2018of Rural Banks and Microfinance Institutions in Ghana. Currently, he is a Consultant and a...

AND FINANCIAL STATEMENTS

ANNUALREPORT

2018

Head OfficeOld Peace Fm Building, Achimota Mile 7,Off Achimota Ofankor Road

t. (233) 303932990-4e. [email protected]. www.bestpointgh.com

Post Office Box CT 10191 Cantonments, Accra

ANNUAL REPORT

2018




Contents6 NOTICE OF ANNUAL GENERAL MEETING

7 CORPORATE INFORMATION

8-9 PROFILE OF BOARD OF DIRECTORS

10-11 CHAIRMAN’S REPORT

12-13 MANAGING DIRECTOR’S REPORT

14-17 PROFILE OF MANAGEMENT

20-22 INDEPENDENT AUDITOR’S REPORT

24 REPORT OF THE DIRECTORS

25 STATEMENT OF COMPREHENSIVE INCOME

26 STATEMENT OF FINANCIAL POSITION

27 STATEMENT OF CHANGES IN EQUITY

28 STATEMENT OF CASHFLOWS

29-41 NOTES TO THE FINANCIAL STATEMENTS

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5BEST POINT SAVINGS AND LOANS LIMITED - ...Your Dream, Our Business

BEST POINT SAVINGS AND LOANS LIMITED

NOTICE OF ANNUAL GENERAL MEETINGIn accordance with sections 149 and 154 of the companies ACT, 1963, (ACT 179) notice is hereby given that the 5th Annual General Meeting of Best Point Savings & Loans Ltd. will be held on;

Wednesday, 24th July 2019 at 2:00Pm at The Accra Marriott Hotel, Liberation Road, Airport City, Accra

TO CONDUCT THE FOLLOWING BUSINESS

1. Receive the Company’s Audited Financial Statements and Accounts for the Year Ended December 31, 2018.

2. Receive the Report of the Directors’ and Auditor’s thereon.

3. To Approve Directors’ Remuneration

4. Appointment/Confirmation of Auditors

5. To Authorize The Directors to fix the Auditor’s Remuneration.

6. To Transact any other Ordinary Business of an AGM.

DATED THIS 24TH DAY OF JUNE, 2019

BY ORDER OF THE BOARD

SIGNEDMILLICENT ODOI{COMPANY SECRETARY}

Note: A member of the Company entitled to attend and vote at the Annual General Meeting is entitled to appoint a proxy to attend and vote instead of him. Such proxy need not be a member of the Company.

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BEST POINT SAVINGS AND LOANS LIMITED - ...Your Dream, Our Business6

CORPORATE INFORMATIONBOARD OF DIRECTORS CHAIRMANMR. ERNEST OFORI SARPONG

MANAGING DIRECTOR MR. PHILIP ODEI ASARE MEMBERSMR. DANIEL ASARE-MINTAH MR. ISAAC EMMIL OSEI-BONSU MR. KWADWO DANSO-DODOO MR. OSEI KWAME MR. PHILIP ODEI ASARE

SECRETARY MISS MILLICENT ODOI

AUDITORPKF ACCOUNTANTS & BUSINESS ADVISERSFARRAR AVENUEP.O.BOX 1219ACCRA

REGISTERED OFFICEOLD PEACE FM BUILDING MILE 7 JUNCTION, OFF ACHIMOTA-OFANKOR ROAD P.O. BOX CT 10191, CANTONMENTS, ACCRA-GHANA

BANKERS ACCESS BANK GHANA LIMITED ECOBANK GHANA LIMITED CONSOLIDATED BANK GHANA

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Ernest is a businessman of many years’ experience with an amazing business career in Small and Medium Scale Enterprise. He is the Chairman and a co-owner of Best Point Savings and Loans Ltd.

1. He has established very reputable businesses including:

Name of Company Nature of Business

i. Special Ice Limited Production of satchet and bottled minieral water

ii. Special Investment Ltd Real Estate and Construction

iii. Sarpong Ventures Ltd Imports and Trading Business He has been conferred with a Doctorate Degree of Philosophy in Law from Barkeley University in the United States of America for his contribution to the socio-economic development of Ghana.The Peristrofi World Honorary International Award Conference has also bestowed on him an Honorary Ambassador of Business Entreprenuer in West Africa. He was also adjudged the Best Manufacturing Entreprenuer for 2013 by Entreprenuers Foundation under the auspices of the Ministry of and Trade and Industries.

Ernest is God fearing and a Presbyterian. He is married with three children.

Dr. Osei Kwame, also known as ‘Despite’, is a well-known and very successful Business Executive with a number of highly successful companies. He is also a co-founder and Vice Chairman of Best Point Savings and Loans Ltd.

His other businesses include: Name of Company Nature of businessi. Despite Company Ltd Trading Company with subsidiaries in the Media Industry including Peace FM,

Okay FM, Neat FM (Accra) & Hello FM (Kumasi)ii. Neat Foods Ltd Food Processingiii. Antona Foods LtdMotherlac Cereal

Food Processing-This Way Chocolate drink,

Dr. Osei Kwame has received numerous prestigious awards in the past which include an Honorary Doctorate Degree in Human Resource from Canterbury University, Honorary Ambassador of Business Entrepreneur in West Africa and Honorary Man of the Moment, Ghana, West Africa.

Despite is a strong and devoted Christian. He is married and has been blessed with children.

In addition to their individual businesses, Ernest and Despite have other joint business interests including:Name of Company Nature of Businessi. U2 Salt Limited Salt mining and refinery at Winnebaii. United Televison Ltd Television (UTV)iii. Best Point Savings and Loans Ltd Savings and Loans iv. Best Assurance Co. Ltd Insurancev. Best Pensions Trust Pensions

CHAIRMANDr Ernest Ofori-Sarpong

MEMBERDr. Osei Kwame

PROFILE OFBOARD OF DIRECTORS

Philip Asare is a professional accountant (ICA – GH) with twenty-three (23) years’ experience in commercial banking, investment banking, banking regulations, and the financial services industry. He holds a Master’s in Business Administration (MBA) and Bachelor of Arts (BA) degrees from the University of

Ghana.

Prior to joining Best Point, Philip worked at FINCA Zambia as Chief Finance Officer (CFO) and later as Acting Chief Executive Officer (CEO). He also worked with the Royal Bank as the Senior Vice President for Finance. Before the Royal Bank, Philip worked with Access Bank in two different capacities as Group Head for Commercial and Consumer Banking and later as Head of Risk Management and

Philip was involved in the setting up of Opportunity International Savings and Loans as Chief Finance Officer (CFO) and later rose to become Deputy CEO and then Acting CEO.

He also worked for the Bank of Ghana in the Banking and Supervision Department.

MEMBERPhilip Odei Asare

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Kwadwo is a Management Consultant with expertise in startup businesses. He is currently the Managing Director for Special Ice Ltd. Before joining Special Ice Ltd, he worked as the Managing Director of Sun Ridge Ltd, producers of Safina

Mineral Water from inception of the Company,the Managing Director of Aqua-In Ltd, and also the Finance Director of Voltic (GH) Ltd for 4years. He has held various positions in other businesses.

Kwadwo is a Chartered Accountant by profession and a member of the Institute of Chartered Accountants (Ghana). He also holds a Masters in Business Administration in Finance from the University of Ghana (Legon). He attened Adisadel College.

He is a very strong and devoted Christian and is married and has four children.

MEMBERMr. Kwadwo Danso-Dodoo Jnr .

Isaac Emmil Osei-Bonsu Jnr. is a seasoned legal practitioner with almost 20 years’ experience in Ghana. He attended the prestigious Achimota Secondary School between 1982 -1989 where he completed his O’level and A’levels successfully.

