The directors present their report together with the audited financial statements for the year ended 31st December 2011, which disclose the state of affairs of Swissport SACCOS (the Society) in accordance with Section 48 of the Co-operative Society Act No. 20 of 2003 and the International Financial Reporting Standards (IFRS)
The directors of the Society at the date of this report are as listed below, all of whom have served since1stOctober, 2009 to 31st December, 2011 with the exception of Mr. Robert Butambala and Ms. Rachel Kihedu whom have served since 2006 to 2011:
NAME POSITION REMARKS
1. Mr. Robert Butambala Chairman DAR Appointed 2006
2. Ms. Rachel Kihedu Vice chairman KIA Appointed 2006
3. Mr. George Faustine Director DAR Appointed 2009
4. Ms. Joyce Mariki Director DAR Appointed 2009
5. Mr. Fabian Mwambinga Director KIA Appointed 2009
6. Mr. Robert Nyanda Director DAR Appointed 2009
In accordance with section 18 and 19 of the Society’s bylaws 1/3 of directors are required either to retire by rotation after every three years in office or otherwise members at the annual general meeting are supposed to vote out of office 1/3 of the directors starting with the oldest directors. In any case for a director who has hold office for nine years is supposed to retire on his/her own on the 9th year. In year 2009 1/3 of the directors retired another 1/3 of the directors are due to retire in year 2012. Of the six directors above the oldest director has been in office for 5 years.
The SACCOS Manager as at 31st December 2011 was Mr. Humphrey Gordon
The Society’s principal activity is the promotion of a thrift culture among members and, the provision of loans to its members at competitive rates. Performance during the year was as follows:
2011 2010 2009 2008
TZS TZS TZS TZS
Interest on Loans 42,615,952 23,749,836 22,119,601 12,905,713
Other incomes 1,314,678 260,000 4,000 404,000
TOTAL INCOME 43,930,630 24,009,836 22,123,601 13,309,713
% CHANGE 79% 9% 69% NA
Revenue has dramatically grown by over 79% compared to prior year. The increase in revenue is attributed to the growth on interest on loans from that of year 2010. This is because more loans have been repaid in 2011 than it was the case in 2010 following the aggressiveness shown by management in collecting debts and the general improvement of good governance in the management of our SACCOS. The other reason is because we have issued more loans in 2011 than it was in 2010. Not only this but, this year’s revenue is the highest since, our SACCOS started its operation in 2006.
NUMBER OF SACCOS MEMBERS
YEAR 2011 2010 2009 2008 2007 2006
Number of members 183 150 170 215 135 129
Swissport SACCOS is increasingly becoming attractive to Swissport staff and this is vindicated by the growing number of members as seen in the above tabulation. This is because: the SACCOS has issued more loans last year compared to the past two years whereby the SACCOS was overwhelmed by loans demands and could not meet all of its members financial demands. Additionally the SACCOS solvency has dramatically improved; following the good work done by SACCOS management in collecting loans especially, the long outstanding ones. It is also worth noting that there is a general improvement in the running of the SACCOS in general and its records. The other reason that has contributed to the improvement of the SACCOS solvency is the changing of the lending policy from lending three times of one’s savings to two times of one’s savings. Lastly, members savings have grown large as the SACCOS has been in existence for over five years’ now and all this long members have been contributing monthly savings to the society as result the SACCOS financing has improved a lot.
3. CORPORATE GOVERNANCE
The CEO of Swissport Tanzania Mr. Gaudence Temu is the patron of the SACCOS and is also a member of the SACCOS. Mr. Temu as a patron is responsible for making sure that the SACCOS is being run well and seeing to it that members’ savings are in good custody and safe. Notwithstanding this, the management of the SACCOS is entrusted to the SACCOS board of directors. The Board of Swissport SACCOS consists of six Directors, all of whom are non executive directors. The Board takes overall responsibility for the running of the SACCOS, including responsibility for identifying key risk areas, considering and monitoring investment decisions, considering significant financial matters, and reviewing the performance of the manager and of the SACCOS, business plans and budgets. The Board is also responsible for ensuring that it has a comprehensive system of internal controls and, operational policies and procedures and it complies with sound corporate governance principles. The Board is required to meet at least four times a year. The Board delegates the day to day management of the SACCOS to the SACCOS manager. The manager is invited to attend board meetings and facilitates the effective control of all the SACCOS’s operations and, is acting as a medium of communication and coordination between all the various business stakeholders. The SACCOS is committed to the principles of good corporate governance .The directors also recognize the importance of integrity, transparency and accountability. During the year the Swissport SACCOS has the following committee to ensure a high standard of corporate governance within the society.
CUSTOMER SERVICE AGENT
The Supervisory Committee reports to members at the Annual General Meeting
The Supervisory Committee met Four times during the year.
4. RISK MANAGEMENT
The Board accepts final responsibility for the risk management and internal control systems of the SACCOS. It is the task of management to ensure that adequate internal financial and operational controls systems are developed and maintained on an ongoing basis in order to provide reasonable assurance regarding:
The effectiveness and efficiency of operations;
The safeguarding of the SACCOS’s assets;
Compliance with applicable laws and regulations;
The reliability of accounting records;
Business sustainability and,
Responsible behaviors’ towards all stakeholders.
