2011 ADB Annual Report - FINANCIAL STATEMENT PDF

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Annual Report & Financial Statements

2011

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Annual Report & Financial Statements

« 2011

- Annual Reports & Financial Statements

Contents Corporate Information

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3

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5

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

ProfileofDirectors



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FinancialHighlights

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

Chairman’sStatement

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7

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ProfileofExecutiveManagement

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10

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ManagingDirector’sReviewofOperations

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11

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 

ReportoftheDirectorstotheMembersof AgriculturalDevelopmentBank

– 13

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CorporateGovernance

– 15

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IndependentAuditors’Report

– 18

 

 

ConsolidatedStatementof ComprehensiveIncomeStatement

– 20

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ConsolidatedStatementofFinancialPosition

– 22

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ConsolidatedStatementofChangesinEquity

– 23

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ConsolidatedStatementofCashflows

– 25

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NotestotheFinancialStatements

– 26

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ADBBranchNetwork

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74

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CorrespondentBanks

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79

Page 2

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Board of Directors, Officials and Registered Office AlhajiIbrahimAdam Mr.StephenKpordzih Mr.PaulAgyiri Dr.S.K.Dapaah Dr.JohnsonAsiama Ms.NancyAmpofo MajorM.S.Tara Mrs.EstherKumado

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Chairman ManagingDirector ExecutiveDirector Non-ExecutiveDirector Non-ExecutiveDirector Non-ExecutiveDirector Non-ExecutiveDirector Non-ExecutiveDirector

Dr.S.K.Dapaah MajorM.S.Tara Dr.JohnsonAsiama Mrs.EstherKumado

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Chairman Member Member Member

Governance & Risk Management

Dr.JohnsonAsiama Dr.S.K.Dapaah Mrs.EstherKumado Ms.NancyAmpofo

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Chairman Member Member Member

Loans and Advances Committee

Dr.JohnsonAsiama Mrs.EstherKumado MajorM.S.Tara Mr.StephenKpordzih Mr.PaulAgyiri

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Chairman Member Member Member Member

Human Resources

AlhajiIbrahimAdam Mr.StephenKpordzih Mrs.EstherKumado Ms.NancyAmpofo

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Chairman Member Member Member

COMPANY SECRETARY

Mr.JamesK.Agbedor ADBHouse,37IndependenceAvenue Accra

REGISTERED OFFICE

ADBHouse,37IndpendenceAvenue POBox4191 Accra

AUDITORS

KPMG CharteredAccountants 13YiyiwaDrive,Abelenkpe POBoxGP242 Accra

BOARD OF DIRECTORS

BOARD COMMITTEE Audit & Compliance Committee

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« 2011

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Board of Directors

2

1

AlhajiIbrahimAdam

Mr.StephenKpordzih

3

4

Mr.PaulAgyiri

Ms.NancyAmpofo

5

Dr.JohnsonAsiama

6

7

MajorM.S.Tara

Dr.S.K.Dapaah

Mrs.EstherKumado

8

9

Mr.JamesK.Agbedor

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Profile of Directors 1- Ibrahim ADAM (Chairman)

5 - Dr. Samuel K. DAPAAH (Non-Executive Director)

AlhajiIbrahimAdam holds aB.Sc (Hons)Agric Degreefrom the Kwame Nkrumah University of Science and Technology. He has attended several short courses on rice production, administration and management. The list includes WARDA (Monrovia), IITA (Ibadan, Nigeria), Ghana Institute of Management and PublicAdministration (GIMPA). Others are EDI(Maastricht) andFeldafing(Germany). Mr.Adamserved ingovernmentforseveralyearsbetween1984and2001.He wasPNDCUnder-SecretaryforAgriculture(NorthernRegion) between1984and1985beforebecomingthePNDCDeputy Secretary for Agriculture (Crops). He was promoted to the PNDCSecretaryforAgriculturein1992.Atthebeginningofthe FourthRepublicin1993,hefirstservedastheMinisterofFood andAgricultureuntil1996whenhewasmadetheMinisterof Trade.Mr.AdamiscurrentlytheCEOofBradaVenturesand wasappointedtheChairmanoftheBoardon26thJune2009.

