EXIMGUARANTY COMPANY GHANA · PDF fileEXIMGUARANTY COMPANY GHANA LTD ... and corporate banking and rejoined the Exim Board ... Taskforce for the establishment of Ghana Exim Bank. PROFILE

ANNUAL REPORT 2016 1

EXIMGUARANTYCOMPANY GHANA LTDGUARANTEEING CREDIT FOR ECONOMIC GROWTH

2016

ANNUAL REPORTA N D F I N A N C I A L S T A T E M E N T S

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ANNUAL REPORTand Financial Statement

2016

ANNUAL REPORT 20164

CORPORATE INFORMATION

DIRECTORS Felix Ntrakwah, (Chairman)

Andrew Boye-Doe

Yvonne Quansah

Isaac Owusu-Hemeng

George Mensah-Asante (Resigned, 31/12/16)

Peter Hayibor

Richard Amo-Techie

Zac Bentum, (Managing Director, Retired, 28/2/17)

REGISTERED OFFICE No. 27, Noi Fetreke Street

Roman Ridge Ambassadorial

Estate Extension

Accra

SECRETARY Mrs. Priscilla Budu

SOLICITORS Peasah-Boadu & Co.

P. O. Box CT 3523

Cantonment

Accra

AUDITORS KPMG

13 Yiyiwa Drive, Abelenkpe

P O Box GP 242

Accra

BANKERS Bank of Ghana

Ecobank Ghana Limited

First Atlantic Bank Limited

www.eximghana.com


Corporate Information 4

Report of the Directors 16

Independent Auditor’s Report 17

Statement of Financial Position 20

Statement of Comprehensive Income 21

Statement of Changes in Equity 22

Statement of Cash Flows 24

Notes to the Financial Statements 25

CONTENT

ANNUAL REPORT 20166

NOTICE IS HEREBY GIVEN that the 18th Annual General Meeting of EXIMGUARANTY COMPANY (GHANA) LIMITED will be held at the BOARDROOM OF THE COMPANY, 27 NOI FETREKE STREET, ROMAN RIDGE AMBASSADORIAL ESTATES EXTENSION, ACCRA on Thursday, 22nd June 2017 at 11.00am to transact the following business:

1. To receive and consider the Audited Financial Statements for the year ended 31st December 2016 together with the Reports of the Directors and Auditors thereon.

2. To authorise the Directors to determine the remuneration of the Auditors.

3. To approve of the fees of the Directors.

Dated this 24th day of May 2017

BY ORDER OF THE BOARD

PRISCILLA BUDU (MRS)

SECRETARY

NOTE

A member of the company entitled to attend and vote is entitled to appoint a Proxy to attend and vote instead of him/her. A Proxy form is attached.

NOTICE OF ANNUAL GENERAL MEETING


PROFILE OF DIRECTORS

MR. FELIX NTRAKWAH, CHAIRMAN Mr. Felix Ntrakwah is a legal practitioner with specialization in corporate commercial law practice. He was for years a director of GCB Bank Limited and the Chairman of its Audit and Finance Committee. He brings unto the board, a wealth of knowledge and experience in corporate governance and corporate finance. He is the founder of the Corporate Law Institute, Ghana and a member of the Chartered Institute of Arbitrators (UK). Mr. Ntrakwah served on the International Chamber Of Commerce Court of International Commercial Arbitration in Paris. He is also a fellow of the Litigation Counsel of America and a senior lecturer in Corporate and Commercial Practice at the Ghana School of Law. He was a member of the Committee of Experts which drafted a new Companies Bill for Ghana. Mr. Ntrakwah is the chairman of Financial Investment Trust. He also chairs The Royal Senchi Limited and serves on other boards.

ANDREW BOYE-DOE

Andrew is a lawyer by profession, specializing in international banking and finance. He is a Director and Head of the Legal Department (General Counsel) at the Bank of Ghana. He is a Director of Export Finance Company, a member of the Board of Trustees of the Financial Investment Trust (FIT). He also serves on the Board of the Financial Intelligence Centre. He is a fellow of the Society for Advanced Legal Studies, London and the Chairman of the Legal and Institutional Issues Committee of the West African Monetary Zone (WAMZ). He is a Research Fellow at the Centre for International Documentation on Organized and Economic Crimes and a Resource Person of the Cambridge International Symposium, UK. Mr. Boye-Doe is also a visiting lecturer in Banking and Finance Law, Commercial Law, International Economic Law and Law and Practice of International Finance in both local and foreign universities.

MS. YVONNE QUANSAH

Yvonne is an economist with good understanding of contemporary macroeconomic, financial sector issues with extensive experience in aid and public debt management having headed the Aid and Debt Management and Financial Sector Divisions of the Ministry. She is a Chief Economics Officer and Director of the External Resources Mobilisation – Bilateral Division at the Ministry of Finance. She has also served as a facilitator/resource person as well as conducted and /or participated in a number of studies and reviews, both locally and internationally.

GEORGE MENSAH-ASANTE

George heads Ecobank Ghana’s Domestic Banking business which covers Local Corporates, SME’s, Public Sector and Retail banking and is also the Cluster Head for Domestic Banking for the West African Monetary Zone (WAMZ) of the Ecobank Group. He is also a member of the Board of Directors of Ecobank Ghana.He is an accomplished banker with over 20 years in treasury management and sales/relationship development. Prior to his appointment as Executive Director of Ecobank, he was the Head, Retail Banking for Ecobank Ghana and was instrumental in growing the bank’s branch network and deposit base. He also worked as Deputy Country Treasurer. George holds a BSc in Administration (Accounting) and an Executive MBA in (Finance) from the University of Ghana, Legon.

ISAAC OWUSU –HEMENG

Isaac is a former Managing Director of The Trust Bank Limited (now part of Ecobank Ltd). He is a fellow of the Chartered Institute of Bankers, Ghana, and a member of the West African Nobles Forum with over 37 years banking and finance exposure. He served for two consecutive terms as President of the Chartered Institute of Bankers between 2006 and 2010. In 2014 he was honoured with a Lifetime Achievement award at the Banking Awards by the CIG. He has a vast wealth of experience in risk management and corporate banking and rejoined the Exim Board in September 2012 after previously serving on the board from 2000 to 2009. Mr. Owusu-Hemeng is also a Board member of Future Leaders Investment (Microfinance) Company Ltd since 2011.

ANNUAL REPORT 20168

MR. PETER HAYIBOR

Peter is a Legal Practitioner with over twenty-five (25)years’ experience at the Ghana Bar. He is currently the General Manager/General Counsel of the Social Security and National Insurance Trust. He has immense experience in Finance Law, Policy Formulation, Human Resource Management, Litigation, Arbitration, Negotiating and Drafting Commercial Agreements, Mergers and Acquisitions and Pensions Administration. He is member of the Ghana Bar Association, the International Bar Association, Institute of Professional Financial Managers, Fellow of the Ghana Institute of Directorsand Associate of the Faculty of Chartered Administrators and Secretaries. Mr. Hayibor is also on the Board of a number of institutions including the Global Impact Micro Finance limited, Ghana Agro-Food Company Limited (GAFCO) (Chairman), Odwen Anoma Rural Bank Limited (Vice Chairman), NTHC Limited (Chairman), NTHC Trustees (Pensions) Limited (Chairman), CCL Properties Management Limited (Chairman) and a member of the Ministry Advisory Board of the Ministry of Works and Housing of the Republic of Ghana.

MR. RICHARD AMO-TACHIE

Richard joined the Board of Eximguaranty Company Limited in August 2014. He heads National Investment Bank’s Audit & Bank Inspection Department. He is a Chartered Accountant and a member of the Institute of Chartered Accountants. He holds an ICA (Gh) Professional Certificate and a certificate from the Chartered Institute of Taxation (CIT) Ghana.

MR. ZAC BENTUM, MANAGING DIRECTOR

Zac is a fellow of ACCA and a FCIB. He is a Council Member of the Chartered Institute of Bankers, and a former Council Member of the Association of Chartered Certified Accountants.Mr. Bentum sits on the Guarantee Fund for Private Investment in West Africa (GARI), Lome, Togo as an Independent Expert and is the West Africa (Alternate) Representative on the Executive Committee of the Association of African Development Finance Institutions (AADFI) based in Cote D’Ivoire. Zac, before joining Exim, worked with Ashanti Goldfields Company Ltd, now Anglogold Ashanti.Zac currently is a member of the World Bank Taskforce on: Design, Implementation and Evaluation of Public Credit Guarantees for SMEs in Emerging Markets and Developing Economies. He is also a Member of the Presidential Taskforce for the establishment of Ghana Exim Bank.

PROFILE OF DIRECTORS


PROFILE OF EXECUTIVE COMMITTEE

ANTHONY K. DWUMAH Head Of Operations

Anthony Kofi Dwumah is an International Certified Expert in SME Lending (from Frankfurt School of Finance and Management), SME/Microfinance Practitioner and Development Analyst and holds a Master of Science (M. Sc.) in Development Policy and Planning and BSc. Agriculture (Economics Option) from the Kwame Nkrumah University of Science and Technology (KNUST), Kumasi. He has over a decade experience in SME finance and microfinance operations.Before joining Exim, Mr. Dwumah consulted as a Senior Business Advisor for Medical Credit Fund, a Netherland NGO involved in the provision of credit guarantees to private healthcare facilities. He was responsible for credit underwriting and business plan development for SMEsHe also worked as the Head of Operations at HFC Boafo Microfinance Services Ltd from 2009 to 2012 where he facilitated the expansion of branch network from nine to seventeen.Mr. Dwumah started his career with Sinapi Aba Trust (SAT), now Sinapi Aba Savings and Loans as a credit officer and rose through the ranks to become Operations Manager. He spearheaded the creation of the deposit, SME lending and remittances departments at Sinapi Aba.

