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Annual Report 2010 1

Annual Report 2010 i

ii Map showing PML Branch Network1 Corporate Profile6 Chairman’s Statement9 Board of Directo rs

10 Senio r Management

11 Employees of the Year12 What customers say

13 PML’s Risk Management Statement

16 Report of the Directors19 Statement of Directo rs Responsibilities

21 Financial Highlights24 Repo rt of the Independent Audito rs

27 Financial Statements

31 General Info rmation

33 PML Branch Netwo rk addresses

Abbreviations / Acronyms

RALCO Risk Asset And Liabilit y Commit tee

CSR Co rpo rate Social Responsibilit y

ICT Info rmation Communication Technology

GOU Government Of Uganda

MDI Microfinance Deposit-taking Institution

PML Pride Microfinance Limited (MDI)

URA Uganda Revenue Autho rity

PPDA Public Procurement And Disposal of Public Assets Autho rity

NORAD No rwegian Agency fo r Development Co operation

ILO International Labour Organization

GIZ Deutsche Gesellschaf t für Internationale Zusammenarbeit(German International Development Co operation)

Contents

Annual Report 2010 ii

PML Branch Network

Rwanda

Tanzania

Kenya

Sudan

DRC

N Adjumani

MoyoYumbe

Arua

NebbiPakwach

Gulu

Kitgum

PaderKotido

Katakwi

Moroto

Nakapiripirit

Kumi

MbalePallisa

Tororo

MalabaBusia

Bugiri

Iganga

Buwenge

Mayuge

Jinja

Lugazi

KamuliNakasongola

Luweero

Mukono

Mpigi

Mityana

Mubende

Kiboga

Sembabule

Masaka

Kyotera

KalangalaRakai

Lyantonde

Ibanda

Mbarara

Kabwohe

Kasese

Bundibugyo

Hoima

Masindi

ApacLira

Kaberamaido

Soroti

FortPortal

Kyenjojo

Bushenyi

Ishaka

Rukungiri

Kihihi

KabaleKisoro

Ntungamo

Lake Victoria

Wakiso

Kampala

Key

PML Branch

Annual Report 2010 iii

General InformationPrincipal Place Of Business:

Met ropole HousePlot 8 -10 Entebbe RoadKampala.

Registered Office: Met ropole HousePlot 8-10 Entebbe RoadP. O. Box 7566,Kampala.

Solicitors And Company Secretary: Sebalu & Lule Advocates and Legal ConsultantsEADB BuildingPlot 4 Nile AvenueP. O. Box 2255,Kampala.

Auditors:KPMG 3rd Flo o r, Rwenzo ri CourtsPlot 2 & 4A , Nakasero RoadP. O. Box 3509,Kampala.


Corporate ProfileAbout PRIDEPride Microfinance Ltd (PML) (MDI) is a Microfinance Deposit-taking Institution regulated and supervised by Bank of Uganda. Since 1995, PML continues to be a majo r player in the financial services secto r, p roviding innovative financial p roducts and services to a multitude of Ugandans. PML serves its customers through 29 netwo rked branches sp read across the count ry.

Our Vision“To lead in the p rovision of financial and microfinance services fo r the social and economic growth of ent rep reneurs in Uganda”

Our Mission“To p rovide financial services to micro, small, medium and upscale ent rep reneurs in rural and urban areas through sustainable operations that p romote social and economic growth of our customers”

Our Core ValuesTo enable it achieve its vision, mission and st rategic objectives, PML observes a set of co re values essential fo r its operations. Our co re values can be summarized with the acronym BE-THERE as follows;

Best Customer serviceExcellency and TransparencyTeamwo rkHonesty, Integrity & Accountabilit yEf ficiency & Ef fectivenessResponsive & Responsible GovernanceEqual Oppo rtunity Employer

To at tach meaning to the acronym, PML pledges to BE THERE fo r its customers, staf f, stakeholders and the count ry at large.

OwnershipPML is wholly owned by the Government of Uganda.