Dr. Dapaah has had a long professional experience in Agricultural Policy and Public Administration, Teaching, ResearchandManagement.HegraduatedfromtheUniversity of Ghana, Legon with a B.Sc. (Hons)Agriculture Degree in June1972andproceededtotheUniversityofGuelph,Canada where he graduated with an M.Sc. Agricultural Economics Degree in February 1975 and Ph.D.Agricultural Economics Degree in February 1982. He returned to the University of Ghana, Legon as a Research Fellow at the Institute of Statistical, Social and Economic Research (ISSER) and Lecturer at the Department of Economics and Department ofAgriculturalEconomics.Dr.Dapaah servedin theMinistry ofFoodandAgriculture,first,asDirectorofPolicy,Planning, Monitoring and Evaluation between 1986 and 1992, and as ChiefTechnicalAdvisorandChiefDirectorbetween1993and 2001.A member of the Board between 1993 and 2001, Dr. DapaahwasreappointedasDirectorinJune2009.

2 - Stephen KPORDZIH (Executive Director) Mr. Kpordzih holds an MBA (Finance) from University of Leicester,UK,andaPost-GraduateCertificate-StrategicBank ManagementfromOdenseBusinessSchool,Denmark.Hehas to his record immense banking experience and consultancy assignments with leading banks, including preparation of a paperonFinancingRuralAgricultureinGhanaaspartofthe Government’sCompactProgrammeforaccessingtheUS$547 million Millennium Challenge Account. He also developed feasibility reports for the establishment of non-bank financial institutions.One-timelecturerinFinanceofInternationalTrade at the Chartered Institute of Bankers, Ghana, a resource person in Treasury Management at the Ghana Banking College,andanHonouredMemberoftheInternationalWho’s WhoofProfessionalsforhisachievementsinandcontribution tobanking,Mr.KpordzihtookofficeastheManagingDirector oftheBankinAugust2009.

3 - Paul O. AGYIRI (Executive Director) Mr.AgyiriholdsaBachelorLawsDegreefromtheUniversity ofGhana,Legon anda ProfessionalQualifying Certificatein LawfromtheGhanaSchoolofLaw.HeservedintheAttorneyGeneral’sDepartmentbetween1978and1984.Between1984 and 1991, he engaged in private consultancy practice with Maxwell&MaxwellLawOffices,Liberiaandtooktheposition ofDirectorofLegalServicesoftheWestAfricanExaminations Council, Head Office. He joined the Bank as Chief Legal Advisorin1991.BetweenJune2003andJuly2005,Mr.Agyiri wassecondedtotheMinistryofFinance&EconomicPlanning asChiefDirector,returningtotheBanktoresumehisposition asSolicitor.

4 - Nancy Dakwa AMPOFO (Non-Executive Director) ANotaryPublic,SolicitorandBarrister,Ms.Ampofograduated fromtheUniversityofGhanain1979withaB.A.(Combined) Degree in Law (with Political Science). She obtained a ProfessionalLawQualifyingCertificatein1981fromtheGhana LawSchoolandwascalledtotheGhanaBaron20thNovember 1981.Ms.Ampofohashadatrackrecordandexpertiseinlegal consultancy acquired through undertaking legal work for the public and private sector institutions, as well as individuals and multinationals. Ms.Ampofo founded her own legal firm, N.D.AmpofoAssociatesin2000andhasbeenofferinglegal consultancyservicestobothlocalandinternationalclientsin allareasofthelaw.ShewasappointedasDirectoroftheBank inJune2009.

6 - Dr. Johnson P. ASIAMAH (Non-Executive Director) Dr. Asiamah is the Chief Manager, Research Department of the Bank of Ghana. He holds a B.A. (Hons) Degree in EconomicswithStatisticsandanM.Phil.(Economics)issued by the University of Ghana in 1993 and 1996 respectively, and a Ph.D. (Economics) Degree from the University of Southampton,England,UnitedKingdomin2005.Withahost ofpublicationsandconferencepresentationstohisrecord,Dr. AsiamahwasappointedtotheBoardoftheBankinJune2009.

7 - Mrs. Esther KUMADO (Non-Executive Director) MrsEstherKumadoholdsaBA(Hons)DegreeandaQualifying Certificate in Law (QCL) from the University of Ghana, and a Professional Diploma in Law issued by the Ghana Law School.Sheis amember ofthe GhanaBarAssociationand International BarAssociation, as well as being a Member of theGoverningBodyoftheFinancialIntelligenceCentre(FIC). MrsKumadoiscurrentlytheHeadoftheLegalDepartmentof BankofGhanaandrepresentstheFinancialInvestmentTrust (asubsidiaryoftheBankofGhana)ontheBoard.