MRS. PRISCILLA BUDUHead, Legal/ Admin./ Company Secretariat

Priscilla holds a LLB (Hons) degree from the University of Ghana and a BL Law from the Ghana School of Law as well as an Executive MBA in Human Resource Management from the University of Ghana. She has over sixteen years of experience as a lawyer. Her experiences within the financial sector include financial solutions for SME’s, credit risk management and debt recovery. Her strengths include drafting, industrial relations and good management practices. She also has considerable experience in Company Secretary and Human Resource Management. Prior to joining Eximguaranty, she was Head of the Legal Department and Secretary to the Board of Directors at Procredit Savings and Loans Co. Ltd. She is a member of the Ghana Bar Association.

ESTHER AMANEY Head of Finance

Esther is a member of ICA (Ghana). She has an MBA from the University of Hertfordshire in the United Kingdom and a Bachelor of Science degree in Business Administration from the University of Ghana. Esther has over 15 years experience in Financial Management, Accounting and Auditing. Prior to joining Exim she worked with Viasat Ghana and Starwin Products as Financial Controller and Head of Finance respectively; having previously worked with KPMG Ghana.

MR. ZAC BENTUM Managing Director

Zac is a fellow of ACCA and a FCIB. He is a Council Member of the Chartered Institute of Bankers, and a former Council Member of the Association of Chartered Certified Accountants.Mr. Bentum sits on the Guarantee Fund for Private Investment in West Africa (GARI), Lome, Togo as an Independent Expert and is the West Africa (Alternate) Representative on the Executive Committee of the Association of African Development Finance Institutions (AADFI) based in Cote D’Ivoire. Zac, before joining Exim, worked with Ashanti Goldfields Company Ltd, now Anglogold Ashanti.Zac currently is a member of the World Bank Taskforce on: Design, Implementation and Evaluation of Public Credit Guarantees for SMEs in Emerging Markets and Developing Economies. He is also a Member of the Presidential Taskforce for the establishment of Ghana Exim Bank.

ANNUAL REPORT 201610

BOARD CHAIRMAN’S REPORT

INTRODUCTION

It gives me great pleasure to warmly welcome you all to our Annual General Meeting and to present to you the Company’s Annual Report and Financial Statements for the year ended 31st December, 2016.

For the year under review, the Company encountered several macroeconomic and operational challenges that impacted negatively on our performance. The escalating high Non Performing Loans of Banks (19.1% as at May ending), high cost of energy tariffs and lending rates as well as the refusal of Cocobod to accept Guarantees from NBFI’s were some of the critical factors that affected our incomes. Fortunately we were able to consolidate our market leadership position through effective strategies to successfully increase the total value of Guarantees issued by 22.5% over that of 2015 recording an amount of GHC 34,373,131.

GLOBAL ECONOMIC PERSPECTIVES

Global economic activity is picking up with buoyant financial markets and a long-awaited cyclical recovery in Manufacturing and Trade. According to the IMF World Economic Outlook (April, 2017), World growth is projected to rise from 3.1% in 2016 to 3.5% in 2017 and 3.6% in 2018. These notwithstanding, binding structural impediments continue to hold back a stronger recovery especially over the medium term.

Emerging markets and developing economies (Asia, Africa and South America) have become increasingly more important in the global economy than before. These economies now account for more than 75% of global growth in output and consumption.

For sub-Saharan Africa, growth momentum remains fragile. 2016 was a difficult year for many countries, with regional growth dipping to 1.4 percent—the lowest level of growth in more than two decades. Most oil exporters were in recession, and conditions in other resource-intensive countries remained difficult. Other non-resource-intensive countries however, continued to grow robustly. A modest recovery in growth of about 2.6 percent is expected in 2017, but this falls short of past trends and is too low to put

sub-Saharan Africa back on a path of rising living standards. While sub-Saharan Africa remains a region with tremendous growth potential, the deterioration in the overall outlook partly reflects insufficient policy adjustment. In order to address this challenge and achieve its potential, strong and sound domestic policy measures would be needed to restart the growth engine.

Ghana’s GDP is expected to rise to 6.3% in 2017 with projected fiscal deficit of 6.5% according to 2017 Budget statement of the Finance Minister. Bank of Ghana policy rate is projected to come down which will result in the reduction of lending rates. With commodity prices also expected to increase, the Cedi will remain stable especially when Government has pledged to exercise discipline in its expenditure while implementing policies to grow the economy through exports.

The Government’s recent release of some payments to settle its huge indebtedness to the Banks will significantly reduce Non Performing Loans of Banks. This action is expected to spur growth in the national economy and create the needed impetus for SMEs to develop and expand their capacities for wealth and job creation.

OPERATIONAL AND FINANCIAL HIGHLIGHTS

Our overall financial and operational performance could have been better but for some of the macro socio economic factors mentioned in my Introduction. Total Guarantee fees earned declined by 9% to GHC 1,316,536 while that of Investment income also dipped by 10.82% from previous year’s GHC 4,047,244 to GHC 3,609,277. Compared to the previous year, our total revenue also declined by 19.65%.

Further, we recorded losses in both our Operating profit before tax and Total profit after tax registering GHC (279,609) and GHC (274,495) respectively.


Total assets marginally declined by 6% with an outturn of GHC 16,809,083 as a result of net claims on the Guarantee Fund.

Total number of Guarantees issued in 2016 was 179 with a value of GHC 34,373,131 which was significantly higher than that of 2015 by 22.5%.

KEY BOARD DECISIONS

In 2016, the Board approved of a new product, Letter of Intent, which is a guarantee issued to SME’s prospecting for credit from financial institutions. It is expected that this product would provide the necessary “comfort” for financial institutions to lend to SME’s.

The Internal Auditor resigned in 1st June, 2016. In view of the discussions related to the merger with Exim Bank Ghana, the Board decided to outsource the function, taking into consideration the critical role of Internal Audit within the Company.

Further, as part of a review of the Company’s policies and procedures, the Board approved of a Redundancy Policy for staff.

OUTLOOK FOR 2017 AND STRATEGY

Ghana’s economy in the short to medium term appears bright with GDP growth projected to hit 6.3%. The Bank of Ghana monetary policy rate has been reduced to 22.5% and it is expected to affect interest rates and inflation by year end. The signals are already being felt in the market with Treasury bill and interest rates plummeting and this is good for business development.

The Government’s various tax incentives package to Industries worth over GHC1 billion is expected to stimulate economic growth and create jobs for the growing unemployed youth in the Country. Recent announcement of the inauguration of a Construction Bank, a specialized Bank, will significantly boost funding for infrastructural development.

Agribusiness is expected to grow by 5% as agriculture is one of the critical poles for growing Ghana’s economy especially with the introduction of the Planting Food for Job programme and One District, one Factory policy initiative of Government. It is worthy to note that some leading Banks have pledged over USD 100 million to support these initiatives. As a proactive Company, we have begun consultation

with key players in the MOFA and identified Banks for collaboration in respect of marketing credit Guarantee and Material Supply Guarantee products.

Recent announcement by the Governor of Bank of Ghana to increase the capitalization threshold of Banks from GHC 120 million to GHC 200 million will be a major boost to the economy and provide more funding for SMEs’ development.

We have reviewed the prevailing macro economic conditions and devised appropriate market driven strategies to take advantage of the opportunities in the Ghanaian economy. The Board of Directors has subsequently given approval for Management to execute a one (1) year Business Plan.

I am happy to announce that Cocobod has rescinded its initial directive not to accept Guarantees from NBFI’s. This revised directive is expected to impact positively on our revenues and incomes especially in the area of Seed Fund Guarantee.

EXIMGUARANTY INTEGRATION INTO EXIMBANK GHANA

The integration of Eximguaranty with EDAIF and EFC into EximBank which began in 2016 is expected to fully materialise by September, 2017. High level discussions with Shareholders and expected legal procedures are being diligently pursued to ensure successful integration for the benefit of the national economy.

ACKNOWLEDGEMENT

Let me take this opportunity to extend our deepest appreciation to Shareholders for the confidence reposed in us in protecting the Guarantee Fund despite the challenges we encountered.

On behalf of the Board, I wish to extend our sincere appreciation to the entire Management and Staff of Eximguaranty Company Ghana Limited for their hard work and commitment to the Company. To my colleagues on the Board, I thank you for your invaluable contributions, diligence and co-operation.

With much pleasure, I wish to also thank all our Clients and Stakeholders for their invaluable support in consolidating the Guarantee business and supporting Ghanaian SMEs to develop.

Thank you for the opportunity.


ACTING MANAGING DIRECTOR’S REPORT

INTRODUCTION

Dear Shareholders, permit me, with much pleasure, to welcome you to the 2016 Annual General Meeting at the head office in Accra. The Company consolidated its market leadership position in the credit Guarantee business and also deepened its core strategic partnership with its key stakeholders such as AADFI,GARI, and USAID-FINGAP as well as Clients; despite the fact that some of the critical challenges experienced in 2015 such as our inability to underwrite Seed Fund Guarantee and Advanced Mobilisation Guarantees for Cocoa roads continued in the year under review. Our strategy to enhance brand visibility and deepen our marketing efforts yielded some positive results. Total value of Guarantees issued in 2016 increased by 22.5% to GHC 34,373,131 from the previous year’s GHC 28,051,762.

ECONOMY

Ghana’s economic performance for 2016 has been described by the World Bank as mixed. Overall fiscal deficit deteriorated to an estimated 9%, far above the envisaged figure of 5.3% under the IMF supported programme. Nevertheless, end of year GDP growth of 3.6% was slightly higher than projected, with inflation declining to 15.4% in December. Government debt to GDP ratio increased further to 74% of GDP as at end of 2016. Gross foreign reserves increased marginally from USD 4.4billion in 2015 to an estimated USD 4.9 billion, equivalent to 2.8 months of imports at the end of 2016.

Average lending rate for most SMEs was above 33%, with BoG policy rate standing at 25.5% at December. With increasing Government debts to Banks, most Banks could not fully support SMEs with the needed funds as NPL remained high. Consequently the Company’s ability to support SMEs with credit guarantee suffered.

FINANCIAL PERFORMANCE

The increasing Non Performing Loans of Banks and peculiar challenges of the Ghanaian economy affected the overall performance of the Company. Total Guarantee fees earned declined by 9% to GHC 1,316,536 while that of Investment income also dipped by 10.82% from previous year’s GHC 4,047,244 to GHC 3,609,277. Compared to 2015 performance, the total revenue was also negatively affected with a 19.65% decline resulting in GHC 5,487,075.