Products and ServicesPML delivers innovative and customer f riendly p roducts and services in a simple way. Our list of p roducts & services can be catego rized under three classes;• Savings p roducts• Loan p roducts• Money Transfer and other services


Achieve your long term projects with savings

Pride Akiba Savings Account

Fixed Deposit Account

Savings Products

This is a semi-liquid account fo r target savers who need to build long term savings fo r a

planned p roject o r any emergencies

This is an Account where a customer invests an amount of money fo r an agreed period

of time and interest.

Unlimited access to your savings

“Pride Smart Savings Account”

It is a fully liquid account where t ransactions can either be daily o r weekly

Corporate Profile

Invest fo r the future


Save fo r Their future

Pride Minor’s Account

It’s an account fo r children under 18 years of age with very at t ractive interest rates. The account is opened and operated by

parents/guardians in t rust of the children.

Save with a Vision

Save As You Earn (SAYE)

This account is designed to suit the needs of clients who are target savers fo r a specific

period of time.

Give your business a boost

Individual Lending Scheme (ILS)

This loan of fers a fast and secured means of bo osting an individual’s income. It is ideal fo r all ent rep reneurs engaged in income generating activities and would like to

grow their businesses

Loan Products

Corporate Profile


Corporate Profile

Grow together

Group Guaranteed Loan Scheme(GGLS)

This loan p roduct is designed fo r those clients who come together, are t rained, guarantee each other so as to be able to access credit

facilities as individuals.

Your Golden Path toSuccess

Salary Guaranteed Loan (SGL)

This p roduct is designed fo r salary earners who intend to access funding fo r self

development using their monthly salaries to pay back the loan.

Access your Assets without paying at once

Mortgage & Asset Financing Loan (MAFL)

This loan enables the customers to acquire their desired assets without paying fo r

them all at once. PML finances assets that generate income and the assets financed

are part of the securities.


Build a career with Pride

School Fees Loan (SFL)

This loan enables a parent, guardian o r student to access funds to pay scho ol fees

at once and repay later in manageable installments.

Proposed Loan product.1. The agricultural loan: This loan will target those involved in the agricultural secto r.

Money Transfer and other Services.1. Western Union Money Transfer. This is a fast and reliable wo rldwide money t ransfer service.2. Loan Insurance Fund (LIF): This is a compulso ry savings fo r Group clients which acts as security fo r their

loans and earns interest.3. Loan Insurance: All loans accessed by clients in Pride are insured against death, accident, permanent and

partial incapacity and catast rophes.

Our Brand promise.PML is commit ted to wo rking tirelessly to meet and exceed customer expectations each time they engage with us at all levels. To achieve this, PML has developed a culture that encourages all staf f to live and feel the institution’s co re values.

Corporate Profile


Enoch RukidiBoard Chairman


Chairman’s Statement

On behalf of the Board, I’m delighted to be p resenting yet another repo rt highlighting PML’s perfo rmance and achievements. PML has registered stable growth over the past years and 2010 was not an exception. 2010 was a year when the wo rld and Uganda in particular began to recover f rom the global economic down turn that

had af fected its economic landscape. Despite increased competition in the Microfinance sub secto r, PML continued to increase its market share. I’m therefo re p rivileged to p resent PML’s annual repo rt fo r the year ended 31st December 2010.

Financial achievements.

In 2010, p rofit af ter tax increased by 21% f rom UGX 2.35bn in 2009 to UGX 2.84 bn. Net loans and advances increased by 23% f rom UGX 47.8bn to UGX 58.6bn. Total Assets increased by 20% f rom UGX 66.08bn to UGX 79.61bn. Outstanding customer deposits (voluntary savings) increased by 80% f rom UGX 13.77bn in 2009 to UGX 24.79bn in 2010. Total equity increased by 19% f rom UGX 15.10bn to UGX17.95bn. Our deposito rs sto od at 231,076, out of which 66,179 were active loan bo rrowers, registering an increase of 24% and 9.7% respectively f rom the 2009 status.

