Directors. During the year under review, four Investment Committee meetings were held. Attendance Attendance Record %M. Sosola 3/4 75A. T. Konyani 4/4 100W. G. Nyengo 4/4 100 06
  • Annual Report 2009c) Nomination and Remuneration Committee This Committee comprises three non-executive directors Messrs Kamwaza and Nyengo and Mrs Masikini. The Committee reviews on a regular basis the composition, size and balance of the full Board to ensure that the Board is not lacking in skills or experience and adequately represents the interests of the shareholders as a whole. Additionally, the Committee deliberates on the appropriate level of remuneration of directors to be recommended for approval by the shareholders in general meeting. This Committee also makes recommendations to the Board on the appointment and contractual terms of appointment of the Fund Manager. During the year under review five Nomination and Remuneration Committee meetings were held.Ethical StandardsThe Board is fully committed to ensuring the Company’s affairs are conducted with integrity andthat the highest ethical standards are maintained.Director’s feesCurrently, directors receive an annual fee of K420,000 each, together with sitting allowances at therate of K21,600 per meeting for the chairman and K18,000 per meeting for other directors.At the forthcoming annual general meeting, it will be proposed that fees and sitting allowances beincreased based on recommendations from the Nomination and Remuneration Committee of theBoard.ManagementThe Company has an agreement for a period of two years commencing from 1 January 2009 withFirst Merchant Bank Limited (FMB) under the terms of which FMB is contracted as sole managerof the Company.Subject to the overall policy and direction of the Board, FMB has day to day administrative andgeneral control and discretion in the management, in accordance with the investment policy, of thefunds and investments of the Company throughout the term of the agreement.Specific duties of FMB include: to ensure adequate administrative, secretarial, accounting, financial and internal control systems are maintained. to ensure the establishment of acceptable custodial arrangements to ensure the safe custody of the Company’s assets.FMB is a commercial bank, licensed in Malawi under the Banking Act, and also licensed as aninvestment/portfolio manager by Reserve Bank of Malawi under the authority vested in it by theCapital Markets Development Act.Independent auditorsThe auditors, KPMG, have signified their willingness to continue in office and a resolution toconfirm their re-appointment as auditors in respect of the year ending 30 September 2010, is to beproposed at the forthcoming annual general meeting.D. J. Kamwaza R. E. MdezaChairman Director10 November 2009 07
  • Annual Report 2009Statement of Directors’ responsibilitiesFor the year ended 30 September 2009The Malawi Companies Act, 1984, Cap. 46:03, requires the directors to prepare financial statements foreach financial year, which give a true and fair view of affairs of the company as at the end of thefinancial year and of the operating results and cash flows for that year. The directors are responsiblefor preparing the company’s financial statements in accordance with Malawi Companies Act, 1984,Cap: 46:03, and International Financial Reporting Standards (IFRS).In preparing those financial statements, the directors are required to: select suitable accounting policies and then apply them consistently; make judgments and estimates that are reasonable and prudent; comply with International Financial Reporting Standards when preparing financial statements subject to any material departures disclosed and explained in the financial statements Prepare the company’s financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.The directors confirm that they have complied with the above requirements in preparing the financialstatements.The directors are responsible for keeping proper accounting records that disclose with reasonableaccuracy at any time the financial position of the company. They are also responsible for safeguardingthe assets of the company and taking reasonable steps for the prevention and detection of fraud andother irregularities.Nothing has come to the attention of the directors to indicate that the company will not remain a goingconcern for at least the next twelve months from the date of this statement.The directors are of the opinion that the financial statements give a true and fair view of the financialaffairs of the company and of their operating results and cash flows.Approval of the financial statementsThe financial statements of the company as indicated above, were approved by the board of directorson 10 November 2009 and are signed on its behalf by:D.J. Kamwaza R.E. MdezaChairman Director 08
  • Annual Report 2009 KPMG Telephone : (265) 01 820 744/01 820 391 Public Accountants and Business Advisors Fax: (265) 01 820 575 MASM House, Lower Sclater Road E-mail: kpmg@kpmgmw.comIndependent Auditor’s Report to the members of The P. O. Box 508, Blantyre, MalawiNational Investment Trust LimitedWe have audited the accompanying financial statements of The National Investment TrustLimited, which comprise the statement of financial position as at 30 September 2009, and thestatement of comprehensive income, statement of changes in equity and cash flow statement forthe year then ended, and a summary of significant accounting policies and other explanatory notesas set out on pages 10 to 31.Directors’ responsibility for the financial statementsThe Company’s directors are responsible for the preparation and fair presentation of thesefinancial statements in accordance with International Financial Reporting Standards and incompliance with the provisions of the Malawi Companies Act, 1984. This responsibility includes:designing, implementing and maintaining internal control system relevant to the preparation andfair presentation of the financial statements that are free from material misstatement, whether dueto fraud or error; selecting and applying appropriate accounting policies; and making accountingestimates that are reasonable in the circumstances.Auditor’s responsibilitiesOur 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 standardsrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance whether the financial statements are free of material misstatement.An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on