Isaac entered the University of Ghana, Legon in 1991 to read Law, Philosophy and Political Science. He graduated in Law with Honors in 1994 and subsequently enrolled at the Ghana Law School for the two-year professional law course which he successfully completed in 1996. He was thereafter called to the Bar.

In 1997, he joined Minkah-Premo & Co, one of the leading law firms in the country as an Associate. He rose to become the youngest partner of the firm in 2001 due to his exceptional legal and business acumen, with oversight responsibility in the practice areas of Corporate and Compliance, Property, Credit and Debt Recovery.

He holds an Executive Masters Degree in Business Administration and currently serves as a Director for several companies such as Inspection & Control Services, Black Star Advisors and Vanguard Properties Development Limited amongst others.

Isaac is also a traditional leader and the Ahenenanahene of the Akyem Abuakwa Traditional Area. He is married to Lynn Osei-Bonsu (née Ziniel), a Communications Consultant and they have two wonderful children. Isaac is an avid golfer.

MEMBERMR. ISAAC EMMIL OSEI-BONSU JNR.

He worked for twenty-six (26) years in the Bank of Ghana and rose to become an Assistant Director in the Banking Supervision Department of the Central Bank.

He trained primarily as an Economist and obtained a BA (Honors) Degree in Economics awarded by the University of Cape Coast, Ghana in 1981.

He pursued various academic courses while in the Bank’s employment including a one year program in Banking and Economics as a Fulbright Scholar at Boston University in Massachusetts, USA between 1993 and 1994.

In 1997, he enrolled in the Ghana Law School to pursue a four-year course in Law. He was awarded in 2001 the Qualifying Certificate of the General Legal Council of Ghana and the Certificate of Enrollment on the Roll of Lawyers in the Republic of Ghana having qualified as Barrister and Solicitor.

Between 2001 and 2008, he was made Coordinator of the Rural Financial Services Project (RFSP), a World Bank Financial Sector Project aimed at improving the operational efficiencies of Rural Banks and Microfinance Institutions in Ghana.

Currently, he is a Consultant and a Senior Partner in Obuor Mintah & Co., a Legal Firm in Accra.

MEMBERMR. DANIEL ASARE-MINTAH

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IntroductionDistinguished Shareholder, Colleague Board Members and Management. It is my privilege to welcome you and to present to you the fifth Annual Report and the financial results of Best Point Savings and Loans Limited for the year ended December 31, 2018.

The year under review witnessed significant events in the banking sector and required painful and creative responses to ensure that Best Point continued to maintain its position as one of the leading savings and loans companies in Ghana.

Operating Environment In 2018, Ghana’s GDP increased by 5.6% compared to 8.1% in 2017, with the growth supported mainly by the non-oil sector, mostly agriculture. The reduction in economic growth rate was partly the result of financial turbulence experienced in 2018 as well as the effects of the rebasing of the economy with 2017 as the base year. Fiscal deficit for 2018 was measured at 3.91% compared to 5.95% in 2017.

By December 2018, Ghana was on course to exit the IMF supported ECF programme. End-December 2018, gross international reserves was measured at US$7.02 billion compared to US$7.55 billion by end December 2017. The inter-bank exchange rate of the Ghana cedi witnessed a mild depreciation of 8.4% (4.9% in 2017), against the United States Dollar. Inflation continued to decline through the year with year-end inflation recorded at 9.4% compared to 11.8% as of December 31, 2017. The Monetary Policy Rate ended the year at 17% compared to 20% end December 2017.

Banking reforms initiated by the Bank of Ghana continued in 2018 as the central bank confirmed December 31, 2018 as deadline for all commercial banks to meet the GHS400 million minimum capital threshold. By the end of the year, some voluntary mergers had been recorded and the Central Bank was in preparation to merge the activities of others who could not meet the limit.

During the year, some Banks and savings & loans companies experienced panic withdrawals resulting in liquidity challenges for these institutions. According to the Bank of Ghana, the root cause of the liquidity challenges emanated from poor corporate governance practices adopted by some financial institutions, which saw them diverting customer deposits to acquire property and other bad investments.

It is instructive to note that Best Point’s investments with the banks that were liquidated have all been retrieved, although at reduced interest rates.

Best Point’s Financial PerformanceIn spite of the challenges enumerated above, Best Point continued to be resilient as it met the prudential guidelines of the Bank of Ghana as well as all customer requests. In fact, Best Point recorded a net increase in deposits as some customers of other financial institutions withdrew their funds and deposited the funds with us. The Company recorded an after-tax profit of GHS1.73 million compared to a loss of GHS9.4 million in 2017 and total assets declined marginally by 0.7% to reach GHS299 million as of December 31, 2018. Gross loans increased by 7.54% to reach GHS33.4 million while Short-term investments reached GHS190.4 million, an increase of 7.7% over 2017. Total deposits increased marginally from GHS256.6 million in 2017 to GHS257.3 million as at end December 2018.

In 2018, Best Point invested significantly in IT infrastructure by building a state of the art Disaster Recovery Centre in addition to converting our ATMs to comply with EMV standards.

Corporate GovernanceThe Board continued to demonstrate high levels of compliance with best corporate governance practices as it maintained its independence and provided critical guidance to Management in its implementation of strategy.

CHAIRMAN’S REPORT

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10 BEST POINT SAVINGS AND LOANS LIMITED - ...Your Dream, Our Business

In 2018, the Managing Director, Mr. Kofi Ampofo Agyapong proceeded on retirement after attaining the pension age and the vacancy was filled by the Deputy Managing Director in an acting capacity after Bank of Ghana’s approval.

Outlook for Year 2019Economic performance for 2019 is expected to be stronger with projected GDP growth of 7.6% underpinned mainly by projected growth in the Industry and Services sectors. According to the Bank of Ghana, inflation is projected to continue to decline to end the year at 9.07%. In addition, Ghana is expected to exit the IMF supported ECF programme in quarter one (Q1) of 2019.

The Bank of Ghana is expected to continue the reforms in the Banking sector by focusing on the savings and loans and the microfinance companies with the view to restoring safety, soundness and stability in the sector.

The above outlook provides a great opportunity for Best Point to focus on its core business of mobilizing savings and lending to micro and small business entities. In

addition, credit risk, internal control and compliance functions will further be strengthened to serve the needs of the Company. The Board shall also work with Management to continue with the re-alignment of the various Units and Departments to further improve operational efficiency.

Best Point is expected to continue to focus on micro-lending with added focus on technology application in the business with the view to improving the effectiveness of our business delivery processes.

ConclusionI would like to thank our customers for their continued support and the Management and staff for the dedication and hard work during this period. I would also like to express my appreciation to my colleague members of the Board for their encouragement and guidance and to my Co-shareholder and brother, Osei Kwame Despite (Dr) for his continued partnership and support.

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IntroductionI am very happy to report on Best Point Savings and Loans Limited’s (Best Point) operational activities and financial performance for 2018, the Company’s fifth year of operations.

Operating Environment During the year under review, the business environment was characterized by improved macro-economic conditions, but turbulent banking environment as depicted below:

• Ghana’s GDP increased by 5.6% in 2018 compared to 8.1% in 2017.

• Ghana recorded some marginal improvement in its fiscal space depicted in reduced current account deficit and budget account deficit of 5.9% in 2017 to an estimated 5.7% in 2018.

• Inflation and lending rates consistently declined during the year in line with consistent drops in BoG MPR rates. Inflation closed the year at 9.4% while the Bank of Ghana (BoG) Monetary Policy rate ended 2018 at 17%.