This consistent growth is at t ributed to the following facto rs: ef fective governance, st rong management, a motivated skilled wo rkfo rce, improved technology, diversified p roduct of ferings and above all, go od customer service.

Risk Management.

Our credit risk has remained moderate with po rt folio at risk 30 days late fluctuating between 1.6 to 3%. We have improved our Risk Management Framewo rk and every staf f has embraced risk management in their day today wo rk.

Corporate Social Responsibility.

PML has a clear intent on social perfo rmance and has continued to enhance financial inclusion by targeting the underserved clientele through its p roducts and services. In 2010, we extended charitable suppo rt to the following o rganizations and institutions: National ICT Ef ficiency Campaign (NICTEC), Nakawa market t raders, Bishop Barham University-Kabale, Nature Uganda and Seguku Wo rship Cent re. PML regularly sensitizes its customers on their rights and is an Equal Oppo rtunity Employer.

2011 Outlook.

As the market continues to be mo re competitive, PML will also continue to invest in its people through t raining. We pledge to int roduce mo re market led p roducts aimed at meeting the growing financial needs of our varied clientele. With a st rong oversight f rom the Board, commit ted Management and staf f, enhanced systems and st ructures, PML’s perfo rmance in 2011 is expected to be even brighter as we utilize the technological plat fo rms that will facilitate the int roduction of branchless banking to enhance financial inclusion.


Chairman’s StatementConclusion.

My special thanks go out to fellow Board members, Management, Staf f and most impo rtantly our customers fo r their suppo rt. In the same breath, I would like to appreciate our development partners who have suppo rted us with technical assistance over the years. These include and not limited to:-NORAD, ILO, GIZ, Oikocredit and aBi. All have cont ributed to the consistent growth registered by PML over the years. PML will remain commit ted to its customers and will always ensure that their interests guide its operations and st rategic direction. We lo ok fo rward to maintaining our relevancy in the microfinance service secto r in the years to come.

Enoch RukidiBoard Chairman

“Your Growth is Our Pride”


Board of Directors

Enoch Rukidi Board Chairman

Peter Gachuba Chairman Strategy Committee

Constance Makosya Chairperson Risk & ALCO Committee

Steven Ddungu KabuguChairperson Board Audit Committee

Maris Wanyera Chairperson Human Resource & Administ ration Committee

Veronicah Gladys Namagembe Managing Directo r


Senior Management

Veronicah Gladys NamagembeManaging Directo r

Deo KateiziHead of Corporate Affairs

Dan Ivan NambwiraAg. Head of Audit

Irene MwoyogwonaHead of Finance

Samuel Baguma Head of ICT

ApolloTaremwaAg. Head of Operations

Rehema N . S Mutazindwa Head of Human Capital Management


Employees of the yearEvery year, PML recognizes its people who stand out as Employees of the Year. This is therefo re to show case our seven employees who sto od out in the year 2010 fo r outstanding perfo rmance. These include:-

Mathias MulumbaOffice AssistantMasaka western I Region

Kakande JohnCredit Of ficer NakulabyeCentral II

Madiinah NampombeCashier KabalagalaEastern II

Bernard MuwangaCCO-Buwenge BranchEastern I Region

Dhizaala CissyHCA Learning & GrowthHead Office

Kizibu DanielCashier-Fortportal Western II region

Richard M MiiroCashier City CentreCentral I


WHAT OUR CUSTOMERS SAY.PML regulary interacts with its customers to find out their views, p rogress o r challenges they face as they go about their businesses and fo rge approp riate solutions with them. In this repo rt, we relay to you real life experiences of some of PML’s customers based in Buwenge Town Council, Jinja Dist rict.

MR. TUSUBIRA CHRISTOPHER I am a resident of Buwenge Town Council, Jinja dist rict, a customer of PML Buwenge branch. I started business by selling sweet bananas and greens but later started dealing in maize and cof fee. The p roceeds f rom the businesses were used to establish a poult ry farm but the capital was not enough so I got credit facilities f rom PML to bo ost my poult ry business.