Losses were recorded in both the Operating profit before tax and Total profit after tax registering GHC (279,609) and GHC (274,495) respectively.

Total assets marginally declined by 6% with an outturn of GHC 16,809,083 as a result of net claims on the Guarantee Fund.

Total number of Guarantees issued was 179 with a value of GHC 34,373,131 which was significantly higher than that of 2015 by 22.5%.

PRODUCTS AND SERVICES

The Credit Guarantee mandate guides the strategic engagement with Clients and Partners specifically Financing Institutions and Contract Awarding Agencies. Consequently, all the products and services are customer driven. During the year under review, the Company introduced a new SME focused product called Letter of Intent; which is issued to SMEs prospecting for credit from financing institutions.

For the year 2016, 66% out of the total Guarantee issued was dominated by Advanced Payment Guarantee ; followed by Bid Security- 17% and Credit Guarantee 11.6%.

We will continue to engage our Clients and Partners constructively as we seek to promote our products and services and ultimately turnaround the fortunes of the Company.


Product Name Value of Guarantees

(GH¢):

Contribution %

- Credit Guarantees 3,978,500 11.57

- Advance Mobilisation/ Payment 22,670,752 65.95 - Performance Bonds/ Retention 2,959,350 8.61 - Bid Securities 4,764,529 13.86 Total 34,373,131 100.00

CORPORATE SOCIAL RESPONSIBILITY

The Company’s CSR focuses on providing support to institutions, programmes, and general, social and economic activities that support the poor, vulnerable and needy in Society.

In 2016, the Company, which is development finance oriented, supported the National Farmers Day event of the Ministry of Food & Agriculture with cash and farm products worth GHC 5,000.

We also responded positively to some sponsorship requests from some needy Institutions to aid development projects.

HR & STAFF DEVELOPMENT

The relationship between Management and staff throughout the year under review was cordial and constructive and I must commend my Team for the harmonious working relationship.

Members of Staff continued to receive training, upgraded skills and received support to enhance career development prospects.

OUTLOOK FOR 2017

Reports from the World Bank and IMF show Ghana’s near term prospects as good and encouraging. Economic growth is expected to accelerate this year with projected GDP growth of 6.3%. Surveys conducted by the Central Bank indicate a positive outlook for business sentiments as this is expected to attract private sector investments.

Government is expected to reduce fiscal deficit to 6.5%. Various tax incentives announced by the Finance Minister in this year’s budget is expected to spur growth and turnaround the economy. Commodity prices including oil and cocoa are projected to increase.

Further repositioning of three exisiting products namely : Leasing, Machinery Credit and Material Supply Guarantees; making more efficient use of technology, enhancing branding and visibility would form priorities to be pursued.

The Company would take up opportunities created such as Government’s decision to settle huge debts owed Banks which is expected to create the needed space for Banks to support more SMEs with required financing to drive economic development and job creation.

The expected take-off of the Exim Bank Ghana would hopefully improve the business fortunes of most Ghanaian SMEs in the export business and help bring stability and growth to the economy in the areas of currency stability and job creation, going forward. I believe Shareholders are well informed about the Company’s integration with Exim Bank as the processes for full integration into the Bank have commenced. We expect the full integration, hopefully, by the third quarter.

Cocobod has reversed its directive of non acceptance of Guarantees from NBFI’s. This is expected to impact positively on our Company’s revenue in 2017.

ACKNOWLEDGEMENT

Mr. Chairman, recent developments regarding the Company’s merger with Exim Bank Ghana gives an indication that this may be our last AGM as a credit Guarantee Company. Consequently I would like to take this unique opportunity to thank all Shareholders, the Board, Management and Staff for their hard work and commitment to developing the credit Guarantee business in the interest of Ghana.

I must also express our deep appreciation to all our Stakeholders and partners – our loyal Clients, Staff, Banks, Contract Awarding Agencies, the Ministry of Finance and the media for their continuous support.

Thank you.


The Directors present their report and the financial statements of the Company for the year ended 31 December 2016.

DIRECTORS’ RESPONSIBILITY STATEMENT

The Directors are responsible for the preparation of financial statements that give a true and fair view of Eximguaranty Company (Ghana) Limited, comprising the statement of financial position at 31 December 2016 and the statements of comprehensive income, changes in equity and cash flows for the year then ended, and the notes to the financial statements which include a summary of significant accounting policies and other explanatory notes, in accordance with International Financial Reporting Standards and in the manner required by the Companies Act, 1963 (Act 179) and the Non-Bank Financial Institutions Act, 2008 (Act 774). In addition, the Directors are responsible for the preparation of the Directors’ report.

The Directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and for maintaining adequate accounting records and an effective system of risk management.

GOING CONCERN CONSIDERATION

In 2015, the President of Ghana set up a Presidential Taskforce to determine the feasiblity and modalities of establishing an Exim Bank by combining the operations of three entities that included Eximguaranty Company. An Act was passed on 2 March 2016.

In accordance with the Presidential Taskforce report, the President appointed a Board and Chief Executive who appointed a Transaction Advisor (Boulders Advisors Limited) to engage the three institutions for the transition process to commence.

The Transaction Advisor presented its report in December 2016. The shareholders of the Company have not met to discuss the options presented in the Transaction Advisor’s report. The transition team discussing integration into Exim Bank has not also held any meeting since the appointment of the new Finance Minister. The Directors are waiting for further directions from the Ministry of Finance.

The Board at its meeting on 22 December 2016 approved the 2017 budget which had key assumption that the transition process would go beyond 2017.

The 2017 budget and Business Plan for 2017 suggest that the Company is expected to be a going concern for 2017. The Board, therefore, concluded the Company is a going concern until the Company is officially liquidated which is expected to go beyond 12 months from 31 December 2016.

The financial statements have, therefore, been prepared on the basis of going concern.

The auditor is responsible for reporting on whether the financial statements give a true and fair view in accordance with the applicable financial reporting framework.

NATURE OF BUSINESS

The principal activity of the Company is to provide credit guarantee cover to financial institutions and other credit awarding agencies to assist them in extending credit facilities to borrowers who may have inadequate or no collateral.

The Company is licensed and regulated by the Bank of Ghana as a non-bank financial institution under the Non-Bank Financial Institutions Act, 2008, (Act 774). There was no change in the nature of business of the Company during the year.

REPORT OF THE DIRECTORSTO THE MEMBERS OF EXIMGUARANTY COMPANY (GHANA) LIMITED


FINANCIAL STATEMENTS AND DIVIDEND

The results for the year are as set out in the attached financials, highlights of which are as follows:

2016GH¢

2015GH¢

(Loss)/profit for the year (attributable to equity holders) (274,495) 150,732

to which is added the balance brought forward

on retained earnings of 232,711 130,574

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(41,784) 281,306

out of which is transferred to the mandatory reserve

fund, in accordance with the Non-Bank Financial

Institutions Act an amount of - (75,366)

and transfers from credit risk reserve of 247,393 114,949

--------- ---------

giving a total of 205,609 320,889

less: Interest on preference shares (30,000) (30,000)

---------- ----------

Resulting in a balance of 175,609 290,889

less: transfer to Guarantee Fund (35,122) (58,178)

---------- ---------

leaves a balance to be carried forward on retained earnings of

140,487 ========

232,711 =======

No dividend was declared in the current year (2015: Nil).

The Directors confirm that to the best of their knowledge:

§ the financial statements, prepared in accordance with applicable laws and the Company’s financial reporting framework, give a true and fair view of the Company’s financial position, performance and cash flows; and

§ the state of the Company’s affairs is satisfactory.

APPROVAL OF THE FINANCIAL STATEMENTS

The financial statements of Eximguaranty Company (Ghana) Limited, as identified in the first paragraph, were approved by the Board of Directors on ………………………. and signed on their behalf by

……………………...…… ...…….……………………… DIRECTOR DIRECTOR

REPORT OF THE DIRECTORSTO THE MEMBERS OF EXIMGUARANTY COMPANY (GHANA) LIMITED (CONT’D)


Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of Eximguaranty Company (Ghana) Limited, which comprise the statement of financial position at 31 December 2016 and the statements of comprehensive income, changes in equity and cash flows for the year then ended and the notes to the financial statements which include a summary of significant accounting policies and other explanatory notes, as set out on pages 8 to 40.

In our opinion, these financial statements give a true and fair view of the financial position of Eximguaranty Company (Ghana) Limited at 31 December 2016 and of its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards and in the manner required by the Companies Act, 1963 (Act 179) and the Non-Bank Financial Institutions Act, 2008 (Act 774).

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Other Information

The Directors are responsible for the other information. The other information comprises the information included in the Annual Report and the Directors’ Report as required by the Companies Act, 1963 (Act 179) and the Non-Bank Financial Institutions Act, 2008 (Act 774) but does not include the financial statements and our auditor’s report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibility of the Directors for the Financial Statements

The Directors are responsible for the preparation of financial statements that give a true and fair view in accordance with International Financial Reporting Standards and in the manner required by the Companies Act, 1963 (Act 179) and the Non-Bank Financial Institutions Act, 2008 (Act 774) and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

INDEPENDENT AUDITOR’S REPORTTO THE MEMBERS OF EXIMGUARANTY COMPANY (GHANA) LIMITED


In preparing the financial statements, the Directors are responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

The Directors are responsible for overseeing the Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

§ Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

§ Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

§ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

§ Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

§ Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

INDEPENDENT AUDITOR’S REPORTTO THE MEMBERS OF EXIMGUARANTY COMPANY (GHANA) LIMITED (CONT’D)

Responsibility of the Directors for the Financial Statements (cont’d)


We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Report on Other Legal and Regulatory Requirements

Compliance with the requirements of Section 133 of the Companies Act, 1963 (Act 179) and the Non-Bank Financial Institutions Act, 2008 (Act 774)

We have obtained all the information and explanations which, to the best of our knowledge and belief were necessary for the purpose of our audit.

In our opinion, proper books of account have been kept, and the statements of financial position and profit or loss and other comprehensive income are in agreement with the books of account.