• The local currency stabilized against major currencies, except for a slight depreciation against the US dollar in the second quarter of 2018. By year end, the local currency exchanged for GHS4.8200 to the USD compared to GHS4.4240 at the beginning of the year.

• In September 2018, Ghana rebased its GDP from 2006 to 2013 resulting in almost 25% expansion in the country’s GDP for 2017 compared to the previous base.

• BoG’s new capitalization deadline for Banks’ to increase capital to GHS 400 million elapsed. The new capital regime saw the merger of some banks in the banking space. Some banks could not meet the new minimum capital of GHS400 million and the Bank of Ghana was planning to take regulatory action against such banks.

Operational PerformanceFollowing the shake-up in the industry and worsened credit conditions, the Best Point resolved to refocus on micro business, which had been its core business. Even though total deposits increased marginally, the revised focus on low-cost deposits resulted in a change in the deposit mix of the Company with the fixed deposit to total deposit ratio reducing from 58% at the beginning of the year to 51% by the end of the year.

In addition, the Compliance and Internal Control Unit was set up to provide additional support to risk management in the Company.

During the period, shareholders injected additional capital of GHS15 million to further shore up the Company’s operations.

Financial Performance Highlights

In 2018, the Company recorded an after-tax profit of GHS1.73 million compared to a loss of GHS9.4 million in 2017. Net interest income increased by 22% while operating expenses increased by 11.5%.

The Company’s balance sheet size remained almost unchanged between 2017 and 2018 but key changes recorded included the following:

• Short Term Investments increased by 7.71% from GHS 176.7million on December 31, 2017 to GHS 190.4 million on December 31, 2018.

• Loans and advances increased by 7.54% from GHS 31.01million in 2017 to GHS 33.42million in 2018.

• Total deposits remained almost unchanged at GHS 256.60 million as of December 31, 2017 to GHS 257.26 million by the close of 2018.

Following the industry challenges, Management resolved to maintain higher liquidity levels to ensure adequate funds were available to meet customers demand at all times. With the guidance of the Board, the Company was spared the panic withdrawals that affected other players in the market. In spite of the defaults by several industry players, Best Point met all customer demands, which positively affected customer confidence and thus positioned the Company to attract more deposit from customers even during the turbulent times of 2018

MANAGING DIRECTOR’S REPORT

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Outlook for the Year 2019The economic outlook for 2019 remains positive. GDP is expected to grow above 7% with interest rates and inflation expected to decline. While this provides a great opportunity to grow the loan book, it also depicts some challenging times as declining rates pose significant risks to the Company’s interest margin. Management will have to find creative ways to maintain margins.

The realignment of the Company’s business to focus on the micro and small businesses is expected to continue.

The risk management regime is expected to be strengthened with the establishment of a separate credit risk management unit.

The increasing adoption of technology in the banking space will attract Management attention in 2019. Partnerships with the leading Telecommunication Companies will be explored to further improve our participation in the new trends in payments using mobile phones and other electronic devices.

The 3-year medium-term plan strategy spanning 2017 – 2019, comes to its end in 2019. A new 2020 – 2022 strategic plan is expected to be developed.

ConclusionI wish to express my appreciation and gratitude to the Board of Directors for their relentless efforts in providing strategic direction to the Company and to our shareholders for their trust and confidence in the Company. To our cherished and loyal customers, we thank you for your unflinching allegiance to Best Point. We promise to continue to give you excellent customer services for your partnership as we make your dream our business.

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Profile ofManagement

Philip Asare is a professional accountant (ICA – GH) with twenty-three (23) years’ experience in commercial banking, investment banking, banking regulations, and the financial services industry. He holds a Master’s in Business Administration (MBA) and Bachelor of Arts (BA) degrees from the University of Ghana.

Prior to joining Best Point, Philip worked at FINCA Zambia as Chief Finance Officer (CFO) and later as Acting Chief Executive Officer (CEO). He also worked with the Royal Bank as the Senior Vice President for Finance. Before the Royal Bank, Philip worked with Access Bank in two different capacities as Group Head for Commercial and Consumer Banking and later as Head of Risk Management and

Philip was involved in the setting up of Opportunity International Savings and Loans as Chief Finance Officer (CFO) and later rose to become Deputy CEO and then Acting CEO.

He also worked for the Bank of Ghana in the Banking and Supervision Department. Philip Odei Asare

MANAGING DIRECTOR

James had his First Degree in Commerce from the University of Cape Cost in 1998 after which he worked as a teacher and later joined Baduman Rural Bank Limited in the year 2000 as an Assistant Accountant.

In 2003 he persued Masters in Business Administration-Finance at the University of Lincoln-UK and graduated in 2005. He is also a Chartered Accountant and a Fellow of Assosiation of Certified Chartered Accountants (ACCA).

In June 2009, James joined United Bank for Africa (UBA). He worked there as Control Officer and was in charge of Domestic Operations and Clearing Departments until he left in October 2013 to join Best Point Savings and Loans Limited in the same year.

James Okrah

GENERAL MAN-AGER FINANCE AND HUMAN RESOURCE

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Martey’s audit career began with Morrison and Associates, a firm of Chartered Accountants in April 2004. He then left to pursue his career with the then Amal-gamated Bank Ltd now Bank Of Africa in 2006. He played various roles such as Resident Internal Control Officer where he set up internal control systems in new branches opened by the Bank and also helped in strengthening existing internal controls.

He also worked with the Operational Risk Unit briefly and then to the Internal Audit Department where he was a Senior Internal Auditor and team leader just before he joined Best Point Savings and Loans Ltd in October 2013.

He holds an EMBA from KNUST and is also a final part student of the Institute Of Chartered Accountants Ghana.

Mrs Gifty Ossei Boating is an Associate of the Chartered Institute of Bankers Ghana. She also holds a Bachelor of Science (Hons) Degree in Business Administration (Banking and Finance) from the University of Ghana Business School and a Masters of Business Administration (Finance) from the Methodist University College of Ghana.

She has been in the banking and finance sector since 2006 when she joined Procredit Savings and Loans Ltd as a Corporate Loan Officer with responsibility for relationship banking and portfolio management.

In 2007, she joined Express Savings and Loans Ltd at its inception, as a Relationship Manager, and then became a Branch Manager and the Credit Risk Manager in 2010. In 2013, she moved to Best Point Savings and Loans Ltd as the pioneer Head of Credit and Marketing Department, and subsequently as Head of Credit.

Her key responsibilities include but not limited to Credit Risk Management, Portfolio Growth and Management, Credit Appraisal, Market intelligence, Customer Service, Relationship and Account Management, Training and Development, Budgeting, Report Preparation, etc,. She is a key member of a number of critical Committees of the Company.

Gifty is a highly self-motivated banking professional whose wide knowledge base, varied skills set and excellent value system combine to help her achieve the best of what she does.

Martey Ago – Mensah

HEAD OF INTERNAL AUDIT

Gifty Ossei Boating

HEAD OF CREDIT

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KWADWO ASARE ASANTE

HEAD OF IT AND E-BANKING

Kwadwo Asare-Asante is a product of the Kwame Nkrumah University of Science and Technology and holds a BSc in Computer Science. He also holds Executive Certificate in Business Administration from the Graduate School of Governance and Leadership (GSGL) and an International Diploma, Business Management/Administration from Cambridge International College, Jersey, Britain.

He started work in the banking industry in 2004 as an Executive Trainee with the Standard Trust Bank (now UBA Ghana). He grew through the ranks and with commitment and hard work became the Head of Network and Infrastructure in 2007. He was further promoted to the position of Head of IT Operations in 2009 due to his competence and ability, a position he held until 2013 when he moved to Best Point Savings and Loans Ltd.