I currently have over 6,000 layers at home in addition to six poult ry joints each having an average of 1,000 birds. I harvest over 120 t rays of eggs daily which are supplied to Buwenge Town Council, Jinja, Busia, Mbale and Juba. I have also been able to open up a shop of chicken feeds in Buwenge. This business is

currently servicing a UGX 30,000,000 (Thirty million shillings) loan f rom PML. I’m so grateful to PML.

MR. SAKWA STEPHEN. I started business in 1999 but my capital was inadequate so I approached PML at their Jinja branch fo r aloan which was p rovided. I was later t ransferred to Buwenge branch.

I operate a stationery shop in Buwenge Town Council which has grown and has made me able to acquire two photocopying machines, educated my kids (4 graduates, two currently at university and one about to join) and a big piece of land.

So am very thankful to Pride since most of my social and economic wealth has been achieved through the credit facilities I have acquired. I started with a loan of UGX 150,000 but am currently servicing a loan of UGX 8,000,000.

As PML, we applaud Mr. Tusubira Christopher and Mr. Sakwa Stephen fo r their ent rep reneurial spirit and being go od clients. We pledge to always p rovide them financial suppo rt as and when they need it. Congratulations!

What Customers Say


PML’s Risk Management Statement

1. Introduction.Given the day to day business activities, PML is exposed to a wide range of risks. The co re activities include, lending, deposit mobilization and money t ransfer services. A company is exposed to various catego ries depending on its chosen st rategies. The Key Risk Catego ries thus include; St rategic Risk, Credit Risk, Reputational Risk, Operational Risk, Liquidity Risk, Compliance Risk, Market Risk (Interest rate risk and some minimal exposures to fo reign exchange risks).

Overtime, PML has enhanced the Risk Management f ramewo rk that started f rom the cont rol environment change through cross wide sensitization. This has enhanced Risk Management accountabilit y and self assessment which is manifested in the business growth (28% in 2010) and bet ter po rt folio quality (1.61% in 2010).

2. Risk Governance.The Board bears the ultimate responsibilit y fo r Risk Management at PML through defining and approving all business st rategies. Implementation however is delegated to the Senio r Management Team in a way that minimizes loss related exposures and maximizes the oppo rtunities. The Risk Management p rocesses are co-o rdinated by the Risk Section. Internal Audit plays a critical role in evaluating ef fectiveness of the risk management st rategies. Below is a detailed st ructure of the Institutional risk governance st ructure.

Board AuditCommit tee

Board RALCOCommit tee

Management RALCO

Management Credit Commit tee

Managing Director/ Senior Management

Team

Board Oversight

Management Responsibilit y

Assurance

PRIDE MICROFINANCEBoard

Internal Audit


PML’s Risk Management Statement

3. Risk Management and Monitoring.The Board has implemented a combination of internal policies and p rocedures and use of external audits to monito r risk management and its ef fectiveness.

3.1 Internal Policies and Procedures.To standardize risk management p ractices, the Board has defined a set of internal policies and p rocedures ranging f rom loan p rocessing policy manuals, operational manuals (HR Manual, IT Security manual, f raud policy, Audit Manual), Co rpo rate Governance manual to ethical code of conduct. All these include mechanisms to ensure compliance, identification and regular repo rting to the Board and Management f rom business functions of significant business risks and the management of those risks.

3.2 Internal Audit.PML’s risk management p rocesses are subjected to Internal Audit review who subsequently fo rm an objective assessment of the adequacy of policies and p rocedures fo r info rmation of the Board.

3.3 External Reviews.To complement the internal audit reviews, regular reviews are conducted by other external stakeholders including External Audito rs, Bank of Uganda Examiners, statuto ry bodies like PPDA ,URA and Rating Agencies.