our judgement,including the assessment of the risks of material misstatement of the financial statements, whetherdue to fraud or error. In making those risk assessments, we consider internal control systemrelevant to the entity’s preparation of the financial statements in order to design audit proceduresthat are appropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the entity’s internal control system. An audit also includes evaluating theappropriateness of accounting policies used and reasonableness of accounting estimates made bymanagement, as well as evaluating the overall presentation of the financial statements.We believe that the audit evidence we have obtained is sufficient to provide a basis for our auditopinion.OpinionIn our opinion, the financial statements, give a true and fair view in all material respects of thefinancial position of The National Investment Trust Limited as at 30 September 2009, and itsfinancial performance and its cash flows for the year then ended in accordance with InternationalFinancial Reporting Standards and in compliance with the provisions of the Malawi CompaniesAct 1984.Certified Public Accountants and Business AdvisorsBlantyre10 November 2009 Resident Partners: L. M. Gama, H. B. Nyirenda, B. J. Mwenelupembe KPMG Malawi is a member firm of KPMG International a Swiss Cooperative. 9
  • Annual Report 2009Statement of Comprehensive IncomeFor the year ended 30 September 2009In thousand Malawi Kwacha Notes 2009 2008Income Re-presentedDividend income 5 115,842 99,559Interest income 6 1,425 1,798Fair value (loss)/gain on equity investments 7 (319,810) 781,524Total net income (202,543) 882,881ExpenditureAuditor’s remuneration - fee 1,200 900 - other expenses 198 149Directors’ remuneration - fees 2,730 2,450 - allowances 914 678Management fees 8 18,308 26,609Listing expenses 3,293 2,649Transfer secretarial fees 1,021 813Communication costs 2,544 1,553Consultancy fees 178 577Other 223 388Total expenditure 30,609 36,766(Loss)/profit before taxation (233,152) 846,115Income tax expense 9 (157) (42,981)(Loss)/profit for the year (233,309) 803,134Attributable to:Equity holders of the Company (233,309) 803,134(Loss)/earning per share (tambala)Basic and diluted 10 (173) 595 10
  • Annual Report 2009Statement of financial positionAs at 30 September 2009In thousand Malawi Kwacha Notes 2009 2008AssetsEquity investments 11 2,510,911 2,825,194Income notes 12 1 1Dividends receivable 3,229 8,372Prepaid expenses 833 792Cash and cash equivalents 13 51,723 26,811Total assets 2,566,697 2,861,170Equity and liabilitiesShareholders’ equityShare capital 14 2,700 2,700Share premium 169,550 169,550Retained earnings 2,353,420 2,639,379Total shareholders’ equity 2,525,670 2,811,629LiabilitiesNon-currentDeferred tax liability 15 17,378 25,735Current liabilitiesProvision for withholding tax on dividends 323 737Current income tax liability 3,961 3,720Trade and other payables 16 19,365 19,349Total current liabilities 23,649 23,806Total liabilities 41,027 49,541Total equity and liabilities 2,566,697 2,861,170The financial statements of the Company were approved by the Board of Directors on 10November 2009 and were signed on its behalf by:D. J. Kamwaza R.E. MdezaChairman Director 11
  • Annual Report 2009Statement of changes in equityFor the year ended 30 September 2009In thousand Malawi Kwacha Share Share Retained capital premium earnings TotalAt 1 October 2007 2,700 169,550 1,880,795 2,053,045Dividends paid to Shareholders (44,550) (44,550)Total comprehensive income for the year - - 803,134 803,134At 30 September 2008 2,700 169,550 2,639,379 2,811,629At 1 October 2008 2,700 169,550 2,639,379 2,811,629Dividends paid to Shareholders (52,650) (52,650)Total comprehensive income for the year - - (233,309) (233,309)At 30 September 2009 2,700 169,550 2,353,420 2,525,670 12
  • Annual Report 2009Statement of cash flowsfor the year ended 30 September 2009In thousand Malawi Kwacha Note 2009 2008Cashflows from operating activitiesDividends received 120,985 93,685Interest received 6 1,425 1,798 122,410 95,483Operating expenditure (32,880) (35,252) 89,530 60,231Taxes paid (8,688) (9,335)Net cash from operating activities 80,842 50,896Cashflows from investing activitiesPurchase of shares 11 (5,527) (127,255)Proceeds from sale of shares - 129,998Net cash (utilized in)/from investing activities (5,527) 2,743Cashflows from financing activitiesDividends paid (50,403) (42,724)Net increase in cash and cash equivalents 24,912 10,915Cash and cash equivalents at beginning of year 26,811 15,896Cash and cash equivalents at end of year 13 51,723 26,811 13
  • Annual Report 2009Notes of the financial statementsfor the year ended 30 September 20091. Reporting entity National Investment Trust Limited is a limited liability company domiciled and incorporated in Malawi under the Malawi Companies Act, 1984. The business objective of the company is to provide investors with an opportunity to invest in a diversified portfolio of equity investment in Malawi. The company’s registered office is C/o First Merchant Bank, Private Bag 122, Livingstone Towers, Blantyre, Malawi.2. Basis of preparation(a) Statement of compliance The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and its interpretations adopted by the International Accounting Standards Board (IASB) and provisions of the Malawi Companies Act; 1984.(b) Nature of business To provide a vehicle to facilitate broad public participation in a diverse portfolio of equity investments in Malawi.(c) Basis of measurement The financial statements are prepared on the historical cost basis except for financial instruments at fair value through profit or loss, which are measured at fair value and financial instruments measured at amortised cost. The methods used to measure fair values are discussed further in note 3.(d) Presentation of financial statements The company applies IAS 1: Presentation of financial statements (2007) which became effective on 1 January 2009. The company has early adopted the standard. As a result of the change the company presents results in the statement of changes in equity all owner changes in equity where as all non owner changes in equity are presented in the statement of comprehensive income. Comparative information has been re-presented so that it is also in conformity with the revised standard. Since the change in accounting policy only impacts presentation aspects, there is no impact on earnings per share.(e) Functional and presentation currency These financial statements are presented in Malawi Kwacha, which is the Company’s functional currency. Except as indicated, financial information presented in Malawi Kwacha has been rounded to the nearest thousand.(f) Use of estimates and judgements The preparation of financial statements in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. 14