He was a Member of the Risk Management Committee, Disaster Recovery/Business Continuity Committee and the IT Steering Committee of UBA Ghana Limited.

He has attended a number of courses and workshops in diverse fields in IT and banking including Data Communication and Networking, Ethical Hacking, Certified Information Security Professional, Banking Operations, Customer Service etc.

From his working life in the banking industry, he has developed excellent skills for IT management and deployment as he was influential in the setup of all the branch network of UBA Ghana.

PROFILE OFMANAGEMENT

ISAAC BAFFOUR AWUAH

HEAD OF BANKING OPERATIONS

Isaac Baffour Awuah is a holder of BBA (Accounting) from Valley View University and an MBA Finance Management from Kazian Global School of Business Management, India. He also holds ICA (Ghana) Part Two.

He has over fifteen years banking experience with former Ghana Cooperative Bank Ltd, and First National Savings and Loans Co. Ltd, Accra (now GN Bank). He joined First National in 2007 as Branch Manager for Tema and rose to become Head of Accounts. He also played various other roles as Head of Internal Audit, and Risk Manager until he left them in September 2013 to join Best Point Savings and Loans Ltd.

He also has seven and a half years working experience in multinational companies: four and a half years in Cadbury Ghana Ltd where he became an Accounts Manager, two years with Barry Callebaut Ghana Ltd, and a year with Gold Fields Ghana Ltd as a Financial Accountant.

Isaac has good knowledge and skills in budgeting, target setting, auditing and banking operations etc.

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MILLICENT ODOI

HEAD OF LEGAL & ADMINISTRATION/COMPANY SECRETARY

Miss Millicent Odoi is a dedicated lawyer with several years of experience at the BAR.

She holds a Bachelor of Arts (BA) Degree in Psychology from the University of Ghana, Legon. She also holds a Bachelor of Law (LLB) Degree from the same University.

In October 2010, she enrolled at the Ghana school of Law for the Qualifying Certificate in Law and also worked as an intern with Kwame Gyan & Associates, a reputable law firm in Accra from 2010-2012.

She was called to the BAR in 2012, thereafter, did her pupillage with Zoe, Akyea & Co, another renowned law firm in Accra.

She worked with the same law firm after her pupillage as an Associate until May 2015 when she joined Best Point Savings & Loans Ltd as the Legal Officer/ Company Secretary and subsequently, the Head of Legal.

Her key responsibilities include advising Management on legal and regulatory compliance issues and regulatory laws, providing legal opinion on matters relating to the Company’s day-to-day business, liaison between the Board and Management and ensures that the Company follows good corporate governance principles

In addition to her role, she was appointed as the Head of Administration in 2018.

She has attended a number of Workshops/Training Programmes in her field as well as Banking including the Changing Role of the Company Secretary, Corporate Governance, Credit Portfolio Management, Customer Service etc.

JACOB IDAN

MARKETING MANAGER

Jacob holds a Bachelor of Science Degree in Chemistry from the Kwame Nkrumah University of Science and Technology and an Executive Master’s Degree in Business Administration, (EMBA), (Marketing Option), from the University of Ghana Business School, Legon.

He joined Best Point Savings and Loans (Best Point) in October 2014 as a Branch Manager. However on January 28th 2015 he was reassigned to head the Marketing Unit of the Company.

Before joining Best Point, Jacob worked as the Group Head of Marketing of COB-A Industries Limited, producers of Standard Mineral Water from May 2009 to December 2011.

Between October 2006 to February 2009, he worked with United Bank for Africa (UBA) in various positions and became the Manager of the Spintex Road Branch in December 2008.

He also worked with Total Ghana Limited for about seven years (2000 - 2006) as a Manager and a Dealer.

Jacob has extensive experience in marketing and banking operations.

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Report on the Audit of the Financial Statements

OpinionWe have audited the accompanying financial statements of Best Point Savings and Loans Limited which comprise the statement of financial position as at December 31, 2018, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes.

In our opinion, the financial statements give a true and fair view of the financial position of Best Point Savings and loans Limited as at December 31, 2018, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards and comply with the Companies Act, 1963 (Act 179) and the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930).

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 these requirements and the IESBA Code.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion

Key Audit MattersKey audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Impairment of loans and advances Impairment of loans and advances to customers is a key audit matter due to the significance of the balances and the complexity and subjectivity over estimating timing and the amount of impairment.

The most significant judgements are:

• Assumptions used in the expected credit loss models to assess the credit risk related to the exposure and the expected future cash flows of the customer.

• Timely identification of exposures with significant increase in credit risk and credit impaired exposures.

• Valuation of collateral and assumptions of future cash flows on manually assessed credit- impaired exposures.

How the matter was addressed in our audit:

Assessed and tested the design, implementation and operating effectiveness of key controls over the capture, monitoring and reporting of loans and advances to customers.

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF BEST POINT SAVINGS AND LOANS LIMITEDFOR THE YEAR ENDED 31 DECEMBER 2018

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Assessed and tested the design and operating effectiveness of controls over the company’s loan impairment process regarding management’s review process over impairment calculations.

Examined a sample of performing loans to evaluate if any indicators of impairment existed to test the completeness of individual impairment provisions.

Substantively validated the year-end impairment models for collective and individual provisioning by re-performing calculations and agreeing a sample of data inputs to source documentation.

Undertook a detailed assessment of a sample of exposures for individual impairment on corporate portfolios, taking a risk based approach to focus on those with the greatest potential impact on the financial statements.

Considered the adequacy of the company’s disclosures in relation to impairment about changes in estimates occurring during the period and its sensitivity to key assumptions.

Responsibilities of Board of Directors for the Financial Statements

The Board of Directors is responsible for the preparation of the financial statements that gives 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 Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930) and for such internal control as the Board of Directors determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Board of 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 Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The Board of Directors is 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 International Standards on Auditing 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 International Standards on Auditing, we exercise professional judgment and maintain professional skepticism 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

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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 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 the Board of Directors.

• Conclude on the appropriateness of the Board of 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.

We communicate with the Board of 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

The Companies Act 1963, (Act 179) and the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930) requires that in carrying out our audit we consider and report to you on the following matters. We confirm that:

i) 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.

ii) In our opinion proper books of account have been kept by the Company, so far as appears from our examination of those books, and

iii) The financial position and statement of comprehensive Income of the company are in agreement with the books of account.

iv) The financial statements give a true and fair view of the state of affairs of the company and its results for the year under review.

v) The Company has complied with the provisions of the Anti-Money Laundering Act, 2008 (Act 749) as amended by the Anti-Money Laundering (Amendment) Act, 2014 (Act 874), the Anti-Terrorism Act, 2008 (Act 762) as amended by the Anti-Terrorism (Amendment) Act, 2014 (Act 875) and the regulations made under these enactments.

vi) The Company’s transactions are within its powers.

SIGNED BY: F. BRUCE TAGOE (ICAG/P/1087)

FOR AND ON BEHALF OF PKF (ICAG/F/2019/039)

CHARTERED ACCOUNTANTS

FARRAR AVENUE

ACCRA

April 18, 2019

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In accordance with the requirements of Section 132 of the Companies Act, 1963 (Act 179) and the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930), we the Board of Directors of Best Point Savings and Loans Limited, do herewith submit our annual report on the state of affairs of the Company for the year ended 31 December 2018.