PML Social Events

Team Pride St rategists at Marketers’ Night Out during a quiz session.

Nakawa Market vendo rs display market cleaning to ols donated by Pride in a CSR drive. These included Wheel barrows, Slashers, Overalls, Spades and Rakes.

Marketers’ Night Out

CSR activity


REPORT OF THE DIRECTORS.

The Directo rs submit their repo rt and the audited financial statements fo r the year ended 31 December 2010, which shows the state of the company’s af fairs.

1. PRINCIPAL ACTIVITIES.

The Company takes deposits f rom the public and various Institutions and p rovides loans and advances to customers.

2. MARKET RISK.

Market risk exists wherever the Company has taken t rading, banking and investment positions. Trading and investment limits are set by the Board to contain the risk of losses within a p rescribed amount in the event of adverse p rice movements.

3. CAPITAL ADEQUACY.

The company monito rs the adequacy of its capital using ratios advised by Bank of Uganda. These ratios measure capital adequacy by comparing the company’s eligible capital with its Statement of Financial Position assets, of f-Statement of Financial Position commitments and market and other risk positions at a weighted amount to reflect their relative risk.

Capital Requirement Basis.

Co re capital required is 15% of the total risk weighted assets including the risk weighted contingent claims.

Total capital required is 20% of the total risk weighted assets including the risk weighted contingent claims.

Based on the above ratios and definitions of capital, the company’s capital adequacy position is as follows:

Report of the Directors


Statement of Financial

Position Risk Weighted

Statement of Financial

Position Risk Weighted

Nominal Amount Amount Nominal Amount Amount

2010 2010 2009 2009

Ushs’000 Ushs’000 Ushs’000 Ushs’000

Assets (net of provisions):

Notes, coins and other cash assets

16,132,658 2,930,986 6,487,474 1,039,219

Investment in treasury bills - - 7,536,765 -

Loans and advances to customers

58,615,019 58,615,019 47,805,118 47,805,118

Other assets 1,336,671 1,336,671 1,449,303 1,449,303

Current tax asset - - 29,460 29,460

Deferred tax asset 45,772 45,772

Property and equipment 2,854,414 2,854,414 2,669,159 2,669,159

Intangible asset 376,939 376,939 60,223 60,223

Total Risk Weighted Assets 79,315,701 66,114,029 66,083,273 53,098,254

Capital ratios Capital Ratio Capital Ratio

2010 2010 2009 2009

Tier 1 capital 17,206,892 26% 14,225,248 27%

Tier 1+ Tier 2 capital 22,062,223 34% 18,998,438 36%

The above computation indicates that the company complies with the capital adequacy requirements under Sections 15 and 16 of the Micro Finance Deposit Taking Institutions Act, 2003. The minimum co re capital required is 15% of total risk weighted assets and total capital required is 20% of total risk weighted assets.

Report of the Directors


Directors 2010Directors.

The Directo rs who served during the year and to the date of this repo rt were: -

Mr. Enoch Rukidi Chairman Mrs. Constance Makosya Member Mr. Peter Gachuba Member Ms. Maris Wanyera MemberMrs. Monica Mugenyi Member (Resigned ef fective 31st December 2010)Mr. Steven Dungu Kabugu Member ef fective 1st March 2011 Ms. Veronicah G. Namagembe Managing Directo r

8. AUDITORS.

KPMG will not continue in of fice in acco rdance with Section 34 of the MDI Act, 2003

9. APPROVAL OF THE FINANCIAL STATEMENTS. The financial statements were approved by the Directo rs at a meeting held on 24th March 2011.

By o rder of the Board

Signed…………………………………

SECRETARY TO THE BOARD


Statement Of Directors’ Responsibilities

The company’s Directo rs are responsible fo r the p reparation and fair p resentation of the financial statements, comprising the statement of financial position as at 31 December 2010, the statement of comprehensive income, the statement of changes in equity and statement of cash flows fo r the year then ended, and the notes to the financial statements, which include a summary of significant accounting policies and other

explanato ry notes, in acco rdance with International Financial Repo rting Standards and in the manner required by the Companies Act of Uganda and fo r such internal cont rols as the Directo rs determine is necessary to enable the p reparation of financial statements that are f ree f rom material misstatement, whether due to f raud o r erro r.