  • Annual Report 2009Notes of the financial statementsfor the year ended 30 September 20092. Basis of preparation (cont’d)(f) Use of estimates and judgements (cont’d) Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements are described in note 19.3. Significant accounting policies The accounting policies set out below have been consistently applied by the company and are consistent with those used in the previous year, except for: Presentation of financial statements IAS 1 which has been early adopted.(a) Financial instruments Financial assets and financial liabilities are recognized on the Company’s statement of financial position when the Company becomes a party to the contractual provisions of the instrument. (i) Fair value measurement The determination of fair values of financial assets and financial liabilities is based on quoted market prices or dealer price quotations for financial instruments traded in active markets. For all other financial instruments fair value is determined by using valuation techniques. The Company uses widely recognised valuation models for determining the fair value of common and more simple financial instruments. For these financial instruments, inputs into models are market observable. The value produced by a technique is adjusted to allow for a number of factors as appropriate, because valuation techniques cannot appropriately reflect all factors market participants take into account when entering into a transaction. Management believes that these valuation adjustments are necessary and appropriate to fairly state financial instruments carried at fair value on the statement of financial position. (ii) Identification and measurement of impairment At each reporting date the Company assesses whether there is objective evidence that financial assets not carried at fair value through profit or loss are impaired. Financial assets are impaired when objective evidence demonstrates that a loss event has occurred after the initial recognition of the asset, and that the loss event has an impact on the future cash flows from the asset that can be estimated reliably. The Company considers evidence of impairment at both a specific asset and collective level. All individually significant financial assets are assessed for specific impairment. All significant assets found not to be specifically impaired are then collectively assessed for any impairment that has been incurred but not yet identified. Assets that are not individually significant are then collectively assessed for impairment by grouping together financial assets (carried at amortised cost) with similar risk characteristics. 15
  • Annual Report 2009Notes of the financial statementsfor the year ended 30 September 20093. Significant accounting policies (cont’d)(a) Financial instruments (Continued) (ii) Identification and measurement of impairment (cont’d) Objective evidence that financial assets (including equity securities) are impaired can include default or delinquency by a borrower, restructuring of a loan or advance by the Company on terms that the Company would not otherwise consider, indications that a borrower or issuer will enter bankruptcy, the disappearance of an active market for a security, or other observable data relating to a group of assets such as adverse changes in the payment status of borrowers or issuers in the group, or economic conditions that correlate with defaults in the group. Impairment losses on assets carried at amortised cost are measured as the difference between the carrying amount of the financial assets and the present value of estimated cash flows discounted at the assets’ original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance account against the related financial asset. Interest on the impaired asset continues to be recognised through the unwinding of the discount. When a subsequent event causes the amount of impairment loss to decrease, the impairment loss is reversed through profit or loss. (iii) Cash and cash equivalents Balances with banks comprise demand deposits and other short term highly liquid instruments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. Treasury bills (including repos) are classified as held for trading and are initially and at subsequent reporting dates measured at fair value. Gains or losses arising from changes in fair value are included in profit or loss for the period. (iv) Other financial assets Other financial assets which include dividends and other sundry receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest method. (v) Creditors Creditors are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest method.(b) Equity investments Equity investments are recognized and derecognised on a trade date basis where the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the time frame established by the market, and are initially measured at fair value. The Company’s equity investments are classified as investments held for trading, and are measured at subsequent reporting dates at fair value. Gains or losses arising from changes in fair value are included in profit or loss for the period. 16