The engagement partner on the audit resulting in this independent auditor’s report is Frederick Nyan Dennis (ICAG/P/1426).

………………………………………

FOR AND ON BEHALF OF:

KPMG: (ICAG/F/2017/038)

CHARTERED ACCOUNTANTS

13 YIYIWA DRIVE, ABELENKPE

P O BOX GP 242

ACCRA

…………………………. 2017

INDEPENDENT AUDITOR’S REPORTTO THE MEMBERS OF EXIMGUARANTY COMPANY (GHANA) LIMITED – (CONT’D)

Auditor’s Responsibilities for the Audit of the Financial Statements (cont’d)


Note 2016GH¢

2015GH¢

ASSETSProperty and equipment 14 576,970 781,134

---------- ----------Non-current assets 576,970 781,134

---------- ----------

Investments 12 15,765,220 16,276,010Receivables and prepayments 13 329,559 487,248Cash and cash equivalents 11 137,334 337,668

---------- -----------Current assets 16,232,113 17,100,926

---------- -----------Total assets 16,809,083

========17,882,060========

EQUITYStated capital 17 3,062,900 3,062,900Preference shares 18 3,000,000 3,000,000Mandatory reserve fund 19 1,511,108 1,511,108Retained earnings 22 140,487 232,711Credit risk reserve 23 335,901 583,294

---------- ----------Total equity 8,050,396 8,390,013

---------- ----------LIABILITIESDeferred income 21 326,938 575,560Guarantee fund 20 7,621,824 8,036,879Deferred tax liability 10 46,403 51,517

--------- ----------Non-current liabilities 7,995,165 8,663,956

--------- ----------Income tax liability 9(c,d) 437,886 520,444Payables 15 281,969 233,980Interest payable on preference shares 16 43,667 73,667

---------- ----------Current liabilities 763,522 828,091

---------- ----------Total liabilities 8,758,687 9,492,047

---------- ----------Total liabilities and equity 16,809,083

========17,882,060========

………………………… ………………………………

DIRECTOR DIRECTOR

The notes on pages 24 to 49 are an integral part of these financial statements.

STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 2016


Note 2016GH¢

2015GH¢

Guarantee and agency fees 5 1,316,536 1,448,264

Investment income 6 3,609,277 4,047,244

Other income 7 61,262 43,671

Release from guarantee fund 20 500,000 1,289,469

--------- ------------

Total revenue 5,487,075---------

6,828,648------------

Administrative expenses 8 5,266,684 5,298,278

Claims incurred 20 500,000---------

1,289,469------------

Total expenses 5,766,684---------

6,587,747------------

Operating profit before taxation (279,609) 240,901

Income tax credit/(expense) 9(a) 5,114-------

(90,169)-------

(Loss)/profit for the year and total comprehensive (loss)/income

(274,495)======

150,732======


STATEMENT OF COMPREHENSIVE INCOMEFOR THE YEAR ENDED 31 DECEMBER 2016


Statedcapital

GH¢

Preferenceshares

GH¢

Mandatoryreserve

GH¢

Retained earnings

GH¢

Credit riskreserve

GH¢

TotalGH¢

Balance at 1 January 2016 3,062,900 3,000,000 1,511,108 232,711 583,294 8,390,013

Total comprehensive loss for the year

Loss for the year ------------ ------------ ------------ (274,495)---------- ---------- (274,495)----------

Total comprehensive loss for the year

------------ ------------ ------------ (274,495)---------- ---------- (274,495)----------

Transactions with equity holders

Interest on preference shares ----------- ----------- -----------(30,000)

-------------------

(30,000)---------

Total transactions with equity holders

----------- ----------- ----------- (30,000)----------

---------(30,000)---------

Regulatory and other reserves

Transfer from credit risk reserve ----------- ----------- -----------247,393

----------(247,393)

--------------------

Total net movements in reserves - - - 247,393 (247,393) -

Transfer to guarantee fund ----------- ----------- -----------(35,122)

-----------

----------(35,122)----------

Balance at 31 December 2016 3,062,900=======

3,000,000========

1,511,108=======

140,487======

335,901======

8,050,396========


STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 DECEMBER 2016


Statedcapital

GH¢

Preferenceshares

GH¢

Manda-tory

reserveGH¢

Retained earnings

GH¢

Credit risk

reserveGH¢

TotalGH¢

Balance at 1 January 2015 3,062,900 3,000,000 1,435,742 130,574 698,243 8,327,459

Total comprehensive income for the year

Profit for the year - --------- - --------- - ---------150,732

---------- --------- 150,732 ---------

Total comprehensive income for the year - ----------

---------- --------- 150,732 ---------

- ---------

150,732 ---------

Transactions with equity holders

Interest on preference shares - --------- - --------- - --------- (30,000) --------- - --------- (30,000) ---------

Total transactions with equity holders - --------- - --------- - --------- (30,000) --------- - --------- (30,000) ---------

Regulatory and other reserves

Transfer to mandatory reserve fund - --------- - --------- 75,366 --------- (75,366) --------- - --------- - ---------

Transfer from credit risk reserve - - - 114,949 (114,949) -

--------- ---------- -------- --------- --------- ---------

Total net movements in reserves - --------- - --------- 75,366 --------- 39,583 --------- (114,949) --------- - ---------

Transfer to guarantee fund (58,178) (58,178)

Balance at 31 December 2015----------3,062,900 ========

----------3,000,000 ========

---------1,511,108

=======

---------232,711

=======

---------583,294

=======

---------8,390,013 == =====


STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 DECEMBER 2016 (CONT’D)


Note 2016GH¢

2015GH¢

Net cashflow from operating activities

(Loss)/profit after taxation (274,495) 150,732

Adjustments:

Depreciation 14 214,912 265,804

Profit on sale of property and equipment 14 (3,840) (5,086)

Tax (credit)/expense 9(a) (5,114) 90,169

Interest income 6 (3,609,277) (4,047,244)

Unrealised exchange difference on cash (3,490)------------

(1,542)------------

(3,681,304) (3,547,167)

Changes in:

Receivables and prepayments 157,690 156,103

Payables 47,989 56,756

Deferred income (248,622)------------

(367,524)------------

Cash used in operations (3,724,247) (3,701,832)

Tax paid 9(c) (82,558) (307,286)

Claims paid 20 (500,000) (1,289,469)

Claims recovered 20 49,823------------

388,226------------

Net cash flow used in operating activities (4,256,982)------------

(4,910,361)------------

Cashflows from investing activities

Purchase of property and equipment 14 (10,748) (224,521)

Proceeds from sale of property and equipment 14 3,840 5,086

Interest received 3,686,987 3,861,987

Decrease/(increase) in medium term investments 125,463------------

(966,527)------------

Net cashflow from investing activities 3,805,542------------

2,676,025------------

Cashflows used in financing activities

Interest on preference shares paid 16 (60,000)---------

-----------

Net cashflow used in financing activities (60,000)---------

-----------

Net decrease in cash and cash equivalents (511,440) (2,234,336)

Cash and cash equivalents at 1 January 5,877,491 8,110,285

Effect of exchange rate fluctuations on cash held 3,490------------

1,542------------

Cash and cash equivalents at 31 December 5,369,541=======

5,877,491=======


STATEMENT OF CASH FLOWSFOR THE YEAR ENDED 31 DECEMBER 2016


NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2016

1. REPORTING ENTITY

Eximguaranty Company (Ghana) Limited is domiciled in Ghana. The Company’s registered office is at No. 27 Noi Fetreke, Roman Ridge, Ambassadorial Estate Extensions Accra.

The Company is involved in the provision of credit guarantee cover to financial institutions and other credit awarding agencies to assist them in extending credit facilities to borrowers who may have inadequate or no collateral. The financial statements at and for the year ended 31 December 2016 comprise the individual financial statements of the Company.

The financial statements were authorized for issue by the Board of Directors on ………………………………………...

2.BASIS OF PREPARATION

(a) Statement of compliance

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) and in a manner required by the Companies Act 1963, (Act 179) and the Non-Bank Financial Institutions Act, 2008 (Act 774).

(b) Basis of measurement

The financial statements are prepared on the historical cost basis.

(c) Functional and presentation currency

The financial statements are presented in Ghana Cedis (GH¢) which is the Company’s functional currency. All financial information presented in Ghana Cedis have been rounded to the nearest Cedi, except where otherwise indicated.

(d) Use of estimates and judgment

The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Estimates and underlying assumptions are based on historical experience and other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The 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 if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

In particular, information about significant areas of estimation, uncertainty and critical judgments in applying accounting policies that have the most significant effect on amounts recognised in the financial statements is included in the following notes:

§ Note 3(e) – determination of fair values

§ Note 4 – financial instruments – fair values and risk management

3. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies set out below have been applied consistently to all periods presented in these financial statements.

(a) Foreign currency

(i) Foreign currency transactions

Transactions denominated in foreign currency are translated into the functional currency using exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement. Non-monetary assets and liabilities are translated at historical exchange rates if held at historical cost, or at exchange rates ruling at the date that fair value was determined if held at fair value, with the resulting exchange gain or loss recognised in the income statement or shareholders’ equity as appropriate. Foreign currency differences arising on retranslation are generally recognized in profit or loss in other income or administrative expenses depending on whether foreign currency movements are in a net gain or loss position.

(b) Property and equipment

(i) Recognition and measurement

Items of property and equipment are measured at acquisition or construction cost less accumulated depreciation and any accumulated impairment losses.



Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, and any other costs directly attributable to bringing the asset to a working condition for its intended use. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

When parts of an item of property and equipment have different useful lives, they are accounted for as separate items (major components).

(ii) Subsequent expenditure

The cost of replacing part of an item of property or equipment is recognised in the carrying amount of the item if it is probable that future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The costs of the day-to-day maintenance, repair and servicing expenditures incurred on property and equipment are recognised in income statement.

(iii) Depreciation

Depreciation is recognised in the income statement on a straight-line basis over the estimated useful lives of each part of an item of property and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives.