The Directors report as follows:

2018 2017GH¢ GH¢

Interest Income 63,963,575 61,227,476

Profit/(Loss) before tax 1,825,218 (9,578,959)

From which is deducted a Tax provision of (96,463) 133,756

Leaving a balance of 1,728,755 (9,445,203)

This is to be added to an Income surplus

balance brought forward from the previous year of (13,588,546) (927,898)

and transfer to Statutory Reserve Fund (864,378) 0

and transfer from/(to) credit risk reserve of 4,000,000 (3,215,445)

Leaving a Balance on the Income Surplus Account of (8,724,169) (13,588,546)

The names of the directors who held office during the year 2018 are: Mr. Ernest Ofori Sarpong

Mr. Osei Kwame

Mr. Philip Odei Asare

Mr. Daniel Asare-Mintah

Mr. Isaac Emmil Osei-Bonsu

Mr. Kwadwo Danso-Dodoo

The principal activity of the Company during the year was in accordance with Section 2 of the regulations of the Company. This represents no change from the activities carried out for the previous year.

The Directors confirm that no matters have arisen since 31 December 2018, which materially affect the Financial Statements of the Company for the year ended on that date.

….….…………………...…………….….…………………...………… ….….…………………...…………….….…………………...…………..

Director Director

Date April 18, 2019

BEST POINT SAVINGS AND LOANS LIMITEDREPORT OF THE DIRECTORSFOR THE YEAR ENDED 31 DECEMBER 2018

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Note 2018 2017GH¢ GH¢

Interest Income 4 63,963,575 61,227,476

Interest Expense 5 (30,584,259) (33,857,146)

Net Interest Income 33,379,316 27,370,330

Net Commission and Fees 6 4,398,392 3,543,872

37,777,708 30,914,202

Credit Impairment Loss 8 (19,362,614) (10,146,380)

Impairment of Financial Assets 8a 0 (4,265,776)

18,415,094 16,502,046

Operating Expenses 9 (30,014,617) (26,929,765)

Other Income 7 13,424,741 848,760

Net Profit /(Loss) beforeTax 1,825,218 (9,578,959)

National Fiscal Stabilization Levy (91,261) 0

Taxation 10a(i) (5,202) 133,756

Net Profit/(Loss) transferred to Income Surplus Account 1,728,755 (9,445,203)

Basic earnings per share

(Ghana cedi per share) 27 0.05 (0.47)

BEST POINT SAVINGS AND LOANS LIMITEDSTATEMENT OF COMPREHENSIVE INCOMEFOR THE YEAR ENDED 31 DECEMBER 2018

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BEST POINT SAVINGS AND LOANS LIMITEDSTATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2018

Notes 2018 2017GH¢ GH¢

ASSETS

Cash and Bank Balances 11 32,296,087 36,913,161

Short Term Investments 12 190,366,869 176,733,363

Loans and Advances 13 33,419,195 31,076,628

Deferred Tax Assets 10c 164,982 170,184

Taxation 10b 1,165,682 63,333

Other Assets 14 34,723,356 46,752,594

Property,Plant & Equipment 15 5,985,568 8,182,248

Intangible Assets 16 727,231 1,232,628

TOTAL ASSETS 298,848,970 301,124,139

LIABILITIES Customers Deposits 17 257,263,972 256,599,975

Other Liabilities 18 13,866,099 31,961,830

Deposit for Shares 19 0 1,572,190

TOTAL LIABILITIES 271,130,071 290,133,995

SHAREHOLDERS' FUNDStated Capital 20 35,140,000 20,140,000

Income Surplus Account (8,724,169) (13,588,546)

Credit Risk Reserve 24 143,914 4,143,914

Statutory Reserve Fund 25 1,159,154 294,776

TOTAL SHAREHOLDERS' FUND 27,718,899 10,990,144

TOTAL LIABILITIES AND

SHAREHOLDERS FUND 298,848,970 301,124,139

Approved by the Board on April 18, 2019 2019

…………………............................

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

DIRECTOR

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BEST POINT SAVINGS AND LOANS LIMITED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2018

Stated Capital

GH¢

Income Surplus Account

GH¢

Credit RiskReserve

GH¢

StatutoryReserve Fund

GH¢

TotalGH¢

2018

Balance as at 1 January 20,140,000 (13,588,546) 4,143,914 294,776 10,990,144

Issuance of Shares 15,000,000 0 0 0 15,000,000

Transfer from Credit Risk Reserve 0 4,000,000 (4,000,000) 0 0

Net Profit for the Year 0 1,728,755 0 0 1,728,755

Transfer to Statutory Reserve Fund 0 (864,378) 0 864,378 0

Balance at 31 December 35,140,000 (8,724,169) 143,914 1,159,154 27,718,899

2017

Balance as at 1 January 15,000,000 (927,898) 928,469 294,776 15,295,347

Issuance of Shares 5,140,000 0 0 0 5,140,000

Net Loss for the Year 0 (9,445,203) 0 0 (9,445,203)

Transfer to Statutory Reserve Fund 0 0 0 0 0

Transfer to Credit Risk Reserve 0 (3,215,445) 3,215,445 0 0

Balance at 31 December 20,140,000 (13,588,546) 4,143,914 294,776 10,990,144

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BEST POINT SAVINGS AND LOANS LIMITEDSTATEMENT OF CASH FLOWSFOR THE YEAR ENDED 31 DECEMBER 2018

2018 2017Note GH¢ GH¢

Cash flows from operating activities

Net Profit/(Loss) before taxation 1,825,218 (9,578,959)

Adjustments for:

Credit Impairment Loss 2,294,498 10,146,380

Loss/(Profit) on Disposal 32,525 (22,379)

Depreciation 3,195,548 3,074,893

Amortisation 522,827 475,976

Operating Profit before working capital changes 7,870,616 4,095,911

Change in Loans and Advances (4,637,065) (7,979,762)

Change in Other Assets 12,029,238 (17,951,722)

Change in Short Term Investments (13,633,506) (58,290,574)

Change in Customers Deposits 663,997 70,023,228

Change in Other Liabilities (18,095,731) 19,114,784

Cash generated in operations (15,802,451) 9,011,865

Taxation

Tax Paid (1,193,610) (129,646)

Net Cash generated in operations (16,996,061) 8,882,219

Cash flows from investing activities

Proceed from Disposal 0 78,882

Purchase of Intangible Assets (17,430) (112,465)

Purchase of Property, Plant & Equipment (1,031,393) (2,790,647)

Net cash used in investing activities (1,048,823) (2,824,230)

Cash flows from financing activities

Deposit for Shares 0 1,572,190

Proceed from issue of shares 13,427,810 5,140,000

13,427,810 6,712,190

Net Increase in cash and cash Equivalents (4,617,074) 12,770,179

Cash and Cash Equivalents at beginning of the year 36,913,161 24,142,982

Cash and Cash Equivalents at end of the year 21 32,296,087 36,913,161

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BEST POINT SAVINGS AND LOANS LIMITEDNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018

1. CORPORATE INFORMATION

Best Point Savings and Loans Limited is a Non-Bank Financial Institutions incorporated in Ghana. The Company is licensed by Bank of Ghana. The address of the Company’s registered office is Old Peace FM Building, Mile 7 Junction, off Achimota-Ofankor Road. The Company’s nature of business involves the granting of loans to individuals, micro, small and medium enterprises as well as deposit mobilization.

2. BASIS OF PREPARATION

The financial statements of Best Point Savings Limited have been prepared in accordance with International Financial Reporting Standards (IFRS) and under the historical cost convention except as disclosed in the accounting policies below.

a. Basis of MeasurementThe financial statements have been prepared under the historical cost convention as modified to include the fair valuation of certain financial assets and liabilities to the extent required or permitted under accounting standards and as set out in the relevant accounting policies.

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

c. Functional and presentation currencyThe financial statements are presented in Ghana Cedis (GH¢), which is the Company’s functional and presentational currency.

3. SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies adopted by the Company which have been used in preparing these financial statements are as follows:

(a) Interest income and expenseInterest income and expense are recognised in the statement of comprehensive income for all instruments measured at amortised cost using the effective interest method.