8 - Major Mahama S. TARA (Rtd) (Non-Executive Director) Major Tara (Rtd), a Chartered Management Accountant (ACMA)alsoholdsaBScAdministration(AccountingOption) Degreefrom theUniversity of Ghana.His richexperience in thepublicsectorhasincludedservingasDirectorofFinance and Administration of the Ghana Tourist Development CompanyLtd.,DirectorofFinanceofthethenArchitecturaland EngineeringServicesCorporation,andaDeputyController& Accountant-General.At the Ministry of Finance & Economic Planning,MajorTara(Rtd)hadpreviouslyservedatintervals as Director of Budgets and Acting Chief Director. Among his achievements, he headed the Technical Team that reorganizedtheBudgetingandPublicExpenditureManagement SystemwithintheGovernmentmachineryandintroducedthe MediumTermExpenditure Framework (MTEF) asthe model forGovernmentalAccounting.HewasappointedtotheBoard inJune2009.

9 - James K. AGBEDOR (Secretary) Mr. Agbedor holds the Bachelor-of-Laws Degree from the Universityof Ghanaand a ProfessionalLaw Certificate from the Ghana School of Law. He joined the Bank in 1985 as a Legal Officer and is currently the Solicitor & Head-General CounseloftheBank.HewasappointedSecretarytotheBoard in2006.

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- Annual Reports & Financial Statements

Financial Highlights

The Group

The Bank

2011

2010

2011

2010

GH¢’000

GH¢’000

GH¢’000

GH¢’000

At 31 December 1,213,671

968,199

1,205,757

964,503

Loansandadvancestocustomers(net)

Totalassets

678,747

576,987

678,747

576,987

Customerdeposits Shareholders’equity

827,718 181,707

536,079 106,353

827,718 176,164

536,079 106,279

51,113 48,557

12,763 12,118

45,903 43,608

12,265 11,652

-

0.39

-

0.39

For the year ended 31 December Profitbeforetax Profitaftertax Dividendpershare(Ghanacedis) Earningspershare(Ghanacedis): -Basic

1.942

0.485

1.744

0.466

-Diluted

1.942

0.485

1.744

0.466

Returnonaverageequity(%)

33.7

10.6

30.9

10.2

Returnonaverageassets(%)

4.5

1.4

4.0

1.4

1,345

1,168

1,345

1,168

76

65

76

65

At 31 December Numberofstaff Numberofbranches

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Chairman’s Statement – 2011 Itismygreatestpleasuretopresenttoyou,theAnnualReportandthefinancialresultsofyourBankforthe yearended31stDecember2011.

1.

World Economy

Globaloutputfor2011showedgrowthof3.8%comparedto5.2%recordedin2010perIMFestimates.This waspoweredby1.6%growthintheadvancedeconomieswhiletheemergingeconomiesandSub-Saharan Africarecorded 6.2% and 4.9% respectively. Developed countries’ economies areexpected to expand by only1.6%duetoshakyconsumerconfidence,fiscaltighteningandaformidabledebtoverhangespecially in Europe. This marked a decline in the 2010 economic growth performances of 3.2% for the advanced economiesandtherespective7.3%and5.3%forboththeemergingeconomiesandSub-SaharanAfrica. Crudeoilpricebegantheyear2011atUSD92perbarrelandwasgenerallystablebutpeakedatUSD124per barrelinMay2011beforerecedingtoUSD103perbarrelattheendof2011. GoldpricerecordedsteadyincreasesfromUSD1,386perounceattheendof2010tothehighestofUSD1,900 perounceinSeptember2011.However,itendedtheyearatUSD1,599perounce.Cocoapriceremained veryhighinthefirsthalfoftheyearandrosefromUSD2,951pertonattheendof2010toUSD3,654perton inMarch2011.MostofthegainswerehowevererodedastheyearendedatthepriceofUSD2,101perton.

2.