The estimated useful lives of major classes of depreciable property and equipment are:

Office Building - 50 years

Plant and Machinery - 10 years

Motor Vehicles - 4 years

Office Equipment - 4 years

Furniture and Fittings - 4 years

Depreciation methods, useful lives and carrying amount are reassessed at each reporting date. The carrying amounts of property and equipment are assessed whether they are recoverable in the form of future economic benefits. If the recoverable amount of a PPE has declined below its carrying amount, an impairment loss is recognised to reduce the value of the asset to its recoverable amount. In determining the recoverable amount of the asset, expected cash flows are discounted to their present value.

Gains and losses on disposal of property and

equipment are determined by comparing proceeds from disposal with the carrying amounts of property and equipment and are recognised in the income statement as other income.

(iv) Derecognition

Property and equipment are derecognised upon disposal or when no future economic benefits are expected to flow to the Company from either their use or disposal.

(c) Intangible assets

Software

Software acquired by the Company is stated at cost less accumulated amortisation and accumulated impairment losses.

Subsequent expenditure on software assets is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is expensed as incurred.

Amortisation is recognised in the income statement on a straight-line basis over the estimated useful life of the software from the date that it is available for use.

Intangible assets are derecognised upon disposal or when no future economic benefits are expected to flow to the Company from either their use or disposal. Gains or losses on derecognition of an intangible asset are determined by comparing the proceeds from disposal, if applicable, with the carrying amount of the intangible asset and are recognised directly in profit or loss.

(d) Financial instruments

(i) Non-derivative financial instruments

Non-derivative financial instruments comprise receivables, cash and cash equivalents, investments and payables.

Recognition and derecognition of a non-derivative financial instrument.

The Company classifies its financial liabilities other than financial guarantees and loan commitments as financial liabilities measured at amortised cost.

The Company initially recognises loans and receivables on the date when they are originated. Financial assets are derecognised when the



contractual rights to the cash flows from the assets expire, or it transfers the right to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership are transferred or it neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control over the transferred asset. Any interest in such derecognised financial assets that is created or retained by the Company is recognised as a separate asset or liability.

Financial liabilities are initially recognised on the trade date when the entity becomes a party to the contractual provisions of the instrument. The Company derecognises a financial liability when its contractual obligations are discharged or cancelled or expire.

Non-derivative financial instruments are categorised as follows:

§ Loans and receivables – these are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables are subsequently recognised at amortised cost using effective interest method less appropriate allowances for doubtful receivables. Allowances for doubtful receivables represents the Company’s estimate of incurred losses arising from the failure or inability of customers to make payments when due. These estimates are based on aging of customer’s balances, specific credit circumstances and the Company’s receivables historical experience.

Loans and receivables comprise cash and cash equivalents and receivables.

Cash and cash equivalents - Cash and cash equivalents comprise cash balances and call deposits with maturities of three months or less from the acquisition date that are subject to an insignificant risk of changes in fair value and are used by the Company in the management of its short-term commitments.

§ Held-to-maturity – these are non-derivative assets with fixed or determinable payments and fixed maturity that the Company has the positive intent and ability to hold to maturity and which are not designated at fair value through profit or loss or available-for-sale.

Held to maturity assets are initially measured at fair value plus incremental direct transaction costs and subsequently measured at amortized

cost using the effective interest method.

Any sale or reclassification of a significant amount of held to maturity asset not close to their maturity would result in the reclassification of all held to maturity assets as available-for-sale, and would prevent the Company from classifying investment securities as held-to-maturity for the current and the following two financial years. Differences between the carrying amount (amortized cost) and the fair value on the date of the reclassification are recognized in other comprehensive income.

The Company classifies investments as held-to-maturity.

§ Financial liabilities measured at amortised cost - this relates to all other liabilities that are not designated at fair value through profit or loss. The Company classifies non-derivative financial liabilities into the other liabilities category.

Other financial liabilities comprise payables.

(e) Determination of fair values

Some of the Company’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. The Company regularly reviews significant unobservable inputs and valuation adjustments. When measuring the fair value of an asset or liability, the Company uses market observable data as far as possible.

Fair values are categorised into different levels in the fair value hierarchy based on the inputs used in the valuation techniques as follows:

§ Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

§ Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

§ Level 3: inputs for the asset and liability that are not based on observable market data (unobservable inputs).

If inputs used to measure the fair value of an asset or a liability might be categorised in different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.



Further information about the assumptions made in determining fair values is included in Note 4, financial instruments – fair value and risk management.

(f) Impairment

(i) Financial assets

A financial asset is considered impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the original effective interest rate.

Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics.

All impairment losses are recognised in the income statement. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised.

(ii) Non-financial assets

The carrying amounts of the Company’s non-financial assets other than deferred tax assets are reviewed at each reporting date to determine whether there is an indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.

The recoverable amount of an asset or cash generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflect current market assessments of the time value of money and the risk specific to the asset.

An impairment loss is recognised if the carrying amount of an asset or its cash generating unit exceeds its recoverable amount. Impairment losses are recognised in the income statement.

(ii) Non-financial assets (cont’d)

A previously recognised impairment loss is reversed where there has been a change in circumstances or in the basis of estimation used to determine the

recoverable value, but only to the extent that the asset’s net carrying amount does not exceed the carrying amount of the asset, after provisions and depreciation, which would have been determined if no impairment loss had been recognised.

(g) Share capital

Ordinary shares

Proceeds from the issue of ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity, net of any tax effects.

(h) Mandatory reserve fund

In accordance with the industry’s legal and regulatory frameworks, a mandatory reserve is established and maintained, to cover the risk of bankruptcy. This is measured at 50% of the net profits after tax, but before dividend and such amount shall accumulate until it reaches the minimum paid-up capital, after which time the applicable percentage reduces to a minimum of 15%.

(i) Interest income and expense

Interest income and expense are recognized in profit or loss using the effective interest method.

When calculating the effective interest rate, the Company estimates future cash flows considering all contractual terms of the financial instrument, but not future credit losses. The calculation includes all transaction costs, fees and points paid or received that are an integral part of the effective interest rate. Transaction costs include incremental costs that are directly attributable to the acquisition or issue of a financial asset or liability.

Once a financial asset or a group of similar financial assets have been written down as a result of an impairment loss, interest income is recognized using the rate of interest used to discount future cash flows for the purpose of measuring the impairment loss.

(j) Guarantee and agency fees

Guarantee and agency fees are generally recognised on an accrual basis when services have been rendered, it is probable that future economic benefits of the transaction will flow to the entity, the



revenue can be measured reliably and the costs are identifiable and can be measured reliably.

If the guarantees issued under a single arrangement are rendered over different reporting periods, then the guarantee fees are deferred on a straight line basis between the different reporting periods.

(k) Employment benefits

(i) Defined contribution plans

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions to a separate entity and will have no legal or constructive obligation to pay future amounts. Obligations for contributions to defined contribution schemes are recognised as an expense in the statement of comprehensive income in the periods during which services are rendered by employees.

(ii) Short-term employee benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A provision is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

(iii) Provident fund

The Company has a provident fund scheme for all employees who have completed their probation period with the Company.

Employees contribute 5.5% of their basic salary to the Fund whilst the Company contributes 13%. Obligations under the plan are limited to the relevant contributions, which are settled on due dates to the Fund Manager.

(l) Taxation

Income tax expense comprises current and deferred tax. The Company provides for income taxes at the current tax rates on the taxable profits of the Company.

Income tax is recognised in the income statement

except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable on taxable income for the year using tax rates enacted or substantially enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax is provided using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes.

Deferred tax is measured at tax rates that are expected to be applied to temporary differences when they reverse, based on laws that have been enacted or substantively enacted by the reporting date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

(m) Provisions

A provision is recognised when the Company has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at pre-tax rates that reflect current market assessments of the time value of money and where appropriate, risks specific to the liability.

(n) Dividend

Dividend payable is recognised as a liability in the period in which they are declared. Dividend proposed which is yet to be approved by the shareholders, is disclosed by way of notes.

(o) Financial guarantee contracts

Financial guarantee contracts are contracts that require the Company to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due, in accordance with the terms of the debt instrument.



Financial guarantees are initially recognised at fair value and amortised over the useful life of the financial guarantee. The liability is subsequently carried at the higher of the amortised amount and the present value of any expected payments to settle the liability, when payment becomes probable.

(p) Grant in support of guarantee fund

Grants are received from Export Development and Agricultural Investment Fund (EDAIF) to augment the guarantee fund to further enhance activities in support of the export sector. This grant is accounted for as deferred income and are released to the income statement to offset claims incurred.

(q) Subsequent events

Events subsequent to the reporting date are reflected in the financial statements only to the extent that they relate to the year under consideration and the effect is material.

(r) Comparatives

Except when a standard or an international interpretation permits or requires otherwise, all amounts are reported or disclosed with comparative information. Where considered necessary, comparative figures have been adjusted to conform to changes in presentation in the current year.

(s) New standards and interpretations not yet adopted

There are new or revised Accounting Standards and Interpretations in issue that are not yet effective. These include the following Standards and Interpretations that are applicable to the business of the entity and may have an impact on future financial statements:

Standard/InterpretationEffective date Periods beginning on or after

IAS 7 Disclosure amendments 1 January 2017

IAS 12 Recognition of deferred Tax Assets for Unrealised Losses 1 January 2017

IFRS 15 Revenue from contracts with customers 1 January 2018

IFRS 9 Financial Instruments 1 January 2018

IFRS 16 Leases 1 January 2019

Disclosure Initiative (Amendments to IAS 7)

The amendments provide for disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flow and non-cash changes. This includes providing a reconciliation between the opening and closing balances for liabilities arising from financing activities.

The amendments apply for annual periods beginning on or after 1 January 2017 and early application is permitted.

To satisfy the new disclosure requirements, the Company intends to present a reconciliation between the opening and closing balances for liabilities with changes arising from financing activities.



Recognition of Deferred Tax Assets for Unrealised Losses (Amendments to IAS 12)

The amendments provide additional guidance on the existence of deductible temporary differences, which depend solely on a comparison of the carrying amount of an asset and its tax base at the end of the reporting period, and is not affected by possible future changes in the carrying amount or expected manner of recovery of the asset.

The amendments also provide additional guidance on the methods used to calculate future taxable profit to establish whether a deferred tax asset can be recognised.

