Times Of Swaziland: FNB’S DEVELOPMENT INTEREST IN EZULWINI

FNB’S DEVELOPMENT INTEREST IN EZULWINI
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BY MFANUKHONA NKAMBULE on 02/08/2020 00:17:00


mfanukhona@times.co.sz
EZULWINI –Famed for its colourful nightlife and main tourist destination in
the country, Ezulwini Valley is now a business area.
Eswatini MTN and Eswatini Revenue Authority (SRA) are some of the big
organisations that moved their head offices there.
Recent reports suggest that Eswatini Communications Commissions (ESCCOM) will
also build its five-storey headquarters at the place known for its attractions
such as hot springs, casinos, craft markets, art galleries, riding stables,
nature reserve, gold course, cultural village, restaurants and hotels.
There is no better description of the place than that given by
www.thekingdomofeswatini.com. It lies directly South East of Mbabane, extending
from the bottom of the Malagwane Hill to Lobamba and runs parallel with the MR3
highway from Mbabane to Manzini.
It is flanked to the West by the craggy Luphohlo/Lugogo Mountains and to the
East by the sacred Mdzimba Mountains.
There are indications that Eswatini Railway will follow suit.
It is where the Government of Eswatini is presently constructing a 500-room five
star hotel and a world class convention centre. A few metres from the hotel,
which is under construction, Tibiyo TakaNgwane has vast lands earmarked for an
unspecified development.
SwaziMed is building a fully-fledged hospital valued at E200 million.
The Times SUNDAY has learnt that First National Bank (FNB) ‘might’ join the
big organisations there. It is not clear if the head office, which is currently
housed at Sales House Building, 2nd Floor, Swazi Plaza, Mbabane, will move to
the golden mile of Eswatini.
Ntobeko Dlamini, FNB’s Brand and Communication Specialist, could only say the
financial institution purchased land in Ezulwini in 2016. She said there was an
interest to develop it. The brand and communication specialist explained FNB was
working on a best possible economic use under the circumstances.
Property and equipment
In its 2016 financial statement, FNB Eswatini mentioned that freehold land and
buildings comprised property situated in Portion 71 of Farm 188, Dalriach,
Mbabane in the Hhohho Region, and Lot No.2 of the Offices Township, situated in
the region of Hhohho Eswatini.
The institution stated that a schedule of its properties was being maintained at
the bank’s registered office and was available to a member for inspection.
“At June 30, 2016 included in property, plant and equipment are fully
depreciated items of property, plant and equipment with an initial cost of E50
622 515 (2015: E44 039 882),” reads the statement.
It mentioned that it carried property and equipment at historical cost less
accumulated depreciation and impairment losses, except for land that was carried
at cost less impairment. The bank said historical cost included expenses that
were directly attributable to the acquisition of the items.
It also pointed to the fact that subsequent costs were included in the asset’s
carrying amount or were recognised as a separate asset, as appropriate, only
when it was probable that future economic benefits associated with the item
would flow to the bank and the cost of the item could be measured reliably.
“The carrying amount of any replacement part is derecognised. All other
repairs and maintenance are charged to profit or loss during the financial
period in which they are incurred,” according to the statement. The statement
further mentioned that leasehold improvements were all improvements made to
property which the bank leased under an operating lease in order to prepare the
property for its intended use and from which the bank was expected to benefit
for more than one year. “Leasehold improvements are capitalised as property
and equipment,” the statement reads.
FNB said property and equipment was depreciated on a straight-line basis at
rates calculated to reduce the book value of these assets to estimated residual
values over their expected useful lives.
“Freehold properties and properties held under finance leases are broken down
into significant components and depreciation calculated based on the expected
useful lives of these components,” FNB reported.
Recorded
The Times SUNDAY has also seen the bank’s financial statement for 2019 where
it recorded total assets of E5 736 141 000 (roughly E5.73 billion).
Its property and equipment had a value of E68 477 000.
Giving its investment positions, FNB said it ensured that they were managed
within an asset-liability matching (ALM) framework that had been developed to
achieve long term investments.
These long-term investments, according to FNB, were in line with the obligations
under the plan. Within this framework, the bank’s ALM objective was to match
assets to the pension obligations by investing in long-term fixed interest
securities with maturities that matched the benefit payments as they fall due.
It was mentioned in the financial statement that the bank actively monitored how
the duration and the expected yield of the investments were matching the
expected cash outflows arising from the pension obligations.
FNB explained that investments were well diversified so that the failure of any
single investment would not have a material impact on the overall level of
assets.
Adopted
The trustees of the pension fund had adopted an investment strategy in respect
of the pensioner liabilities that largely followed a 70 per cent exposure in
fixed interest instruments to immunise the interest rate and inflation risk, and
30 per cent exposure to local growth assets.
It was stated that the fixed interest instruments mainly consisted of long dated
inflation linked bonds, while the growth assets were allocated to selected local
asset managers.
It must be said that the trustees received monthly reports on the funding level
of the pensioner liabilities and an in-depth attribution analysis in respect of
changes in the pensioner funding level.
According to the statement, the trustees of the fund aimed to apportion an
appropriate level of balanced portfolio, conservative portfolio, inflation
linked, and money market assets to match the maturing defined benefit active
member liabilities. It should be noted that this was an approximate matching
strategy as elements such as salary inflation and decrement rates could not be
matched. That was, however, an insignificant liability compared to the liability
of the pension fund.
It has been established that there was a high possibility that another prominent
bank in the country set up a structure in Ezulwini.