  • Annual Report 2009Notes of the financial statementsfor the year ended 30 September 20093. Significant accounting policies (cont’d)(c) Revenue recognition Interest income is recognised in the statement of comprehensive income for all interest bearing instruments on an accrual basis using the effective interest basis. Dividend income is recognised when the Company has an unconditional right to receive the income (usually the date on which trading in the underlying investment becomes “ex-dividend”).(d) Expenses All expenses, including management fees are recognised in the statement of comprehensive income on an accrual basis.(e) Taxation Taxation on the profit or loss for the year comprises current tax (including taxation withheld on dividend income) and deferred taxation. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the statement of financial position date, and any adjustment to tax payable in respect of previous years. Deferred tax is provided using the full liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantially enacted at the reporting date.(f) New standards and interpretations not yet adopted A number of new standards, amendments to standards and interpretations are not yet effective for the year ended 30 September 2009, and have not been applied in preparing these financial statements: IFRS 8 Operating Segments introduces the “management approach” to segment reporting. IFRS 8, which becomes mandatory for the period commencing on or after 1 January 2009, will require the disclosure of segment information based on the internal reports regularly reviewed by the Company’s management in order to assess each segment’s performance and to allocate resources to them. It is expected to have impact on the disclosures in the financial statements. Revised IAS 23 Borrowing Costs removes the option to expense borrowing costs and requires that an entity capitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. The revised IAS 23 which will become mandatory for reporting periods commencing on or after 1 January 2009 is not expected to have any impact on the financial statements. IAS 39 amendment Eligible Hedged Items. The IAS 39 amendment is applicable for reporting periods commencing on or after 1 January 2009. The amendment is not expected to have any impact on the company s financial statements. 17
  • Annual Report 2009Notes of the financial statementsfor the year ended 30 September 20093. Significant accounting policies (cont’d)(f) New standards and interpretations not yet adopted (Continued) IAS 27 amendment Consolidated and Separate Financial Statements. The IAS 27 amendment is applicable for reporting periods commencing on or after 1 January 2009. The amendment is not expected to have any impact on the company s financial statements. IFRS 1 and IAS 27 amendment Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate. The IFRS1 and IAS 27 amendment is applicable for reporting periods commencing on or after 1 January 2009. The amendment is not expected to have any impact on the financial statements. IFRS 2 amendment Share-based Payment: Vesting Conditions and Cancellations. The IFRS 2 amendment is applicable for reporting periods commencing on or after 1 January 2009. No impact is expected on the entity s 2010 financial statements. IFRS 2 amendment Group Cash-settled Share-based Payment. The IFRS 2 amendment is applicable for reporting periods commencing on or after 1 January 2010. The amendment is not expected to have any impact on the financial statements. IFRS 3 Business Combinations. This standard is applicable for reporting periods commencing on or after 1 January 2009. It is not expected to have any impact on the company s financial statements. IFRS 7 amendment Improving disclosures about financial instruments. The IFRS7 amendment is applicable for reporting periods commencing on or after 1 January 2009. This amendment will affect Amendments to IAS 32 and IAS 1 Presentation of Financial Statements - Puttable Financial disclosures in the company s 2010 financial statements. Instruments and Obligations Arising on Liquidation require puttable instruments and instruments that impose on the entity an obligation to deliver to another party a pro rata share of the net assets of the entity only on liquidation to be classified as equity if certain conditions are met. The amendments, which become mandatory for periods commencing on or after 1 January 2009 with retrospective application required is, not expected to have any impact on the financial statements. IFRIC 15 Agreements for the Construction of Real Estate. The IFRIC 15 is applicable for reporting periods commencing on or after 1 January 2009. No impact is expected on the company s financial statements. IFRIC 17 Distribution of Non-Cash Assets to Owners. The IFRIC 17 is applicable for reporting periods commencing on or after 1 January 2009. No impact is expected on the company s financial statements. IFRIC 18 Transfer of Assets from Customers. IFRIC 18 is applicable for reporting periods commencing on or after 1 January 2009. This IFRIC is not expected to have impact on the entity s financial statements. 18
  • Annual Report 2009Notes to the financial statementsfor the year ended 30 September 20094. Determination of fair values A number of the company’s accounting policies and disclosures require determination of fair value for both financial and non financial assets and liabilities. Fair values have been determined for measurement and for disclosure purposes based on the following methods. When applicable, further information about the assumptions made in determining fair value is disclosed in the notes specific to that asset or liability. Trade and other receivables Trade and other receivables is estimated as the present value of the future cashflows discounted at market rate of interest at the reporting date. This fair value is determined for disclosure purposes. 2009 20085. Dividend income Auction Holdings Limited 8,983 3,000 Dairibord Malawi Limited - 1,600 Illovo Sugar (Malawi) Limited 50,673 40,145 Kang’ombe Investment Limited 7,500 6,250 Malawi Property Investment Company Limited 229 213 National Bank of Malawi 20,432 16,502 NBS Bank Limited 9,825 14,738 NICO Holdings Limited 2,272 3,060 Packaging Industries Malawi Limited 72 416 Press Corporation Limited 4,966 8,169 Standard Bank Limited 10,779 5,466 Telekom Networks Malawi Limited 111 - Total dividend income 115,842 99,5596. Interest income Funds at call and on deposit 1,425 1,798 19