Guidance is provided where an entity may assume that it will recover an asset for more than its carrying amount, provided that there is sufficient evidence that it is probable that the entity will achieve this.

Guidance is provided for deductible temporary differences related to unrealised losses are not assessed separately for recognition. These are assessed on a combined basis, unless a tax law restricts the use of losses to deductions against income of a specific type.

The amendments apply for annual periods beginning on or after 1 January 2017 and early application is permitted.

The Company has not assessed the potential impact on its financial statements resulting from the amendment.

IFRS 15 Revenue from Contracts with Customers

This standard replaces IAS 11 Construction Contracts, IAS 18 Revenue, IFRIC 13 Customer Loyalty Programmes, IFRIC 15 Agreements for the Construction of Real Estate, IFRIC 18 Transfer of Assets from Customers and SIC-31 Revenue – Barter of Transactions Involving Advertising Services.

The standard contains a single model that applies to contracts with customers and two approaches to recognising revenue: at a point in time or over time. The model features a contract-based five-step analysis of transactions to determine whether, how much and when revenue is recognised.

This new standard may have an impact on the

Company, which will include a possible change in the timing of when revenue is recognised and the amount of revenue recognised.

The Company will perform a detailed assessment of the impact of this standard and will provide more information in subsequent financial statements.

The standard is effective for annual periods beginning on or after 1 January 2018, with early adoption permitted under IFRS. The Company will adopt this standard for the year ending 31 December 2018.

IFRS 9 Financial Instruments

On 24 July 2014, the IASB issued the final IFRS 9 Financial Instruments Standard, which replaces earlier versions of IFRS 9 and completes the IASB’s project to replace IAS 39 Financial Instruments: Recognition and Measurement.

This standard may have an impact on the Company, which will include changes in the measurement bases of the Company’s financial assets to amortised cost, fair value through other comprehensive income or fair value through profit or loss. Even though these measurement categories are similar to IAS 39, the criteria for classification into these categories are significantly different.

In addition, the IFRS 9 impairment model has been changed from an “incurred loss” model in IAS 39 to an “expected credit loss” model, which is expected to increase the provision for bad debts recognised by the Company.

The standard is effective for annual periods beginning on or after 1 January 2018 with retrospective application, early adoption is permitted. The Company will adopt the amendment for the year ending 31 December 2018.

IFRS 16 Leases

IFRS 16 was published in January 2016. It sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract, i.e. the customer (‘lessee’) and the supplier (‘lessor’). IFRS 16 replaces the previous leases Standard, IAS 17 Leases, and related Interpretations. IFRS 16 has one model for lessees which will result in almost all leases being included on the Statement of Financial Position. No significant changes have been included for lessors.



The standard is effective for annual periods beginning on or after 1 January 2019, with early adoption permitted only if the entity also adopts IFRS 15. The transitional requirements are different for lessees and lessors.

The Company has not yet quantified the impact on its reported assets and liabilities from the adoption of IFRS 16. The quantitative effect will depend on, inter alia, the transition method chosen, the extent to which the Company uses the practical expedients and recognition exemptions, and any additional leases that the Company enters into. The Company expects to disclose its transition approach and quantitative information before adoption.

4. FINANCIAL INSTRUMENTS – FAIR VALUES AND RISK MANAGEMENT

(a) Accounting classification and fair values

The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy.

It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.

Loans & receivables

GH¢

Held-to- maturity

GH¢

Other financial

liabilities GH¢

Total GH¢

December 2016

Financial assets not measured at fair value

Cash and cash equivalents 137,334 - - 137,334

Investments - 15,765,220 - 15,765,220

Receivables 64,651 --------

- --------

- --------

64,651 --------

201,985 ======

15,765,220 ======

- ======

15,967,205 ========

(a) Accounting classification and fair values

Loans &receivables

GH¢

Held-to-maturity

GH¢

Other financial

liabilities GH¢

Total GH¢

December 2016

Financial liabilities not measured at fair value

Payables - =====

- =====

204,832 ======

204,832 =======

December 2015

Financial assets not measured at fair value

Cash and cash equivalents 337,668 - - 337,668



Investments - 16,276,010 - 16,276,010Receivables 145,388

----------

----------

---------145,388

---------

483,056 ========

16,276,010 ========

- ========

16,759,066 ========

Financial liabilities not measured at fair value Payables

- ======

- ======

182,083 ======

182,083 ======

(b) Financial risk management

(i) Overview

The Company has exposure to the following risks from its use of financial instruments:

§ credit risk

§ liquidity risk

§ market risks

§ operational 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.

(ii) Risk management framework

The Board of Directors has the overall responsibility for the establishment and oversight of the Company’s risk management framework. The responsibilities of the Board of Directors include: setting out the Company’s overall risk appetite/tolerance limit, ensuring that the Company’s overall risk exposure is maintained at prudent levels and consistent with available capital. They also include; ensuring that executive management as well as individuals responsible for risk management possess sound expertise and knowledge to accomplish the risk management function and ensuring that appropriate policies and procedures for risk management are in place.

The Board of Directors, credit committee and the management team oversee implementation of the broad risk management policies and objectives of the Company.

The most important components of this financial risk are market risks (interest rate risk, equity risk and currency risk), credit risk and liquidity risk.

The risk that the Company primarily faces due to the nature of its investments and liabilities is interest rate risk. The risk arise from open positions in interest rates which are exposed to general and specific market movements.

(iii) Credit risk

Credit risk stems from outright default due to inability or unwillingness of a client or counterpart to meet commitments in relation to guarantees issued. Resultant losses are written off in the statement of comprehensive income.



The credit committee is responsible for implementation of the guarantee risk policy and monitoring credit risk on transactional basis to ensure compliance with guarantee limits approved by the Board. The credit committee is a separate function from the operations department and this ensures credibility and discipline in the guarantee delivery value chain.

Managing problem guarantees

Monitoring and Recovery department manages delinquent facilities including outright recoveries or nursing of such problem guarantees back to health.

At delinquent stage and 360 days past due, where recovery efforts are unsuccessful, the Monitoring and Recovery Department refers the client to the Company’s external solicitors.

Provisioning for guarantees

In conformity with Bank of Ghana‘s directives, the minimum provision that are held are as follows:

Guarantee risk rating minimum provision Required - %

Advanced mobilization 1.0Credit guarantee 1.0Mobilisation guarantee 1.5Advance payment guarantee 1.0Bid bond 0.5Bid security 0.5Performance bond/performance security 1.0Seed fund guarantee 1.0Syndication guarantee 1.0

Exposure to credit risks

The carrying amount of financial assets represents the maximum credit risk exposure. The maximum exposure at the reporting date was:

2016GH¢

2015GH¢

Receivables 64,651 145,388

Investments 15,765,220 16,276,010

Bank balances 125,748 ---------

326,767 ---------

15,955,619 ========

16,748,165 ========

Off-balance sheet items:Unexpired guarantees outstanding 27,928,668

========47,375,085 ========

Concentration by location within Ghana



Receivables 64,651 145,388

Investments 15,765,220 16,276,010

Bank balances 125,748 ---------

326,767 ---------

15,955,619 ========

16,748,165 ========

Off-balance sheet items:

Unexpired guarantees outstanding 27,928,668 ========

47,375,085 ========

Concentration by location outside Ghana - ========

- ========

(iv) Liquidity risk

Liquidity risk is the risk that the Company either does not have sufficient financial resources available to meet all its obligations and commitments as they fall due, or can access them only at excessive cost. The Company’s approach to managing liquidity is to ensure that it will maintain adequate liquidity to meet its liabilities when due.

The following are contractual maturities of financial liabilities:

Amount GH¢

6mths or less GH¢

12mths GH¢

December 2016

Non-derivative financial liabilities

Payables 204,832 ======

204,832 ======

- ======

December 2015

Non-derivative financial liabilities

Payables 182,083 ======

182,083 ======

- ======

(v) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Company’s income or the value of its holding of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, whilst optimizing the return.

(a) Currency risk

The Company is exposed to currency risk in terms of balances denominated in currencies other than the functional currency.

The Company’s exposure to foreign currency risk was as follows based on notional amounts.



2016 US$ Euro GB£

Assets

Cash and bank balances 5,525 -------

135 -------

27 -------

-----

Net exposure 5,525 =====

135 =====

27 =====

2015

Assets

Cash and bank balances 15,139 ------

135 ------

27 ------

-----

Net exposure 15,139 =====

135 =====

27 =====

The following significant exchange rates applied during the year:

Average rate Reporting rate

2016 2015 2016 2015

US$ 1 3.93 3.76 4.20 3.80

Euro 1 4.34 4.16 4.44 4.13

GBP 1 5.28 5.75 5.20 5.62

(b) Sensitivity analysis on currency risks

The following table shows the effect of a strengthening or weakening of GH¢ against all other currencies on equity and profit or loss. This sensitivity analysis indicates the potential impact on equity and profit or loss based upon the foreign currency exposures recorded at 31 December. (See “currency risk” above) and it does not represent actual or future gains or losses. The sensitivity analysis is based on the percentage difference between the closing exchange rate and the average exchange rate per currency recorded in the course of the respective financial year.

A strengthening/weakening of the GH¢, by the rates shown in the table, against the following currencies at 31 December would have increased/decreased equity and profit or loss by the amounts shown below:



This analysis assumes that all other variables, in particular interest rates, remain constant.2016

2015 At 31 December

% Change Profit or loss/equity impact Strengthening GH¢

Profit or loss/equity impact Weakening GH¢

% Change Profit or loss/equity impact Strengthening GH¢

Profit or loss/equity impact Weakening GH¢

Euro ±10 60 (60) ±10 56 (56)

USD ±10 2,322 (2,322) ±10 5,748 (5,748)

GBP ±10 14 (14) ±10 15 (15)

(c) Interest rate risk

Changes in market interest rates have a direct effect on the contractually determined cash flows associated with floating rate instruments. Interest rate risk relates to the Company’s investments in floating or fixed rate deposits and treasury bills. At the reporting date, the interest rate profile of the Company‘s interest-bearing financial instruments was:

Carrying amounts

2016GH¢

2015GH¢

Fixed rate instruments

Fixed deposit 12,120,258 11,823,142

Treasury bills 3,644,962 ---------

4,452,868 ---------

15,765,220 ========

16,276,010 ========

The Company does not account for any fixed rate financial instruments at fair value through profit or loss therefore a change in interest rates at the reporting date would not affect profit or loss. No interest rate sensitivity analysis has thus been disclosed.