The Directo rs’ responsibilit y includes: designing, implementing and maintaining internal cont rols relevant to the p reparation and fair p resentation of these financial statements that are f ree f rom material misstatement, whether due to f raud o r erro r; selecting and applying approp riate accounting policies; and making accounting estimates that are reasonable in the circumstances. They are also responsible fo r safeguarding the assets of the company.

Under the Ugandan Companies Act, the Directo rs are required to p repare financial statements fo r each year that give a t rue and fair view of the state of af fairs of the company as at the end of the financial year and of the operating results of the company fo r that year. It also requires the Directo rs to ensure the company keeps p roper accounting reco rds that disclose with reasonable accuracy the financial position of the company.

The Directo rs accept responsibilit y fo r the financial statements which have been p repared using approp riate accounting policies suppo rted by reasonable and p rudent judgments and estimates, in confo rmity with International Financial Repo rting Standards, the repo rting requirements of the MDI Act, 2003 and Ugandan Companies Act. The Directo rs are of the opinion that the financial statements give a t rue and fair view of the state of the financial af fairs and the p rofit fo r the year ended 31 December 2010. The Directo rs further accept responsibilit y fo r the maintenance of accounting reco rds that may be relied upon in the p reparation of financial statements, as well as adequate systems of internal financial cont rol

The Directo rs have made an assessment of the company’s abilit y to continue as a going concern and have no reason to believe the business will not be a going concern fo r the next twelve months o r mo re f rom the date of this statement.

Approval of the Financial Statements.The financial statements, were approved by the Board of Directo rs on 24th March 2011 and were signed on its behalf by:

Mr. Enoch Rukidi Ms. Veronicah G. Namagembe Maris WanyeraDirecto r (Chairman) Managing Directo r Directo r


Find a reason to LOVEthem with PRIDE


Find a reason to LOVEthem with PRIDE

Financial Highlights Graphs

Total Assets

35,274

46,51851,518

62,75366,083

79,614

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

2005 2006 2007 2008 2009 2010

Year

Am

ou

nt

(Sh

s. M

illio

ns)

20,369

26,469

34,892

43,447 47,805

58,615

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

2005 2006 2007 2008 2009 2010

Amou

nt (S

hs. M

illio

ns)

Year

Loans and Advances

Net loans and advances increased by 23%f rom UGX 47.8bn to 58.6bn.

Total Assets increased by 20% f rom UGX 66.08bn to UGX 79.61bn


1432.429539

5319.036249

8505.482257

11385.599

13772

24790

0

5000

10000

15000

20000

25000

30000

2005 2006 2007 2008 2009 2010

Amou

nt (

Shs.

Mill

ions

)

Year

Deposits

Net Profit after Tax

830

300

3,073

2,5852,353

2845

-

500

1,000

1,500

2,000

2,500

3,000

3,500

2005 2006 2007 2008 2009 2010

Year

Amou

nt (S

hs. M

illion

s)

In 2010, net profit increased by 21% f rom UGX 2.35bn in 2009 to UGX 2.84 bn.

Saving Deposits increased by 80% f rom UGX 13.7bn in 2009 to UGX 24.79bn in 2010.

Financial Highlights


0

64,098

107,716

148,634

186,346

235,582

51,002 51,717 56,297 60,589 60,276 65,928

0

50000

100000

150000

200000

250000

2005 2006 2007 2008 2009 2010

Number of customersloan clients

Number of Savers and Loan Clients

Num

bero

f Clie

nts

Year

The savers increased by 26% in 2010 f rom 186,346 in 2009 to 235,582 in 2010.