  • Annual Report 2009Notes to the financial statementsfor the year ended 30 September 2009In thousand of Malawi Kwacha 2009 20087. Fair value (loss)/gain on equity investments Net (decrease)/increase in fair value of unlisted equity investments (37,717) 127,227 Net (decrease)/increase in fair value of listed equity investments (282,093) 654,297 Net (decrease)/increase in fair value of equity investments (319,810) 781,524 Represented by: (Decrease)/increase in fair value of unlisted equity investments (37,717) 127,227 Increase in fair value of listed equity investments 131,000 655,856 Decrease in fair value of listed equity investments (413,093) (1,559) Net (decrease)/increase in fair value of listed equity investments (282,093) 654,297 Net (decrease)/increase in fair value of equity investments (319,810) 781,524 Of which realized through disposal - ( 7,175) Unrealized net (decrease)/increase in fair value (319,810) 774,3498. Management fees Fee payable 15,904 22,840 Value added tax 2,404 3,769 18,308 26,6099. Income tax expense Current income tax – current year provision 316 486 – prior year underprovision - 7,130 Deferred income tax (8,357) 25,735 Dividend tax 8,198 9,630 157 42,981Income tax using company income tax rate of 30% (2008: 30%) (69,946) 253,834Non deductible expenditure 9,071 10,812Non taxable element of fair value increase in investments 87,586 (207,261)Dividends received (34,752) (29,868)Adjustment to deferred tax provided in respect of prior years - 12,227Adjustment to income tax provided in respect of prior years - 7,130 (8,041) 46,874Deferred tax (provided) not provided - (13,523) (8,041) 33,351Tax withheld on dividends 8,198 9,630Income tax in statement of comprehensive income 157 42,981 20
  • Annual Report 2009Notes to the financial statementsfor the year ended 30 September 2009In thousand of Malawi Kwacha9. Income tax expense (cont’d) The Company is currently appealing against a ruling by the Malawi Revenue Authority (MRA) to not allow a deduction for tax purposes of certain expenditure incurred for the purposes of its trade.10. Earnings per share Basic earnings per share The calculation of basic earnings per share at 30 September 2009 was based on the loss attributable to ordinary shareholders of K233,309,000 (2008: profit of K803,134,000) and the number of ordinary shares in issue at 30 September 2009 of 135,000,000 (2008: 135,000,000) 2009 2008 (Loss)/profit attributable to ordinary shareholders (233,309) 803,134 Number of ordinary shares in issue (‘000) 135,000 135,000 Earnings per share (tambala) (173) 595 Diluted earnings per share The diluted earnings per share are equal to the basic earnings per share as there were no potential dilutions in earnings identified at year end. 21
  • Annual Report 2009Notes to the financial statementsfor the year ended 30 September 2009In thousand of Malawi Kwacha11. Equity investments 2009 2008 Cost 328,319 322,792 Adjustment to fair value 2,182,592 2,502,402 Fair value 2,510,911 2,825,194 Fair value of equity investments is analysed as: Listed: Illovo Sugar (Malawi)Limited 891,837 1,094,527 Malawi Property Investment Company Limited 4,335 7,689 National Bank of Malawi 335,761 357,656 NBS Bank Limited 458,500 327,500 Nico Holdings Limited 75,724 75,724 Packaging Industries Malawi Limited 8,964 8,964 Press Corporation Limited 261,663 432,750 Standard Bank Limited 202,012 216,079 Telekom Networks Malawi Limited 5,527 - 2,244,323 2,520,889 Unlisted: Auction Holdings Limited 27,430 27,430 Dairibord Malawi Limited 14,158 51,875 Kang’ombe Investment Limited 225,000 225,000 266,588 304,305 2,510,911 2,825,194 Adjustment to fair value At beginning of year 2,502,402 1,845,399 Fair value (losses)/gains during year (319,810) 774,349 Realised on disposal - (117,346) At end of year 2,182,592 2,502,402 There has been no movement in the fair value of Auction Holdings Limited and Kang’ombe Investments Limited as the valuation has been based on the most recent transactions regarding the shares of the respective companies. 22
  • Annual Report 2009Notes to the financial statementsfor the year ended 30 September 2009In thousand of Malawi Kwacha11. Equity investments (cont’d) At the reporting date the equity investment portfolio comprised: Percentage Number of shares shareholding 2009 2008 2009 2008 African Lotteries Limited 0.8 0.8 300,000 300,000 Auction Holdings Limited 5.0 5.0 45,716,970 45,716,970 Dairibord Malawi Limited 20.0 20.0 200,000 200,000 Illovo Sugar (Malawi)Limited 1.1 1.1 8,107,611 8,107,611 Kang’ombe Investment Limited 25.0 25.0 500,000,000 500,000,000 Malawi Property Investment Company Limited 0.1 0.1 1,635,960 1,635,960 National Bank of Malawi 1.2 1.2 5,690,853 5,588,376 NBS Bank Limited 6.6 6.6 32,750,000 32,750,000 Nico Holdings Limited 0.8 0.8 8,413,800 8,413,800 Packaging Industries Malawi Limited 2.1 2.1 1,434,205 1,434,205 Press Corporation Limited 1.7 1.7 2,012,791 2,012,791 Standard Bank Limited 1.3 1.3 2,711,574 2,542,100 Telekom Networks Malawi Limited <0.1 - 2,763,500 -12. Income notes African Lotteries Limited – at cost 2,850 2,850 Impairment provision (2,849) (2,849) 1 1 The Company holds 22,800 income notes of nominal value US$1 each in African Lotteries Limited which bear interest at a variable rate ranging from 12% to 20% per annum. There is no specific repayment date.13. Cash and cash equivalents 2009 2008 Funds at call and on deposit 36,076 21,658 Balances with banks 15,647 5,153 Total cash and cash equivalents 51,723 26,811 23
  • Annual Report 2009Notes to the financial statementsfor the year ended 30 September 2009In thousand of Malawi Kwacha14. Capital and reserves The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meeting of the Company. All shares rank equally with regard to the Company’s residual assets. Share capital 2009 2008 K K Authorised share capital 150,000,000 ordinary shares of 2 tambala each 3,000,000 3,000,000 Issued and fully paid 135,000,000 ordinary shares of 2 tambala each 2,700,000 2,700,000 Retained earnings Included in the reported retained earnings are unrealised gains on the change in fair value of equity investments held at fair value through profit or loss net of related deferred taxation totalling K2,304,169,000 (2008: K2,615,620,000), which are not available for distribution to shareholders.15. Deferred tax Deferred tax is calculated, in full, on all temporary differences under the liability method using the enacted tax rate of 30% (2008: 30%). The movement on the deferred tax account is as follows: 2009 2008 Balance at 1 October 25,735 - Statement of financial position charge (note 8) (8,357) 25,735 Balance at 30 September 17,378 25,73516. Trade and other payables Accrued operating expenses 9,258 13,022 Value added tax 3,314 1,781 Unclaimed dividends payable to shareholders 6,793 4,546 Total creditors payable within one year 19,365 19,349 24
