SBN HOLDINGS LIMITED Annual Report 2022

56 56 DIRECTORS' REPORT continued STATEMENTS OF FINANCIAL POSITION as at 31 December 2022 SBN HOLDINGS LIMITED Annual report 2022 57 Directors The directors of the company during the year and to the date of this report are as follows: Name Executive directors Mrs M Geises Mrs L du Plessis Non-executive directors Mr H Maier (Chairperson) Mr AN Mangale¹ Mrs B Rossouw Mr IH Tjombonde Nationality Namibian Namibian Namibian South African Namibian Namibian Mr JL Muadinohamba² Namibian Mrs M Shivute Dax Namibian Adv N Bassingthwaighte Namibian Mr P Schlebusch Ms S Hornung³ Ms S Brugman4 Ms NA Tjipitua 1 Mr AN Mangale resigned on 2 June 2022. 2 Mr JL Muadinohamba retired on 22 April 2022. 3 Ms S Hornung was appointed on 26 July 2022. 4 Ms S Brugman was appointed on 15 December 2022. 5 Ms NA Tjipitua was appointed on 10 March 2023. See Annexure C for details of the directors' remuneration. Company secretary South African Namibian South African Namibian S Tjijorokisa, based at 1 Chasie Street, Kleine Kuppe, Windhoek, Namibia Debt officer Y Fourie, based at 1 Chasie Street, Kleine Kuppe, Windhoek, Namibia Compliance with BID-2 The group's annual financial statements comply with the Bank of Namibia's (BON) Determination on Asset Classification, Suspension of Interest and Provisioning (BID-2) and Determination on Policy Changes in Response to Economic and Financial Stability Challenges as a result of the COVID-19 Pandemic (BID-33), except for paragraph 10.(e) (BID-2) and paragraph 6.1.(d) (BID-33) regarding when an asset must be written off. The guidance received from BoN indicates that if an asset, which is overdue for 360 days or more should be written off unless it is well secured, in the process of collection and the time needed to realise the collateral does not exceed three years after judgement. IFRS 9.5.4.4 states that an entity shall directly reduce the gross carrying amount of a financial asset when the entity has no reasonable expectation of recovering a financial asset or contractual cash flows in its entirety or a portion thereof. The BID-2 and BID 33 requirement to write-off an asset if it takes more than three years after judgement to realise the collateral even though the asset is well secured, is not aligned with IFRS 9 which requires an entity to only write off if there is no reasonable expectation of recovery. Given the fact that the asset is well secured there is reasonable expectation of recovery. As such, in terms of IFRS 9, it cannot be written off. Interest in subsidiaries The company owns 100% of the share capital of Standard Bank Namibia Limited, Standard Insurance Brokers (Namibia) (Proprietary) Limited, Arleo Investment Sixteen (Proprietary) Limited and Stanfin (Namibia) (Proprietary) Limited. The company also owns 50.91% of the share capital of Mobicash Payments Solutions (Proprietary) Limited. Refer to Annexure A for further information on interests in subsidiaries. Insurance The group and company protects itself against financial loss by maintaining banker's comprehensive crime and professional indemnity cover. The insurance terms and conditions are reviewed by the SBG insurance committee annually to ensure they are 'fit-for-purpose' in terms of the group and company's risk exposures. Events during 2022 Standard Bank Namibia Ltd (Standard Bank) previously advanced various loans to a company (the Financing Entity) who, in turn, provided funding to various related entities within a property development portfolio. These funding transactions were structured in various ways and the underlying properties provided as collateral to Standard Bank, through a package of security arrangements, underpinning the various loans to the Financing Entity. Over time, the property development portfolio experienced financial difficulties, which ultimately culminated in default on various obligations to Standard Bank as well as to other lenders. These defaults then led to the commencement of liquidation proceedings against the Financing Entity. Given Standard Bank reliance on the property development portfolio to recover its exposure, there was a need to realise collateral over multiple properties held by multiple entities. In the previous financial reporting period, the loans to the Financing Entity were included in Standard Bank's non-performing loans (NPLs). To execute on this collateral and minimise the potential for any further losses to Standard Bank, on 31 March 2022, Standard Bank and Spearmint (acting in concert, as Spearmint was created as a Standard Bank special purpose vehicle (SPV) subsidiary to acquire the security), the property-owning entities and related shareholders entered into a share acquisition agreement (SAA). All the regulatory approvals and conditions precedent to the SAA have been fulfilled and thus the acquisition of the property-owning entities by Spearmint became unconditional and effective from 3 August 2022. The SAA was executed to ensure that Standard Bank obtained direct access to the properties provided as collateral, as opposed to the lengthy and uncontrolled process of realising the collateral through multiple separate liquidations of the related property owning entities. The ultimate purpose of the transaction was to enable a debt settlement to minimise the potential for any further losses to Standard Bank, and also to reduce the level of NPLs. Refer to note 42 for further details regarding the Spearmint transaction. Assets Cash and balances with the central bank Derivative assets Trading assets Pledged assets Financial investments Normal tax asset Loans and advances Other assets GROUP Note 2022 N$'000 2021 Restated¹ N$'000 123 1 January 2021 Restated¹ N$'000 COMPANY 2022 N$'000 2021 N$'000 1 673 337 138 918 474 621 1 488 497 1 035 972 291 326 312 401 73 326 619 584 372 288 417 542 520 956 4 923 014 49 351 5 670 546 165 126 4 25 969 450 491 154 25 382 322 24 892 317 973 4 299 673 123 772 24 090 594 13 242 319 110 52 37 763 921 986 Properties in possession² 42 6 441 296 6 346 Interest in subsidiaries 7 921 986 Property, equipment and right-of-use assets 8 951 764 1 027 366 1 083 502 Goodwill and other intangible assets 9 517 733 13 44 059 547 857 1 560 35 674 697 35 319 049 32 800 870 1 219 658 1 272 150 Deferred tax asset Total assets Equity and liabilities Equity Equity attributable to the ordinary shareholders Ordinary share capital Ordinary share premium Reserves 642 189 500 769 23 450 642 189 1 045 4 782 992 4 338 276 4 129 020 1 208 505 1 257 934 4 767 462 4 323 423 4 114 990 1 208 505 1 257 934 10 1 045 1 045 1 045 11 642 189 4 124 228 3 680 189 Non-controlling interest 15 530 14 853 3 471 756 14 030 1 045 642 189 565 271 642 189 614 700 Liabilities 30 891 705 30 980 773 Derivative liabilities 2 140 763 Trading liabilities 12 36 799 Deposits and current accounts 14 27 353 407 Debt securities issued 15 2 528 252 Provisions and other liabilities 16 805 008 Deferred tax liability 13 27 476 28 255 886 1961 123 625 266 12 168 Total equity and liabilities 35 674 697 35 319 049 32 800 870 1 219 658 1 272 150 11 153 14 216 362 123 34 532 70 576 55 754 28 671 850 26 133 840 1 620 305 515 694 5 356 11 153 14 216 1 Refer to restatement narrative included in the accounting policy elections and restatements section for the restatements of loans and advances, other assets and deposits. 2 As part of the acquisition of Spearmint Investments (Pty) Ltd, the group's properties in possession increased by N$465 million. To enhance disclosure, properties in possession, which were previously presented as part of other assets, are now disclosed separately. Comparative information has been restated accordingly.