When loans and advances become doubtful of collection, they are written down to their recoverable amounts and interest income is thereafter recognised based on the rate of interest that was used to discount the future cash flows for the purpose of measuring the recoverable amount

(b) Fees and commissionsFees and commissions are generally recognised on an accrual basis when the service has been rendered. Commission and fees from processing of loans are amortised over the maturity of the loan granted and recognised as an adjustment to the effective interest rate on the loan. All other commissions and fees arising from negotiating or participating in the negotiation of a transaction for a third party are recognised on completion of the underlying transaction.

(c) Financial Instruments (i) Recognition and measurement of financial assets

The Company recognizes its financial assets when it becomes a party to the contractual provisions of the instrument. Trade and other receivables are recognized on the date of transaction.

At initial recognition, financial assets are measured at its fair value plus, in the case of financial asset not measured at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction cost of a financial asset measured at fair value through profit or loss is recognized as profit or loss.

(ii) Classification of non-derivative financial assets

Classification and measurement model of non-derivative financial assets are summarized as follows. The Company classifies financial assets at initial recognition as financial assets measured at amortized cost, debt instruments measured at fair value through other comprehensive income, equity instruments measured at fair value through other comprehensive income or financial assets measured at fair value through profit or loss.

(iii) Financial assets measured at amortized cost

A financial asset that meets both the following condition is classified as a financial asset measured at amortized cost.

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• The financial asset is held in order to collect contractual cash flows.

• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

A financial asset measured at amortized cost is initially recognized at fair value plus transaction cost directly attributable to the asset. After initial recognition, carrying amount of the financial asset measured at amortized cost is determined using the effective interest method, net of impairment loss, if necessary.

(iv) Debt instruments measured at fair value through other comprehensive incomeA debt instrument that meets both the following condition is classified as a financial asset measured at fair value through other comprehensive income.

• The financial asset is held within the Company’s business model whose objective is achieved by both collecting contractual cash flows and selling financial assets.

• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

A debt instrument measured at fair value through other comprehensive income is recognized initially at fair value plus transaction cost directly attributable to the asset. After initial recognition, the asset is measured at fair value with changes in fair value included as “financial asset at fair value through other comprehensive income” in other comprehensive income. Accumulated gains or losses recognized through other comprehensive income are directly transferred to profit or loss when debt instrument is derecognized.

(v) Equity instruments measured at fair value through other comprehensive incomeThe Company makes an irrevocable election to recognize changes in fair value of investments in equity instruments through other comprehensive income, not through profit or loss. A gain or loss from fair value changes will be shown in other comprehensive income and will not be reclassified subsequently to profit or loss.

An equity instrument measured at fair value through

other comprehensive income is recognized initially at fair value plus transaction cost directly attributable to the asset. After initial recognition, the asset is measured at fair value with changes in fair value included as “financial asset at fair value through other comprehensive income” in other comprehensive income. Accumulated gains or losses recognized through other comprehensive income are directly transferred to retained earnings when equity instrument is derecognized or its fair value substantially decreased.

Dividends are recognized as “finance income” in profit or loss.

(vi) Financial assets measured at fair value through profit or lossWhen any of the above-mentioned conditions for classification of financial assets is not met, a financial asset is classified as “at fair value through profit or loss” and measured at fair value with changes in fair value recognized in profit or loss.

A financial asset measured at fair value through profit or loss is recognized initially at fair value and its transaction cost is recognized in profit or loss when incurred. A gain or loss on a financial asset measured at fair value through profit or loss is recognized in profit or loss, and presented in “finance income” or “finance cost” in the statement of income for the reporting period in which it arises.

The Company does not designate any debt instrument as at fair value through profit or loss to remove or significantly reduce an accounting mismatch.

(vii) De-recognition of financial assetsThe Company derecognizes its financial assets if the contractual rights to the cash flows from the investment expire, or the Company transfers substantially all the risks and rewards of ownership of the financial asset. Any interests in transferred financial assets that are created or continuously retained by the Company are recognized as a separate asset or liability.

(viii) Recognition and measurement of financial liabilitiesThe Company recognizes financial debts when it becomes a party to the contractual provisions of the instruments. The measurement of financial debt is explained in (b) Classification of financial liabilities.


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(b) Classification of financial liabilities

(i) Financial liabilities measured at amortized costA financial liability other than those measured at fair value through profit or loss is classified as a financial liability measured at amortized cost. A financial liability at amortized cost is initially measured at fair value less transaction cost directly attributable to the issuance of the financial liability. After initial recognition, the financial liability is measured at amortized cost based on the effective interest rate method.

(ii) Financial liabilities measured at fair value through profit or loss

A financial liability measured at fair value through profit or loss is initially measured at fair value. After initial recognition, the financial liability is measured at fair value with subsequent changes recognized as profit or loss.

(c) Derecognition of financial liabilitiesThe Company derecognizes a financial liability when the financial liability is distinguished, i.e. when the contractual obligation is discharged or cancelled or expired.

(d) Preference sharesPreference shares are classified as equity or financial liabilities based on the substance of the contractual arrangements, not on their legal forms. Preference shares mandatorily redeemable on a particular date are classified as financial liabilities. Preference shares classified as liabilities are measured at amortized cost in the statement of financial position and the dividends on these preference shares are recognized as interest expense and presented as financial cost in the statement of income.

iii. Presentation of financial assets and liabilitiesFinancial assets and liabilities are offset and the net amount is presented in the consolidated statement of financial position only when the Company currently has a legally enforceable right to set off the recognized amounts and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.

Impairment of Financial Assets

The Company recognizes 12-month expected credit loss as loss allowance when there is no significant increase in the credit risk since initial recognition. When there is a significant increase in credit risk since initial recognition, expected credit losses for the remaining life of the financial

assets are recognized as loss allowance. Whether credit risk is significantly increased or not is determined based on the changes in default risk. To determine if there is a change in default risk, the following factors are considered. However, the Company always measures loss allowance for trade receivables at an amount equal to lifetime expected credit losses.

• External credit rating of the financial asset

• Downgrade of internal credit rating

• Operating results, such as decrease in sales, decrease in working capital, asset deterioration and increase in leverage

• Reduced financial support from the parent company or associated companies

• Delinquencies (Overdue information)

Expected credit losses are measured based on the discounted present value of the differences between the contractual cash flows and the cash flows expected to be received.

(g) Property, plant and equipmentAll property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset’s carrying amount or are recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the profit and loss account during the financial period in which they are incurred.

Depreciation on property and equipment is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives, as follows:

Furniture, fittings and fixtures 25%

Office machines and equipment 25%

Computer systems 33.3%

Motor vehicles 20%

Leasehold Property 40 years or lease period whichever is lower


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The assets’ useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the profit and loss account.

(h) Intangible Assets - Computer SoftwareSoftware acquired by the Company is stated at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised in the statement of comprehensive income on a straight line basis over the estimated useful life of the software. The estimated life of the software is up to five years.

(i) Current and deferred income taxIncome tax expense is the aggregate of the charge to the profit and loss account in respect of current income tax and deferred income tax.

Current income tax is the amount of income tax payable on the taxable profit for the year determined in accordance with the Internal Revenue Act 2000 (Act 592).

Deferred income tax is provided, using the liability method, for all temporary differences arising between the tax bases of assets and liabilities and their carrying values for financial reporting purposes. Currently enacted tax rates are used to determine deferred income tax.

Deferred income tax assets are recognised only to the extent that realisation of the related tax benefit is probable.