The Company does not have variable-rate instruments.

(vi) Operational risk

Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. It is the risk of loss arising from the potential that inadequate information systems, breaches of internal controls, fraud, technological failure and unforeseen catastrophes may result in unexpected loss or reputational problems.

The Company has developed a thorough and consistent framework and policies to control and actively manage its operational risk.

(vii) Compliance and regulatory risk

In order to strengthen the Company’s compliance with regulatory requirements, the Company organizes series of dedicated training on a regular basis to equip staff with compliance and regulatory issues in order to minimize risk emanating there from.



(viii) Legal risk

The Company is not dependent on any patent or any industrial, commercial or financial contract. The Company’s activities are undertaken in a manner which adequately reduces the risks which may arise out of material litigation to be initiated against it (the Company).

(ix) Reputational risk

The Company conducts its business in a responsible, professional and transparent way. By offering simplified products and following the necessary legal and regulatory processes, the Company safeguards the interest of its clients as well as its reputation. Furthermore, the Company maintains close ties with the communities in which it operates by supporting them in various ways. This is aimed at demonstrating our commitment and fostering a long term relationship with our clients and the public at large.

(x) Capital management

(a) Capital definition

The Company’s capital, ordinarily referred to as shareholders fund comprises ordinary share capital raised through direct investment, retained earnings including current year profit and various reserves the Company is statutorily required to maintain. As a non-bank financial institution, the Company also has regulatory capital as defined below.

The primary objectives of the Company’s capital management are to ensure that the Company complies with the requirement of Bank of Ghana and healthy capital ratios in order to support its business and to maximise shareholders value.

The Company manages its capital structure and makes adjustment to it in the light of changes in the economic conditions and the risk characteristics of its activities. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividend payments to shareholders, or issue additional capital securities.

(b) Regulatory capital

Regulatory capital consist of Tier 1 capital, which comprises share capital, share deals account, retained earnings including current year profit, foreign currency translation and minority interests less accrued dividend, net long positions in own share and goodwill. Certain adjustments are made to IFRS-based result and reserves, as prescribed by the Bank of Ghana. The other component of regulatory capital is Tier 2 capital which includes revaluation reserves and preference shares.

(c) Capital adequacy

The adequacy of the Company’s capital is monitored using, among other measures, the rules and ratios established by the Basel Committee on Banking Supervision and adopted by the Bank of Ghana.

The Central Bank requires Non-Bank Financial Institutions to:

(i) Hold a minimum paid up capital of GH¢15 million

(ii) Maintain a minimum capital adequacy ratio of 8%

The capital adequacy ratios of the Company as of 31 December 2016 and 2015 are shown below:



2016 2015

GH¢ GH¢

Tier 1 capital

Ordinary share capital 3,062,900 3,062,900

Disclosed reserves 1,987,496 2,327,113

Losses not provided for (335,901) ---------

(583,294) ---------

4,714,495 ---------

4,806,719 ---------

Tier 2 capital

Preference shares 3,000,000 ---------

3,000,000 ---------

Total regulatory capital 7,714,495 7,806,719

----------

Adjusted risk-weighted assets 36,965,731 ----------

56,414,098 -----------

Total capital expressed as a percentage of

total risk-weighted assets is 20.87% 13.84%

Management provided us with a letter from Financial Investment Trust dated 30 May 2014 indicating that the Company is not a Finance House, therefore, its focus should be to grow the Guarantee Fund and not capital.

The Company considers this as an exemption from meeting the minimum capital requirement of GH¢15 million, hence, it has not met the minimum capital requirement at the end of the reporting date and at the end of the prior year.

5. REVENUE2016 2015

GH¢ GH¢

Guarantee and agency fees 1,316,536 ========

1,448,264 ========

6. INVESTMENT INCOMEIncome from investment 2,724,412 2,812,880

Income on guarantee fund held at Bank of Ghana 884,865 ---------

1,234,364 ---------

3,609,277 ========

4,047,244 ========



7. OTHER INCOME

2016 2015

GH¢ GH¢Exchange gain 3,304 1,112Gain on sale of property and equipment 3,840 5,086Sundry income 32,248 12,696Interest on staff loan 3,405 4,215Concessionary interest on staff loan 18,465

--------20,562

--------61,262

======43,671

======

8. ADMINISTRATIVE EXPENSES

Directors’ remuneration 449,660 403,106Auditor’s remuneration 65,000 62,000Donation 2,595 9,810Depreciation 214,912 265,804Staff cost 2,912,400 2,882,777Repairs and maintenance 68,062 75,614Rent 190,397 134,653Utilities 284,493 190,028Bad & doubtful debts 75,296 38,799Other administrative expenses* 985,404 1,215,125Concessionary interest 18,465

---------20,562

---------5,266,684 ========

5,298,278 ========

*Included in other administrative expenses are stationery and office expenses, project monitoring and inspection expenses, training, subscription, vehicle running cost, and legal fees.

2016 2015

GH¢ GH¢Staff cost comprise:Wages and salaries 1,709,551 1,727,469Social security fund contribution 232,260 234,088Provident fund contributions 232,260 233,617Other staff costs 544,204 543,187Medical expenses 194,125 144,416

---------2,912,400 ---------

---------2,882,777 ---------

The number of persons employed by the Company at the year-end was 32 (2015: 33).



9. TAXATION

a. Income tax expense

2016 2015

GH¢ GH¢

Current income tax - 70,512

National fiscal stabilization levy - 12,045

Deferred tax charge (5,114) ------

7,612 ------

(5,114) =====

90,169 =====

b. Reconciliation of effective tax

The tax charge based on the Company’s profit before tax differs from the hypothetical amount that would arise using the statutory income tax rate.

This is explained as follows:

2016 2015

GH¢ GH¢

(Loss)/profit before taxation (279,609) ======

240,901 ======

Tax at applicable tax rate at 25% (2015: 25%) (69,902) 60,225

Non-deductible expenses 649 17,899

Tax exempt income - -

Current year losses for which no deferred tax asset is recognised -

National fiscal stabilisation levy - -------

12,045 -------

Income tax expense (5,114) =====

90,169 =====

Effective tax rate 2% ===

37% ===



The movement on the income tax account was as follows:

c. Company income tax

Balance 1/1/16

GH¢

Payments GH¢

Charge for the

year GH¢

Balance 31/12/16

GH¢

Year of assessment

2003-2012 142,340 - 142,340

2013 323,061 (50,000) - 273,061

2016 - ----------

(32,558) ----------

- ---------

(32,558) ----------

465,401 ----------

(82,558) ----------

- ---------

382,843 ----------

d. National Fiscal Stabilisation Levy

Balance1/1/16

GH¢

PaymentsGH¢

Chargefor the

yearGH¢

Balance31/12/16

GH¢

2013 39,380 - - 39,380

2014 3,618 - - 3,618

2015 12,045 - - 12,045

2016 - - - -

-------- ----------------

-----------

55,043 - - 55,043

---------- ----------------

-------------

520,444 (82,558) - 437,886

====== ===== ====== ======

The National Fiscal Stabilisation Levy Act, 2013 (862) was introduced in 2013 and is effective prospectively from July 2013 with an eighteen (18) months tenure. Under the Act, a 5% levy, which is payable quarterly, is charged on profit before tax of selected entities. On 31 December 2014, Act (862) was amended by Act (882) to extend the date of expiration of the national fiscal stabilization levy and to provide for related matters. Under the Amended Act, the levy is payable in respect of profit before tax for the 2013, 2014, 2015, 2016 and 2017 years of assessment.



The above tax liabilities are subject to agreement with the Ghana Revenue Authority.

10. DEFERRED TAX2016 2015GH¢ GH¢

Balance at 1 January 51,517 43,905Charge for the year (5,114) 7,612Balance at 31 December --------

46,403 ======

-------- 51,517

======

Unrecognised deferred tax asset

Deferred tax asset of GH¢64,139 has not been recognised in respect of current year tax loss of GH¢256,556 because it is not probable that future taxable profits will be available against which the Company can use the benefits therefrom.

11. CASH AND CASH EQUIVALENTS2016 2015GH¢ GH¢

Balances with Bank of Ghana 71,939 155,448Balances with other banks 53,809 171,319Cash on hand 11,586

----------10,901

----------

Cash and cash equivalents in statement of financial position 137,334 337,668

91 Day treasury bills and fixed deposits 5,232,207 ----------

5,539,823 ----------

Cash and cash equivalents in statement of cashflows 5,369,541 =======

5,877,491 =======

12. INVESTMENTS2016 2015GH¢ GH¢

Treasury bills 3,644,962 4,452,868Fixed deposits 12,120,258

---------11,823,142 ---------

15,765,220 ========

16,276,010 ========

Short term investments (91 Day treasury bills and fixed deposits) 5,232,207 5,539,823

Medium term investments (above 91 days but within 1 year) 9,610,747 9,736,210

Accrued interest income 922,266 ---------

999,977 ---------

15,765,220 ========

16,276,010 ========

There was no indication of impairment of investment securities held at the year end.



13. RECEIVABLES AND PREPAYMENTS

2016 2015

GH¢ GH¢

Trade debtors - 75,296

Staff debtors 64,651 70,091

Prepayments 264,908 --------

341,861 --------

329,559 ======

487,248 ======

The maximum amount due from staff during the year amounted to GH¢124,336 (2015: GH¢121,000).

Loans to staff are granted at an interest rate ranging between 2-3% per annum. The staff loans have been recognized at fair value using market interest rates.

Prepayments represent the unexpired portion of certain expenditure spread on time basis.