  • Annual Report 2009Notes to the financial statementsfor the year ended 30 September 2009In thousand of Malawi Kwacha17. Financial risk management Overview The Company has exposure to the following risks from its use of financial instruments: Credit risk; Liquidity risk; Market risk. This note presents information about the Company’s exposure to each of the above risks, the Company’s objectives, policies, and processes for measuring and managing risk, and the Company’s management of capital. Further quantitative disclosures are included throughout these financial statements. The Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The Board has developed risk management policies principal among which is the Investment Policy outlined on page 2 of this Annual Report. The Investment Committee and the Fund Manager are expected to adhere at all times to the Investment Policy. The Investment Committee reports regularly to the Board of Directors on its activities. The Company’s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities. The Company’s Audit Committee oversees how management monitors compliance with the Company risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The Company Audit Committee is assisted in its oversight role by the Fund Managers’ internal audit department which undertakes reviews of risk management controls and procedures, the results of which are reported to the Audit Committee. Credit risk Credit risk is the risk of financial loss to the Company if a counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Company’s investments. Money market investments are limited to government paper and to deposits with licensed financial institutions. The table below shows the maximum credit exposure as at the reporting date: Note 2009 2008 Dividends receivable 3,229 8,372 Funds on call 12 36,076 21,658 Cash and bank balances 12 15,647 5,153 54,952 35,183 25
  • Annual Report 2009Notes to the financial statementsfor the year ended 30 September 200917. Financial risk management (cont’d) Credit risk (cont’d) The company holds its deposits with several licensed commercial banks. The company limits its exposure to credit risk by investing a large portion of portfolio in liquid securities which are valued at market trade values. Impairment losses The Company’s policy for recognition of impairment losses is described in note 3a(ii). An impairment loss provision of K2,899,000 (2008:K2,899,000) is being carried in respect of an investment in African Lotteries Limited, an unlisted company which has incurred significant losses since it commenced its operations. This company was restructured during 2008 but the asset remains fully impaired until such time as a period of sustained profitability demonstrates that this company will be able to service its income note obligations and provide a return to its shareholders. Liquidity risk Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company’s approach to managing liquidity risk is to ensure, as far as possible, that it has sufficient liquidity to meet liabilities when they fall due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation. The Company maintains sufficient funds in liquid money market investments to meet foreseeable operating expenses. The Company’s financial instruments include investments in unlisted equity investments, which are not traded in an organised public market and which generally may be illiquid. As a result, the Company may not be able to liquidate quickly some of its investments in these instruments at an amount close to fair value in order to meet its liquidity requirements, or to respond to specific events such as a deterioration in the financial position of any particular issuer. 26
  • Annual Report 2009Notes to the financial statementsfor the year ended 30 September 2009In thousand of Malawi Kwacha17. Financial risk management (cont’d) Liquidity risk (cont’d) The Company’s Investment Policy sets maximum permitted limits for investments in unlisted equities. Compliance position as at 30 September 2009: Permitted Current limit position 1. Equities % of portfolio invested in equities 100% 98% % of portfolio in individual listed company 40% 35% % of portfolio in individual unlisted company 10% 9% 2. Bonds % of portfolio invested in bonds 25% Nil % of portfolio in bonds of single private sector issues 10% Nil 3. Property % of portfolio invested in property companies/equities 25% 9% % of portfolio in a single property investment 10% 9% 4. Cash equivalents 100% 2% 5. Speculative investments Nil Nil Due within Fair 30 September 2009 Month Total Value Financial liabilities Payables 19,365 19,365 19,365 30 September 2008 Financial liabilities Payables 19,349 19,349 19,349 Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity and commodity prices will affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk. The Company’s market risk is managed on a daily basis by the Fund Manager in accordance with policies and procedures in place. The Company’s overall market positions are monitored by the Audit Committee and reported on a quarterly basis to the Board of Directors. 27
  • Annual Report 2009Notes to the financial statementsfor the year ended 30 September 200917. Financial risk management (cont’d)(a) Currency risk As the company had no significant foreign denominated financial assets, save for a full impaired US dollar denominated income note, and foreign denominated financial liabilities, the company’s income and operating cashflows are substantially independent of changes in foreign exchanges rates.(b) Interest rate risk The Fund Manager is not permitted to borrow funds without the sanction of the Board of Directors who, in turn, may not, unless sanctioned by an ordinary resolution of shareholders, borrow in excess of the aggregate of the Company’s share capital and reserves. However, since incorporation, the Directors have not exercised their borrowing powers and, accordingly, the Company is not exposed to interest risk on borrowings. At the reporting date, the Company has only invested in fixed rate financial instruments. The company does not account for any fixed rate financial instruments at fair value through profit or loss as the debt securities market is fairly illiquid. Therefore, a change in interest rates at the reporting date would not affect profit and loss.(c) Market price risk Equity price risk arises from the Company’s held for trading equity securities. The Company seeks to manage individual equity risk through diversification of its investments within its Investment Policy guidelines on individual investments and/or broad classes of investments. The Fund Manager and the Investment Committee manage risk on an ongoing basis. Due to the nature of its business, the Company is always exposed to overall market price risk. Sensitivity analysis – equity price risk The carrying value, at latest trading price, of shares listed on the Malawi Stock Exchange (MSE) represents 87% (2008: 88%) of the Company’s total asset value. Although not directly correlated, it could be expected that the overall value of this portfolio would move broadly in line with movements in the MSE Domestic Share Index. The domestic share index on 30 September 2009 was 4962.20 (2008:5936.10) Capital management The Board’s policy is to maintain its capital base in real terms by not distributing unrealised fair value gains on revaluation of equities or realised profit on sale of equity investments. 28