(j) BorrowingsBorrowings, which are classified as financial liabilities, are recognised initially at fair value, being their issue proceeds (fair value of consideration received) net of transaction costs incurred. Borrowings are subsequently stated at amortised cost. Any difference between proceeds net of transaction costs and the redemption value is recognised in the profit and loss account over the period of the borrowings using the effective interest method.

(k) Cash and cash equivalentsCash and cash equivalents comprise balances with less than three months’ maturity from the date of acquisition, including: cash and non-restricted balances with banks, and amounts due to and from other banks.

(l) New Standards, Interpretations and amendments not yet adoptedA number of new standards, amendments to standards and interpretations are not yet effective for the year ended 31 December 2017, and have not been applied in preparing these financial statements. These are disclosed as follows:

IFRS 9 FINANCIAL INSTRUMENTS

IFRS 15 Revenue from contracts with customers IFRS 15 requires the recognition of revenue to depict the transfer of promised goods or services to a customer in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. Applies to an annual reporting period beginning on or after 1 January 2018

IFRS 9 Financial Instruments IFRS 9 introduced new requirements for the classification and measurement of financial assets and the classification and measurement requirements for financial liabilities along with the requirements for recognition and derecognising of financial assets and liabilities. IFRS 9 Financial Instruments has replaced IAS 39 Financial Instruments: Recognition and Measurement in its entirety. This is mandatorily effective for periods beginning on or after 1 January 2018 with early adoption permitted (subject to local endorsement requirements).

IFRS 16 specifies how an IFRS reporter will recognize, measure, present and discloses leases. The standard provides a single lessee accounting model, requiring lessees to recognize assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value. Lessors continue to classify lease as operating or finance. IFRS 16 was issued in January 2016 and applies to annual reporting periods beginning on or after 1 January 2019.

IFRS 1 First-time Adoption of International Financial Reporting Standards

Deleted the short-term exemptions for first-time adopters of IFRS 1 because they have now served their intended purpose. Effective from 1 January 2018.

IAS 28 Investments in Associates and Joint Ventures effective 1 January 2018


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Clarified that the election to measure at fair value through profit or loss an investment in an associate or a joint venture that is held by an entity that is a venture capital organisation, or other qualifying entity, is available for each investment in an associate or joint venture on an investment-by-investment basis, upon initial recognition

IFRIC 22, FOREIGN CURRENCY TRANSACTIONS AND ADVANCE CONSIDERATION.

The interpretation addresses foreign currency transactions or parts of transactions where:

There is consideration that is denominated or priced in a foreign currency;

The entity recognizes a prepayment asset or a deferred income liability in respect of that consideration, in advance of the recognition of the related asset, expense or income; and the prepayment asset or deferred income liability is non-monetary.

The Interpretations Committee came to the following conclusion:

The date of the transaction, for the purpose of determining the exchange rate, is the date of initial recognition of the non-monetary prepayment asset or deferred income liability. If there are multiple payments or receipts in advance, a date of transaction is established for each payment or receipt.

IFRIC 22 is effective for annual reporting periods beginning on or after January 1, 2018. Earlier application is permitted.

Annual Improvements to IFRS Standards 2015–2017 Cycle

Annual Improvements to IFRS Standards 2015–2017 Cycle contains amendments to IFRS 3 Business Combinations, IFRS 11 Joint Arrangements, IAS 12 Income Taxes and IAS 23 Borrowing Costs.

The amendments to IFRS 3 clarify that when an entity obtains control of a business that is a joint operation, it re-measures a previously held interest in that business.

The amendments to IFRS 11 clarify that when an entity obtains joint control of a business that is a joint operation, it does not re-measure a previously held interest in that business.

The amendments to IAS 12 clarify that an entity accounts for all income tax consequences of dividends in the same way, regardless of how the tax arises.

The amendments to IAS 23 clarify that when a qualifying asset is ready for its intended use or sale, an entity treats any outstanding borrowing made to obtain that qualifying asset as part of general borrowings. Effective date is 1 January 2019.

The above new standards, interpretations and amendments are not expected to have any material impact on financial statements.

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2018 2017

GH¢ GH¢

4. INTEREST INCOME

Loans and Advances to Customers 11,437,920 7,979,466

Investments 52,525,655 53,248,010

63,963,575 61,227,476

5. INTEREST EXPENSE

Call Accounts 360,385 111,721

Saving Accounts 3,091,179 2,264,967

Fixed Deposits 27,132,695 31,480,458

30,584,259 33,857,146

6. NET COMMISSION AND FEESFacility Fees 611,350 954,588

Commission 1,878,992 870,605

Fees from Other Services 1,908,050 1,718,679

4,398,392 3,543,872

7. OTHER OPERATING INCOME

Others 304,297 506,776

Impairment no longer required 13,068,116 0

Exchange Gain 52,328 341,984

13,424,741 848,760

8. IMPAIRMENT CHARGE ON LOANS AND ADVANCESBalance at 1 January 13,392,439 3,246,059

Impairment Released (13,068,116) 0

Impairment Charge 2,294,498 10,146,380

Balance at 31 December 2,618,821 13,392,439

CREDIT IMPAIRMENT LOSS

Specific Impairment 1,231,198 10,146,380

Collectively assessed 1,063,300 0

2,294,498 10,146,380

Loans and Advances written off 17,068,116 0

19,362,614 10,146,380

8a. IMPAIRMENT OF FINANCIAL ASSETSThe impaired charge on financial assets for the year is mainly related to a claw back of an investment placed at Accent Financial Services Limited which the parent company(guarantor) failed to honour its obligation.

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2018 2017

GH¢ GH¢

9. OPERATING EXPENSES

Staff Cost 15,767,927 14,343,110

Directors' Emoluments 270,500 336,167

Audit Fee 36,800 32,000

Depreciation 3,195,548 3,074,893

Amortisation 522,827 475,976

Occupancy 3,440,480 3,124,269

General & Administrative Expenses 6,780,535 5,543,350

30,014,617 26,929,765

10a. TAXATION

(i) Income tax expense

Current Tax Expense 0 0

Deferred Tax (8c) 5,202 (133,756)

5,202 (133,756)

All tax liabilities are subject to the agreement of the Ghana Revenue Authority.

(ii) Reconciliation of effective tax rate

Profit /(Loss) Before Tax 1,825,218 (9,578,959)

Corporate Tax at 25% (2017: 25%)

Tax calculated at corporate tax rate 456,305 (2,394,740)

Tax effect of non -deductible expenses 1,365,168 892,036

Tax effect of non- deductible income 0 (5,595)

Tax loss for which no deferred tax asset is recognised (1,309,698) 1,508,299

Tax effect of capital allowance (511,775) 0

Deferred Tax (Credit) 5,202 (133,756)

5,202 (133,756)

Effective tax rate % 0 1


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35BEST POINT SAVINGS AND LOANS LIMITED - ...Your Dream, Our BusinessBEST POINT SAVINGS AND LOANS LIMITED - ...Your Dream, Our Business


Balance1 Jan.GH¢

Paymentduring the

yearGH¢

Charge forthe year

GH¢

Balance31 Dec

GH¢

10b. Income Tax

2015 (70,475) 0 0 (70,475)

2016 72,239 0 72,239

2017 (55,000) (318,187) 0 (373,187)

2018 0 (675,423) 0 (675,423)

National Fiscal Stabilization levy (10,097) (200,000) 91,261 (118,836)

(63,333) (1,193,610) 91,261 (1,165,682)

10c. Deferred Tax (170,184) 0 5,202 (164,982)

(233,517) (1,193,610) 96,463 (1,330,664)

2018 2017

GH¢ GH¢

11. CASH AND BANK BALANCES

Current and Call Accounts 24,973,968 31,260,122

Cash on Hand 7,322,119 5,653,039

32,296,087 36,913,161

12. SHORT TERM INVESTMENTS

Fixed Deposit 190,366,869 176,733,363

190,366,869 176,733,363

13. LOANS AND ADVANCES

Business Loans 43,638,089 39,624,671

Overdrafts 9,468,043 4,844,396

Loans and Advances written off (17,068,116) 0

36,038,016 44,469,067

Less Credit impairment loss (2,618,821) (13,392,439)

33,419,195 31,076,628

14. OTHER ASSETS

Interest Receivable 25,462,873 39,222,163

Other Debtors 2,809,943 847,214

Stock 614,726 440,473

Capitalised Expenditure 3,126,326 3,547,402

Prepayments 2,709,488 2,695,342

34,723,356 46,752,594

14a This represents major infrastructural improvements to the rented premises of the company. The expenditure is to be written off over the rental period.