14. PROPERTY AND EQUIPMENT

Office Motor Office Fixtures & Plant &

Building Vehicle Equipment Fittings Machinery Total

GH¢ GH¢ GH¢ GH¢ GH¢ GH¢

Cost

Balance at 1 January 2016 435,249 825,365 439,665 322,329 120,184 2,142,792

Additions - - 8,198 2,550 - 10,748

Disposal - - (1,350) (16,622) - (17,972)

Balance at 31 December 2016 435,249 --------

825,365 --------

446,513 --------

308,257 --------

120,184 --------

2,135,568 ---------

Depreciation


Charge for the year 8,705 136,408 32,385 28,298 9,116 214,912

Disposal - --------

- --------

(1,350) --------

(16,622) --------

- --------

(17,972) --------

Balance at 31 December 2016 101,680 --------

706,154 --------

404,359 --------

272,509 --------

73,896 --------

1,558,598 --------

Net Book Value

At 31 December 2016 333,569 ======

119,211 ======

42,154 ======

35,748 ======

46,288 ======

576,970 ======



Office Motor Office Fixtures & Plant &

Building Vehicle Equipment Fittings Machinery Total

GH¢ GH¢ GH¢ GH¢ GH¢ GH¢

Cost


Additions - 136,782 42,232 45,507 - 224,521

Disposal - (50,772) - (5,736) - (56,508)

---------- --------- ---------- ---------- ---------

Balance at 31 December 2015

435,249 825,365 439,665 322,329 120,184 2,142,792

---------- --------- ---------- ---------- ---------

Depreciation


Charge for the year 8,705 150,510 47,366 47,204 12,019 265,804

Disposal - (50,772) - (5,736) - (56,508)

-------- ---------- ---------- ---------- --------

Balance at 31 December 2015

92,975 569,746 373,324 260,833 64,780 1,361,658

-------- ---------- ---------- ---------- --------

Net Book Value

At 31 December 2015 342,274 255,619 66,341 61,496 55,404 781,134

====== ====== =====

There was no indication of impairment of property and equipment held by the Company at 31 December 2016 (2015: Nil)



Disposal of property and equipment2016 2015

GH¢ GH¢Cost 17,972 56,508

Accumulated depreciation (17,972) (56,508)

-------- --------

Net book value - -

Proceeds from disposal 3,840 -------

5,086 -------

Gain on disposal 3,840 ====

5,086 ====

15. PAYABLES

Sundry creditors 28,971 41,755

Accruals 252,998 192,225

---------- ----------

281,969 233,980

====== ======

16.INTEREST PAYABLE

Balance at 1 January 73,667 43,667

Interest for the year 30,000 30,000

Interest paid (60,000) -

--------- ---------

Balance at 31 December 43,667 =====

73,667 =====

17. STATED CAPITALNo. of Shares Proceeds

2016 2015 2016 GH¢

2015 GH¢

Authorised:Ordinary shares of no par value 10,000,000

=========10,000,000 =========

Issued:Issued for cash (ordinary shares) 1,334,182

---------1,334,182 ---------

3,062,900 ---------

3,062,900 ---------

At 31 December 1,334,182 =======

1,334,182 =======

3,062,900 ========

3,062,900 ========

There is no unpaid liability on any share and there are no calls or installments unpaid. There are no shares in treasury.



18.REDEEMABLE PREFERENCE SHARESNo. of Shares Proceeds

2016 2015 2016 2015

GH¢ GH¢

Issued and fully paid 300 ===

300 ===

3,000,000 ========

3,000,000 ========

The redeemable preference shares are held by the Government of Ghana acting through its authorised representative, the Ministry of Finance and Economic Planning (MOFEP).

19. MANDATORY RESERVE FUND2016 2015

GH¢ GH¢

Balance at 1 January 1,511,108 1,435,742

Transfer from retained earnings - --------

75,366 --------

Balance at 31 December 1,511,108 =======

1,511,108 =======

This represents the cumulative amounts set aside as a non-distributable reserve from annual net profit after tax in accordance with Section B, Rule 7 (1a) of the Non-Bank Financial Institutions Business Rules. Under this rule, the Company is required to transfer 50% of its net profit after tax until the amount in the Institution’s Mandatory Reserve Fund is equal to the minimum capital requirement, after which transfers shall be made of amounts at a rate not less than 15% of net profit after tax for the year.

20. GUARANTEE FUND2016 2015

GH¢ GH¢

Balance at 1 January 8,036,879 8,879,944

Claims recovered 49,823 ---------

388,226 ---------

8,086,702 9,268,170

Release to income statement (500,000) (1,289,469)

Transfer from retained earnings 35,122 ---------

58,178 ---------

Balance at 31 December 7,621,824 ========

8,036,879 =======



The objective of the Fund is to support the Company in terms of payment of claims as they arise. The Fund has therefore been classified in the statement of financial position as part of liabilities as per IFRS requirement and this is to enable the Company release to income statement the portion of the fund required to offset claims. At December 2014, the Board put in place a policy to transfer up to 20% of the balance on retained earnings to the fund at the end of each financial year effective 1 January 2015.

The Company in 2010 obtained from Export Development and Agricultural Investment Fund (EDAIF) a Board resolution converting its subordinated loan of GH¢10.5 million into a grant for the purposes of augmenting the guarantee fund of the Company.

21. DEFERRED INCOME2016 2015GH¢ GH¢


Amount deferred 310,429 556,389

Amount released (559,051) ----------

(923,913) ----------

Balance at 31 December 326,938 ======

575,560 ======

22. RETAINED EARNINGSThis represents the residual of cumulative annual profits that are available for distribution to shareholders.

2016 2015GH¢ GH¢


(Loss)/profit for the year (274,495) 150,732

Interest on preference shares (30,000) (30,000)

Transfer to mandatory reserve - (75,366)

Transfer from credit risk reserve 247,393 114,949

Transfer to guarantee fund (35,122) (58,178)

---------- ----------


232,711 ======

23. CREDIT RISK RESERVEThis represent Bank of Ghana’s total provision on unexpired guarantees.


Transfer to retained earnings (247,393) ----------

(114,949) ----------


583,294 ======



24. DIVIDEND PER SHARENo dividend was declared in the current year (2015: Nil).

25. RELATED PARTY DISCLOSURESThe total amounts of transactions that have been entered into with related parties during the year and the related outstanding balances at end of the year are as follows:

a. Transactions with key management personnel

Key management personnel are defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Company (directly or indirectly) and comprise the Managing Director and Senior Management of Eximguaranty Company (Ghana) Limited.

There were no material transactions with companies in which the Managing Director or other members of key management personnel (or any connected person) is related.

Loans

No loans were advanced to the Managing Director and Senior Management during the year. There were no balances outstanding on account of loans due from the Managing Director and Senior Management at the year end.

Remuneration of key management personnel

2016 2015GH¢ GH¢

Salaries and other short-term employee benefits

726,579 ======

612,518 ======

b. Transactions with non-executive directors

Directors’ fees and allowances 171,218 ======

170,694 ======

26. CONTINGENCIESThere were contingent liabilities at the end of each financial year in respect of:

Unexpired guarantees outstanding 27,928,668 ========

47,375,085 ========

Legal cases against the Company 5,795,612 ========

6,295,612 ========

There was a judgment debt of GH¢6,995,612 against the Company in 2015. This was as a result of an action brought by ESM Company Limited for default of Machinery Credit Guarantee by Big Aidoo Construction Limited. The Company has made payments of GH¢1,200,000 between October 2015 to December 2016 bringing the debt to GH¢5,795,612.

The court has also ruled in favour of ESM Company Limited for a Garnishee order to be placed on the payment of IPC No.11 valued at GH¢4,557,324 to Big Aidoo by the Ministry of Finance.



The Company has mortgage of three landed properties valued at GH¢1,982,665 and a Deed of Assignment of Equipment of Big Aidoo valued at GH¢5,439,000 amounting to GH¢7,421,665. On the basis of these arrangements, the Company has not recognised any liability in respect of the ESM judgment debt.

27. GOING CONCERN CONSIDERATION

In 2015, the President of Ghana set up a Presidential Taskforce to determine the possibility of establishing an Exim Bank by combining the operations of three entities that included Eximguaranty Company.

An Act was passed on 2 March 2016. In accordance with the Presidential Taskforce report, the President appointed a Board and Chief Executive who appointed a Transaction Advisor (Boulders Advisors Limited) to engage the three institutions for the transition process to commence.

The Transaction Advisor presented its report in December 2016. The shareholders of the Company have not met to discuss the options presented in the Transaction Advisor’s report. The transition team discussing integration into Exim Bank has not also held any meeting since the appointment of the new Finance Minister. The Directors are waiting for further directions from the Ministry of Finance.

The Board at its meeting on 22 December 2016 approved the 2017 budget which had key assumption that the transition process would go beyond 2017.

The Board at its emergency meeting on 17 February 2017 directed management to extend the Business Plan that expired in 2015 to December 2017. Both the 2017 budget and Business Plan for 2017 suggest that the Company is expected to be a going concern for 2017.

The Board, therefore, believes the Company is a going concern until the Company is officially liquidated which is expected to go beyond 12 months from 31 December 2016. The financial statements have, therefore, been prepared on the basis of going concern.


I/We ………………………………………… of …………………………………… being member/members of the above-named company hereby appoint ………………………….. of ……………………………………. or failing him ………………………………………… of …………………………as my/our proxy to vote for me/us on my/our behalf at the annual/extraordinary general meeting of the company to be held on the …………………….. day of ………………………2017 and at any adjournment thereof.

Please indicate with an ’x’ in the spaces below how you wish your votes to be cast.

PROXY FORM

FOR AGAINST

Resolution

1. To receive and consider the Audited Financial Statements for the year ended 31st December 2016 together with the Reports of the Directors and Auditors thereon.

2. To authorise the Directors to determine the remuneration of the Auditors.

3. To approve of the fees of the Directors.

Signed this …………………… day of ….......……………. 2017. Signature ……………………………………

IMPORTANT A person attending the meeting should produce this form to obtain admission.



Documents

EXIMGUARANTY COMPANY GHANA · PDF fileEXIMGUARANTY COMPANY GHANA LTD ... and corporate banking and rejoined the Exim Board ... Taskforce for the establishment of Ghana Exim Bank. PROFILE