Investor Presentaiton

28 ANNUAL FINANCIAL STATEMENTS STATEMENT OF CASH FLOWS for the year ended 31 December 2020 Note(s) 2020 N$'000 2019 Restated¹ N$'000 Net cash flow (used in)/from operating activities Net income before capital items and equity accounted earnings (128 979) 547 483 240 945 812 738 Adjusted for non-cash items and other adjustments included in the income statement Decrease/(increase) in income earning assets 34.1 (783 094) (1 011 383) 34.2 1 443 765 (3 491 087) (Decrease)/increase in deposits and other liabilities 34.3 (2 354 370) 2 860 084 Interest received 2 248 371 2 869 062 Dividends received 1 940 3 804 Interest paid Direct taxation paid 34.4 (1 086 809) (146 265) (1 531 458) Net cash flows used in investing activities (125 312) (270 815) (165 628) Capital expenditure on property and equipment (89 762) Proceeds from sale of property and equipment 34.5 1 257 Capital expenditure on intangible assets Proceeds from sale of intangible assets (37 203) (67 038) 10 475 (109 065) 34.6 396 (234 982) (109 606) Net cash flows used in financing activities Subordinated debt redeemed Contributions from owners Senior debt redeemed Senior debt issued Lease payments - principal elements Dividends paid (263 300) (100 000) 200 000 (100 000) 300 000 17.1 (50 451) (23 106) 34.7 (221 231) (86 500) Net decrease in cash and cash equivalents (489 273) Cash and cash equivalents at the beginning of the year 1 1 512 374 Effects of exchange rate changes on cash and balances with central banks 1 237 (34 289) 1 546 355 308 Cash and cash equivalents at the end of the year 1 1 024 338 1 512 374 1 In the current year, the company aligned the presentation of the statements of cash flows with that of SBG. The company also corrected certain Details of the effect of the restatements are presented on page 30. errors. STANDARD BANK NAMIBIA LIMITED Annual financial statements 2020 ACCOUNTING POLICY ELECTIONS AND RESTATEMENTS 29 29 The principal accounting policies applied in the presentation of the company's annual financial statements are set out below. These financial statements are the separate financial statements of Standard Bank Namibia Limited. The company is exempted from the preparation of consolidated financial statements as the company is a wholly-owned subsidiary of SBN Holdings Limited, a Namibia-incorporated company which produces consolidated financial statements available for public use. Basis of preparation The company's annual financial statements are prepared in accordance with IFRS as issued by the IASB, its interpretations adopted by the IASB and the Companies Act. The annual financial statements have been prepared on the historical cost basis except for the following material items in the statement of financial position: ⚫ Financial assets classified as FVOCI financial assets and liabilities classified as fair value through profit or loss (FVTPL) and liabilities for cash-settled share-based payment arrangements. • Post-employment benefit obligations that are measured in terms of the projected unit credit method. The following principal accounting policy elections in terms of IFRS have been made, with reference to the detailed accounting policies shown in brackets: ⚫ purchases and sales of financial assets under a contract whose terms require delivery of the asset within the time frame established generally by regulation or convention in the marketplace concerned are recognised and derecognised using trade date accounting (accounting policy 3) ⚫ commodities acquired principally for the purpose of selling • in the near future or generating a profit from fluctuation in price or broker-traders' margin are measured at fair value less cost to sell (accounting policy 3) intangible assets and property and equipment are accounted for at cost less accumulated amortisation/depreciation and impairment (accounting policy 6) ⚫ the portfolio exception to measure the fair value of certain groups of financial assets and financial liabilities on a net basis (accounting policy 4) ⚫ investments in associates and joint ventures are initially measured at cost and subsequently accounted for using the equity method in the separate financial statements (accounting policy 2). Functional and presentation currency The annual financial statements are presented in Namibian dollars, which is the presentation currency of the company and the functional and presentation currency of the company. All amounts are stated in thousands of dollars (N$'000), unless indicated otherwise. Changes in accounting policies The accounting policies are consistent with those reported in the previous year except as required in terms of the adoption of the following: Adoption of new and amended standards effective for the current financial year ⚫ IFRS 3 Business Combinations (amendment) (IFRS 3), the amendment clarifies the definition of a business, with the objective of assisting entities to determine whether a transaction should be accounted for as a business combination or as an asset acquisition. The amendment will be applied prospectively. • IFRS 7 Financial Instruments: Disclosures (IFRS 7), IFRS 9 Financial Instruments (amendments) (IFRS 9) and IAS 39 Financial Instruments: Recognition and Measurement (IAS 39). Interest Rate Benchmark Reform resulted in amendments to IFRS 9, IAS 39 and IFRS 7 requirements for hedge accounting to support the provision of useful financial information during the year of uncertainty caused by the phasing out of interest- rate benchmarks such as interbank offered rates (IBORS) on hedge accounting. The amendments modify some specific hedge accounting requirements to provide relief from potential effects of the uncertainty caused by the IBOR reform. In addition, the amendments require companies to provide additional information to investors about their hedging relationships which are directly affected by these uncertainties. The amendment will be applied retrospectively. Conceptual Framework for Financial Reporting (revised) (Conceptual Framework), the revised Conceptual Framework includes a comprehensive set of concepts for financial reporting, replacing the previous version of the Conceptual Framework. These concepts are used by the IASB as the framework for setting IFRS standards. • Early adoption of revised standards: ⚫ IFRS 3 Business Combinations (amendments). This standard requires an entity to refer to the Conceptual Framework in determining what constitutes an asset or a liability. The amendments update the reference from the previous version of the Conceptual Framework that existed up to the version issued in March 2018 and adds an exception for some types of liabilities and contingent liabilities to refer to IAS 37 instead of the Conceptual Framework. The amendments will be applied prospectively. • IAS 16 Property, Plant and Equipment (amendments) (IAS 16). Narrow-scope amendments to IAS 16 for the accounting of amounts received when selling items produced while an entity is preparing an asset for its intended use. The amendments clarify the accounting requirements in prohibiting the entity from deducting such amount from the cost of property, plant and equipment and instead recognising such sales proceeds and related cost in profit or loss. The amendments will be applied retrospectively. • IAS 37 Provisions, Contingent Liabilities and Contingent Assets (amendments) (IAS 37). Narrow-scope amendments to IAS 37 in determining which costs to include in estimating the cost of fulfilling a contract for the purposes of assessing whether that contract is onerous. The amendments clarify that the cost of fulfilling the contract includes both the incremental costs of fulfilling the contract and an allocation of costs that relate directly to fulfilling contracts. The amendments will be applied retrospectively. Adjusting prior years is not required, but rather adjusting the opening retained earnings with the cumulative effect of the amendments on transition date. The adoption of the above new and amended standards on 1 January 2020 did not affect the company's previously reported financial results, disclosures or accounting policies and did not impact the company's results upon transition. Accounting policies have been amended as relevant. Refer to annexure E - detailed accounting policies.