Notwithstanding the above, the efficiency of any internal control system is dependent on the strict observance of existing controls however; there is always a risk of non-compliance of such controls. Whilst no system, of internal control can provide absolute assurance against misstatement or losses, the SACCOS system is designed to provide the Board with reasonable assurance that the procedures in place are operating effectively.
The Board assessed the internal control systems throughout the financial year ended 31st December 2011 and is of the opinion that they are effective and working.
5. DIRECTORS REMUNERATION
Given that our SACCOS is still very young directors are not paid any remuneration however, members at the annual general meeting might decide to pay them honorarium at a rate decided by members, depending on the financial position of the Society and as they will deem fit. In 2010 all directors were paid TZS 300,000 each as honorarium and the chairman was paid 500,000. The board is recommending to members that this year directors be remunerated in the same manner as it was in 2010.
6. RESULTS AND DIVIDEND
The SACCOS net profit for the year is TZS 20,187,830.00. The Board of Directors is proposing a dividend of TZS 10,000,000 out of the 2011 profits be paid to members or as otherwise, decided by members at the annual general meeting.
7. CAPITAL STRUCTURE
2011 2010 2009 2008
Equity and Savings 368m 303m 289m 257m
Loan portfolio 346m 287m 263m 280m
Looking at our capital structure you can see clearly that our SACCOS is growing from strengths to strengths and from year to year. This is a demonstration of a healthy SACCOS. The prospect of our future is equally bright and we are even poised to grow further in year 2012 both in terms of assets and number of members. The growth in Equity is comparable with the growth in loan portfolio hence, there is no idle cash.
8. FUTURE DEVELOPMENTS
The SACCOS will continue to improve its profitability through the introduction of innovative products, and selective expansion of its common bond while carefully managing both costs and risks. In this light the board is proposing the introduction of another loan product called SACCOS PESA FASTER where one can borrow up to 10m and its issuance will not make reference to ones savings. This means one can simultaneously take a conventional loan (which is 2 times to what one has in the society in the form of savings and shares) and also take SACCOS PESA FASTER. The interest rate on SACCOS PESA FASTER loan will be 25% reducing balance, loan processing fee 2% of the applied amount and will be repaid within 24 months. SACCOS PESA FASTER loans will not be extended to contract staff.
The state of affairs of the society is as demonstrated in the financial statements attached. The directors consider the society to be solvent for a foreseeable period.
During the year 2011, the SACCOS set aside a sum of TZS. 1,200,000/=for staff training in order to improve employee’s technical skills and effectiveness. In year 2011 we sent twice our SACCOS manager for training; one session was held at Bagamoyo and was organized by COASCO and it touched on IFRS requirements and taxes. The second session was organized by CRDB and it touched on microfinance computing (CRDB Microfinance). We are endeavouring to equip our manager and directors with the requisite expertise needed to run our SACCOS by sending them on various trainings as long as they are within our financial limitations.
11. EMPLOYEES WELFARE
The society has one full time employee who is the manager of SACCOS and, is the one who is running daily affairs of the society including financial accounting. The manager is also a member of the society and Faraja Fund. The manager is a member of the National Social Security Fund (NSSF). The Society contributes 10% of his gross salary towards NSSF and the manager is also contributing 10% of his gross salary. A healthy relationship continues to exist between the board and the manager and there is no any unresolved complaint between the two parties as at the end of 2011.
13. CORPORATE SOCIAL RESPONSIBILTY
The society is giving back to the community by offering its members who are men and women loans at favourable rates which cannot be easily obtained from Commercial banks. The Society also has one salaried employee thus contributing in a way towards the national fight against poverty reduction.
The society did not borrow from any financial institution between 2010 - 2011.
15. STATEMENT OF THE DIRECTORS REPONSIBILITIES
The Co-operative Societies Act No.20 of 2003 requires the directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the SACCOS as at the end of the financial period and its profit and loss. The directors have prepared the accounts that conform to the International Financial Reporting Standards as at the period ended 31st December 2011. Financial statements prepared include, Balance sheet, Income statement, cash flow statement and statement of changes in Equity. Furthermore the directors confirm that, in preparing these financial statements, necessary accounting policies have been applied consistently and agree that responsibility for keeping proper accounting records which disclose reasonable accuracy of the financial position and that assure the SACCOS’s assets are safeguarded fall in the directors’ hands. The directors are of the opinion that the financial statements give a true and fair view of the state of affairs of the Society and its profit.
Co-operative Audit and Supervision Corporation (COASCO) are the Auditors of the society for the financial year ended 31st December 2011. The auditors COASCO have expressed their willingness to continue in office and are eligible for reappointment. A resolution proposing the re-appointment of the SACCOS auditors’ for the year 2012 will be put to the Annual General Meeting.
BY ORDER OF THE BOARD