  • Annual Report 2009Notes to the financial statementsfor the year ended 30 September 200918 Related parties Fund Manager The Company entered into a management agreement with First Merchant Bank Limited, a licenced bank and licenced investment/portfolio manager. Management fees for the year amounted to K15.9 million (2008:K22.8 million). Included in accounts payable at 30 September 2009, is management fees payable of K 6.6 million (2008: K9.7 million). The fund manager provides banking services to the Company. Balances amounting to K15.6 million (2008: K5.2 million) were held at First Merchant Bank Limited. Interest earned on these balances during the year was K0.05 million (2008:K0.06 million). The transactions are done at arm’s length. Fund Manager (cont’d) At various times during the year funds have been placed on short-term deposit at normal commercial rates of interest with The Leasing and Finance Company of Malawi Limited, a subsidiary of First Merchant Bank Limited. Interest earned on these balances during the year was K1.1 million (2008: K1.3 million). At the reporting date the Company had no investments (2008: K21.7 million) with The Leasing and Finance Company of Malawi Limited. As required by the Malawi Stock Exchange listing rules, First Merchant Bank Limited as fund manager are required to hold a minimum of 5% of the issued share capital of the Company. At 30 September 2009, 11,767,447 (2008: 11,767,447) issued shares of the Company were held by First Merchant Bank Limited. At 30 September 2009, FMB Pension Fund whose assets are managed by First Merchant Bank Limited held 6,012,314 (2008:5,577,314) shares in the Company. At 30 September 2009, directors of First Merchant Bank Limited had beneficial interests in the Company totalling 463,000 (2008:213,000) shares. Directors’ fees Total directors’ fees are disclosed in the statement of comprehensive income. A listing of the members of the Board of Directors is shown on page 5 of the annual report. Directors’ interests As at 30th September 2009, the total direct and indirect interests of the directors and related parties thereto in the issued share capital of the Company were as follows: 2009 2008 D.J. Kamwaza 110,000 110,000 R.E. Mdeza 32,700 16,10019. Critical accounting estimates and judgements19.1 Fair values of financial instruments Many of the Company’s financial instruments are measured at fair value on the statement of financial position and it is usually possible to determine their fair values within a reasonable range of estimates. 29
  • Annual Report 2009Notes to the financial statementsfor the year ended 30 September 200919. Critical accounting estimates and judgements (cont’d) For the majority of the Company’s financial instruments, quoted market prices are readily available. However, certain financial instruments for example, unlisted equity investments are fair valued using valuation techniques, including reference to the current fair values of other instruments that are substantially the same (subject to the appropriate adjustments). Fair value estimates are made at a specific point in time, based on market conditions and information about the financial instruments. These estimates are subjective in nature and involve uncertainties and matters of significant judgement and, therefore, cannot be determined with precision. For certain other financial instruments, including other receivables and other payables, the carrying amounts approximate fair value due to the immediate or short–term nature of these financial instruments. The carrying amounts of all the Company’s financial assets and financial liabilities at the reporting date approximated their fair values.19.2 Impairment of financial assets The company follows the guidance of IAS 39 to determine when a financial asset is impaired. This determination requires significant judgement. In making this judgement, the company evaluates, among other factors, the duration and extent to which the fair value of an investment is less than its cost; and the financial health of and short-term business outlook for the investee, including factors such as industry and sector performance, changes in technology and operational and financing cashflow.19.3 Income taxes The company is subject to income taxes. Significant judgement is required in determining the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain. The company recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Whether the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made.20. Contingencies At the reporting date there were no contingent assets or liabilities.21. Capital commitments At the reporting date there were no capital commitments which were authorized or contracted. 30
  • Annual Report 2009Notes to the financial statementsfor the year ended 30 September 200922. Exchange rates and inflation rates 2009 2008 2007 K K K United States Dollars (USD) 141 141 141 South African Rand (ZAR) 19 21 21 Inflation rates as at 30 September 7.5% 9.3% 7.4%23. Subsequent events There have been no events subsequent to the reporting date requiring adjustments to the financial statements. 31
  • Annual Report 2009Details of ShareholdersThe number of shareholders in NITL was 1,857 as at 30 September 2009 compared to 1,909 as at30 September 2008.Analysis by number of shares held:Number of shares held Number of Total shareholders holding0 - 1000 150 108,9181000 - 5000 453 1,494,4055001 - 10000 324 2,902,99910001 - 20000 233 3,862,56620001 - 50000 296 10,879,22050001 - 100000 206 17,771,193100001 - 500000 159 36,016,292500001 - 1000000 19 12,848,6921000001 - 10000000 16 37,348,26810000001 - 20000000 1 11,767,447Grand total 1,857 135,000,000Analysis by shareholder type:Type Number Number % of of share holders of shares held total sharesResident Individual 1,746 77,970,305 57.76Pension / provident 21 22,466,409 16.64Banks / Nominees 26 18,395,111 13.63Invest / Trust etc 21 8,596,517 6.37Insurance / Assurance 7 3,222,836 2.39Local Company 14 2,687,119 1.99Other Corporate bodies 13 1,512,178 1.11Non-resident 7 117,525 0.09Foreign Company 2 32,000 0.02Total 1,857 135,000,000 100.00Shareholders holding in excess of 2% of the Company’s equity:Shareholders name Number % of total number of shares of sharesFirst Merchant Bank Limited 11,767,447 8.72FMB Pension Fund 6,012,314 4.46Press Trust 4,795,000 3.55SUCOMA Non-contributory Fund 4,720,000 3.50National Bank of Malawi 3,946,371 2.92NBM Pension Fund 3,037,826 2.40 32