Domestic Economy

ProvisionalrealGDPgrowthwas13.6%andwasbelowtheprojectedtargetof14.4%for2011.Thiswas however higher than the real GDP growth of 7.7% recorded in 2010. Government’s fiscal stability and consolidation policies were on course.Fiscal deficit roseto GH¢2.1billion comparedto GH¢1.7 billionin 2010butwaswithinthebudgeteddeficitofGH¢2.4billion. ThecurrentaccountdeficitwidenedfromUSD2.1billioninDecember2010toUSD3.1billioninDecember 2011. This led to a decline in the overall balance of payments surplus from USD1.5 billion to USD546.5 million.However,thegrossexternalreservespositionincreasedfromUSD4.7billionin2010toUSD5.4billion inDecember2011. The Cedi depreciated against the major currencies in 2011 showing a decline of 8.3%, 7.9 % and 5.3% respectivelyfortheUSD,GBPandtheEURO.Inflationrosemarginallyto9.1%inFebruary2011buteased thereafterandgenerallyremainedasingledigitendingtheyearat8.6%.Theyear2011openedwiththeBank ofGhanaPrimeRateat13.5%.Twosuccessivecutsintheyearbroughttherateto12.5%attheendofthe year2011.

3.

Financial Performance

Boththeexternalanddomesticeconomicconditionsoutlinedabovegreatlyaffectedtheperformanceofthe Bankin2011. NetProfitaftertheNationalStabilizationLevyfor2011wasGH¢48.6millionandwasover300%abovethe restatedamountofGH¢12.1millionrecordedfor2010.ProfitwasrestatedtoenabletheBankprudentlymake provisionforcertainlongoutstandingiteminitsbooksdatingbackto2002andtoprovideitwithacleanbill ofhealthtopursueitsoperations.TheBankwrotebackprovisionstotalingGH¢7.6millionasaresultofthe improvingconditionsofitscreditportfolio.Wewillcontinuetoprudentlyreviewthecreditportfoliotoprevent potentialdeteriorationintheassetsandthenegativeconsequencesofitsimpactonprofitabilityandstrength oftheBank’sbalancesheet. Thebalancesheetshowedsignificantgrowthinthefinancialyear2011.Totalassetsgrewby25.4%from therestatedamountofGH¢968.2millionattheendofDecember2010toGH¢1,213.7millionatyearend

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- Annual Reports & Financial Statements

Chairman’s Statement (Cont’d) December2011.ThiswasfundedmainlyfromtheincreaseindepositsmobilizedfromGH¢536.1millionto GH¢827.7million-agrowthof54.4%.Shareholders’Fundsalsowentupby70.9%fromGH¢106.4millionat theendofDecember2010toGH¢181.7millionattheendofDecember2011.

4.

Financing to Agriculture Sector

TheBank increased itscredit disbursements to variousproductive agricultural projects totalingGH¢141.7 million,inexcessoftheGH¢100.1millionrecordedin2010.Thisrepresented41.6%increase.Financingof agro-processingwaspredominantasitamountedtoGH¢84.5million.Totalcredittotheagriculturesectorat theendofDecember2011stoodatGH¢190.8millionandthisconstituted27.4%ofthetotalcreditportfolio. ThismarkedanincreaseofGH¢50.3millionor35.8%intheDecember2010positionofGH¢140.5million.

5.

Update on Strategic Plan 2010 – 2012

TheBanksetitsvisiontobeamongthetop3performingbanksinGhanaby2012,balancingmarketorientation with adevelopment focus on agriculture and more. Key initiatives sofar implemented included improving servicedelivery,rolling outnew products andservices, and introducing newchannels for sales.The year 2011sawfurtherexpansioninourbranchnetworkandconsolidationofourearlierstrategicinitiatives.We successfullyimplementedournewIToperatingsystemwhichhasenabledtheBanktocopewithexpansion ofserviceandproductdeliveryandenhanceditscompetitivepositionintheGhanaianbankingindustry.

6.

Outlook for 2012

We look forward to a promising but challenging prospects as the world economy is expected to register a growth of 3.3% while the domestic Ghanaian economy faces challenges of an election year. However, weremain optimistic that Governmentspending in key sectorsof the economy especiallyAgriculture and infrastructure,willprovidethenecessaryexpansionineconomicactivitieswhichtheBankcantakeadvantage ofandexpanditsbusinessoperations.

7.

Conclusion

I take the opportunity on behalf of the Board to congratulate the shareholders and customers for their continuedloyaltyandsupportduringthepastyear.IalsothankManagementandstafffortheirhardworkand commitmenttodutyandwishallstakeholdersasuccessfulYear2012.

ALHAJI IBRAHIM ADAM BOARD CHAIRMAN

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2011 »

Executive Management

Mr.StephenKpordzih ManagingDirector

Mr.PaulAgyiri ExecutiveDirector

JamesK.Agbedor BoardSecretaryandGeneral Counsel