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15. PROPERTY, PLANT AND EQUIPMENT

Leasehold Office Furn Motor Office Plant

Property & Fittings Vehicles Computers & Equipment Total

Cost GH¢ GH¢ GH¢ GH¢ GH¢ GH¢

Balance at 1 January 3,777,670 2,735,540 2,759,577 971,044 4,808,640 15,052,471

Additions 0 17,850 0 930,018 83,525 1,031,393

Disposal 0 0 (195,150) 0 0 (195,150)

Balance at 31 December 3,777,670 2,753,390 2,564,427 1,901,062 4,892,165 15,888,714

Depreciation

Balance at 1 January 1,053,978 1,493,984 1,194,587 733,082 2,394,592 6,870,223

Charge for the year 514,069 647,152 529,451 409,028 1,095,848 3,195,548

Disposal 0 0 (162,625) 0 0 (162,625)

Balance at 31 December 1,568,047 2,141,136 1,561,413 1,142,110 3,490,440 9,903,146

Net Book Value 31/12/18 2,209,623 612,254 1,003,014 758,952 1,401,725 5,985,568

Net Book Value 31/12/17 2,723,692 1,241,556 1,564,990 237,962 2,414,048 8,182,248


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2018 2017

GH¢ GH¢

16. INTANGIBLE ASSETS

Cost

Balance as at 1 January 2,084,306 1,971,841

Additions 17,430 112,465

Balance as at 31 December 2,101,736 2,084,306

Amortisation

Balance as at 1 January 851,678 375,702

Charge for the Year 522,827 475,976

Balance as at 31 December 1,374,505 851,678

Net Book Value 727,231 1,232,628

Intangible Assets represents computer software

17. CUSTOMERS DEPOSITS

Current Accounts 26,271,256 22,218,626

Savings Accounts 98,593,454 80,374,579

Fixed Deposits 132,399,262 154,006,770

257,263,972 256,599,975

18. OTHER LIABILITIES

Accruals 1,522,723 1,104,792

Interest Payable 10,505,000 25,454,866

Other Payable 1,641,479 5,103,176

Sundry Creditors 196,897 298,996

13,866,099 31,961,830

19. DEPOSIT FOR SHARES

These are funds advanced by various shareholders towards equity yet to be registered.


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2018 2017

Number of Number of

Shares Shares

20. STATED CAPITAL

Authorised Ordinary Shares of no par value 10,000,000,000 10,000,000,000

Issued Ordinary Shares of no par value 35,140,000 20,140,000

GH ¢ GH ¢

Proceeds of issue for cash - Ordinary Shares 35,140,000 20,140,000

35,140,000 20,140,000

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

21. ANALYSIS OF CASH AND CASH EQUIVALENTS

Cash and Bank Balances 32,296,087 36,913,161

32,296,087 36,913,161

22. CONTINGENT LIABILITIES

There were no contingent liabilities at the statement of financial position date. (2017:nil)

23. CONCENTRATION OF ASSETS AND LIABILITIES

The company's assets and liabilities are held in Ghana. There are no assets and liabilties held outside Ghana.

24. CREDIT RISK RESERVE

This reserve represents excess loan provision as per Bank of Ghana guidelines over IFRS loan provisions.

25. STATUTORY RESERVE FUND

Balance as at 1 January 294,776 294,776

Transfer from Income Surplus 864,378 0

Balance as at 31 December 1,159,154 294,776


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BEST POINT SAVINGS AND LOANS LIMITEDNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2018 26. RELATED PARTY TRANSACTIONS

Transactions with Executive Directors and Key Management Personnel Key management personnel are defined as those person having authority and responsibilty for planning, directing and controlling the activities of the company(directly or indirectly) and comprise the Executive Directors and Officers of the Company

There were no material transactions with companies in which a Director or other members of key management personnel (or any connected person) is related Remuneration of Executive Directors and other key management personnel

2018 2017

GH¢ GH¢

Salaries and other short term benefits 1,506,889 1,472,010

Employer social security charges on emoluments 108,341 153,507

1,615,230 1,625,517

Details of transactions and balances between the Bank and Executive

Directors and other key management personnel are as follows:

Loans

Loans outstanding at 1 January 222,347 420,932

Net movement (99,202) (198,585)

Loans outstanding at 31 December 123,145 222,347

Deposits

Deposits at 1 January 126,564 1,419,144

Net movement during the year (66,263) (1,292,580)

Deposits at 31 December 60,301 126,564

Interest expense 5,970 66,941

BASIC EARNINGS PER SHARE

Basic earnings per share is calculated by dividing the net profit attributable to equity holders

of the Company by the weighted average number of ordinary shares in issue during the year.

Profit attributable to equity holders 1,728,755 (9,445,203)

Weighted average number of ordinary shares 35,140,000 20,140,000

Basic earnings per share (Ghana cedi per share) 0.05 (0.47)

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2018 2017

GH¢ GH¢

STAFF COST

Salaries and Wages 11,741,377 10,471,448

Social Security Cost 920,383 812,367

Other Staff Cost 1,922,433 1,733,998

Staff Training 83,254 152,033

Medical Expenses 1,100,480 1,173,264

15,767,927 14,343,110

OCCUPANCY

Cleaning & Maintenance- Office Premises 899,858 740,838

Maintenance- Furniture, Fixtures & Fittings 63,766 49,350

Maintenance- Plant & Equipment 231,461 246,006

Rent & Rates 1,264,051 1,038,110

Water, Electricity & Conservancy 981,344 1,049,965

3,440,480 3,124,269

GENERAL AND ADMINISTRATIVE EXPENSES

Security Services 1,067,583 759,775

Bank Charges 53,557 53,474

Board Expenses 5,226 14,428

AGM and Annual Report Expenses 3,698 0

Printing & Stationery 501,870 493,384

Computer Consumables 20,063 12,617

Core Banking Software Maintenance Expense 458,520 218,000

Telephone,Postage & Internet 863,002 807,286

Subscription & Publication 390,904 324,595

Lodging and Boarding 193,093 743,550

Marketing, Advertising & Promotion 368,199 550,379

ATM Expenses 69,750 10,415

Insurance 104,886 100,035

Loss on Disposal 32,525 0

Donations 13,477 17,273

Money transfer and Controller Expenses 554,593 392,750

Auto Loan Expenses 13,720 21,089

Other expenses 52,508 54,380

Vehicle Running Expenses 420,032 395,269

Repairs and Maintenance: Motor Vehicles 176,622 239,188

Professional & Legal Fees 744,699 149,646

Susu Staff Operating Expenses 263,738 185,817

Transport & Travelling 408,270 0

6,780,535 5,543,350

BEST POINT SAVINGS AND LOANS LIMITEDSCHEDULE TO OPERATING EXPENSESFOR THE YEAR ENDED 31 DECEMBER 2018

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