  • Annual Report 2009 The National Investment Trust LimitedNotice is hereby given that the 8th annual general meeting of members of The National Investment TrustLimited will be held at Ryalls Hotel, Blantyre, Malawi on Thursday 10 December 2009 at 2.30 pm totransact the following business:1. Minutes of previous annual general meeting To approve the minutes of the 7th annual general meeting held on 12 December 2008.2. Financial Statements To receive and adopt the audited financial statements for the year ended 30 September 2009.3. Election of directors To consider re-electing Mrs. V.H. Masikini and Miss A.T. Konyani who retire in terms of the articles of association, and who, being eligible, offer themselves for re-election. To consider the election of Mrs. B. Movete, who was co-opted to the board during the year to fill a casual vacancy that had arisen. Persons other than the retiring and/or nominated directors will also be eligible for election to the office of director. Nominations in writing will be accepted from members of the company until 2.30pm on 9 December 2009. Nominations should be delivered to The Company Secretary, The National Investment Trust Limited, First House, Glyn Jones Road, Private Bag 122, Blantyre and must be accompanied by the written consent of the nominee to be elected director and a signed copy of the nominee’s curriculum vitae. The election of any person as director is conditional upon the approval of The Reserve Bank of Malawi under the authority vested in it by The Capital Market Development Act.4. Ordinary business To consider and, if deemed fit, to pass with or without modification the following ordinary resolutions: 4.1 That unless otherwise determined by the company in general meeting, the chairman shall be entitled to remuneration for his services at the rate of K575,000 (2008: K420,000) and each director shall be entitled to remuneration for his/her services at the rate of K525,000 (2008: K420,000) per annum payable quarterly in arrears with effect from 1 October 2009 and that the directors shall also be entitled to receive a sitting allowance for each board meeting attended at the rate of K27,500 (2008: K21,600) per meeting for the chairman and K22,500 (2008:K18,000) per meeting for other directors. 4.2 That audit fees of K1,200,000 (2008:K1,048,500) payable to KPMG in respect of the audit of the financial statements for the year ended 30 September 2009 be approved. 4.3 That KPMG be re-appointed as auditors for the 2009/2010 financial year. 4.4 That a final dividend of 27 tambala (2008: 22 tambala) per share for the year ended 30 September 2009 recommended by the directors be declared and paid on 28 December 2009 to all shareholders registered in the books of the company at close of business on 10 December 2009. 33
  • Annual Report 20095 Other business To transact such other business as may be transacted at an annual general meeting of members. A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend, speak and vote in his/her/its stead. The proxy need not be a member of the company. Proxy forms should be forwarded to reach the company’s registered office or the transfer secretaries not later than 2.30pm on 9 December 2009.By order of the BoardFirst Merchant Bank LimitedSecretariesBlantyre, Malawi, 10 November 2009. 34
  • Annual Report 2009 The National Investment Trust LimitedForm of Proxy for the 8th Annual General Meeting of The National Investment Trust LimitedI/We(Name/s in block letters)of (address) Number of votesBeing a shareholder/ member of the above named company and entitled to (1 share = 1 Vote)do hereby appoint1 ofor failing him/her2 ofor failing him/her3. the chairman of the meetingas my/our proxy to attend, speak and vote for me/us or on my/our behalf at the annual generalmeeting of the company to be held at Ryalls Hotel, Blantyre, Malawi on 10 December 2009 at 2.30 pmand at any adjournment thereof as follows: Agenda Item where applicable Mark with X In Favour Against Abstain 1. Approval of minutes of previous annual general meeting 2. Adoption of 2009 annual financial statements 3. Election of directors including retiring directors 4.1 Determination of directors’ remuneration 4.2 Approval of audit fees 4.3 Re-appointment of auditors. 4.4 Declaration of final dividendSigned at on this day of 2009SignatureAssisted by me (where applicable) (see note 3)Full name/s of signatory/ies if signing in a representative capacity (see Note 4) 35
  • Annual Report 2009Notes:A member entitled to attend and vote at the meeting is entitled to appoint one or more proxies toattend, speak and vote in his/her/its stead. A proxy need not be a member of the company.If this proxy form is returned without any indication as to how the proxy should vote, the proxy willbe entitled to vote or abstain from voting as he/she thinks fit.A minor must be assisted by his/her guardian.The authority of a person signing a proxy in a representative capacity must be attached to the proxyunless the company has already recorded that authority.In order to be effective, proxy forms must reach the registered office of the company (c/o FirstMerchant Bank, First House, Glynn Jones Road, Blantyre, Malawi) or the transfer secretaries (NationalBank of Malawi, Financial Management Services Department, P. O. Box 143, Blantyre) by no later than2.30pm on 9 December 2009.The delivery of a duly completed proxy form shall not preclude any member or his/ her/its dulyauthorized representative from attending the meeting, speaking and voting instead of such dulyappointed proxy.If two or more proxies attend the meeting, then that person attending the meeting whose name appearsfirst on the proxy form, and whose name is not deleted, shall be regarded as the validly appointedproxy. 36
  • Annual Report 2009
  • Annual Report 2009