The Active Loan Clients increased by 9.4% f rom 60,276 in 2009 to 65,928 in 2010.

Financial Highlights


Report Of The Independent Auditors

REPORT OF THE INDEPENDENT AUDITORS

Report on the Financial Statements.

We have audited the financial statements of Pride Microfinance Limited (MDI) which comprise the Statement of financial position as at 31st December 2010, the Statement of Comprehensive income, the statement of changes in equity and Statement of Cashflows fo r the year then ended and the notes to the financial statements, which include a summary of significant accounting policies and other explanato ry notes.

Directors’ responsibility for the Financial Statements.

The company’s Directo rs are responsible fo r the p reparation and fair p resentation of these financial statements in acco rdance with International Financial Repo rting Standards and in the manner required by the Companies Act of Uganda, and fo r such internal cont rols as the Directo rs determine are necessary to enable the p reparation of financial statements that are f ree f rom material misstatement, whether due to f raud o r erro r.

Auditors’ responsibility.

Our responsibilit y is to express an opinion on these financial statements based on our audit. We conducted our audit in acco rdance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perfo rm the audit to obtain reasonable assurance whether the financial statements are f ree f rom material misstatement.

An audit involves perfo rming p rocedures to obtain audit evidence about the amounts and disclosures in the financial statements. The p rocedures selected depend on the audito r’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to f raud o r erro r. In making those risk assessments, the audito r considers internal cont rol relevant to the entity’s p reparation and fair p resentation of the financial statements in o rder to design audit p rocedures that are approp riate in the circumstances, but not fo r the purpose of exp ressing an opinion on the ef fectiveness of the entity’s internal cont rol. An audit also includes evaluating the approp riateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall p resentation of the financial statements.

We believe that the audit evidence we have obtained is suf ficient and approp riate to p rovide a basis fo r our audit opinion.


Opinion.

In our opinion, the financial statements give a t rue and fair view of the state of af fairs of Pride Microfinance Limited (MDI) as at 31 December 2010 and of its financial perfo rmance and cash flows fo r the year then ended in acco rdance with International Financial Repo rting Standards and the Ugandan Companies Act.

Report on Other Legal and Regulatory Requirements.

As required by the Ugandan Companies Act, we repo rt to you based on our audit, that:i. We have obtained all the info rmation and explanations which to the best of our knowledge and

belief were necessary fo r the purpose of our audit; ii. In our opinion, p roper bo oks of account have been kept by the company so far as appears f rom our

examination of those bo oks; and iii. The financial statements are in agreement with the bo oks of account.

KPMG Certified Public AccountantsP O Box 3509Kampala, Uganda

Date: 24th March 2011.

Report Of The Independent Auditors


Builds a Career With Pride


Financial StatementsSTATEMENT OF COMPREHENSIVE INCOMEFOR THE YEAR ENDED 31 DECEMBER 2010

2010 2009

Note UShs’000 UShs’000

Interest income 2 25,352,801 23,332,586

Interest expense 3 (3,040,386) (3,549,040)

Net interest income 22,312,415 19,783,546

Fee and commission income 4 2,194,053 2,462,948

Fee and commission expense (34,342) (33,964)

Net fee and commission 2,159,711 2,428,984

Other operating income 5 1,084,453 762,166

Net operating income 25,556,579 22,974,696

Impairment losses on loans and advances 12 ( c ) (481,777) ( 423,501)

Personnel costs 6 (12,203,974) ( 11,314,786)

Depreciation and amortisation 14 & 15 (1,138,675) ( 954,561)

Other operating expenses 7 (8,529,941) ( 6,880,549)

Total expenses (22,354,367) (19,573,397 )

Profit before income tax 3,202,212 3,401,299

Income tax expense 9 (357,372) ( 1,047,817)

Profit for the year 2,844,840 2,353,482

Other comprehensive income - -

Total comprehensive income 2,844,840 2,353,482

Builds a Career With Pride


2010 2009UShs’000 UShs’000

ASSETS Cash 16,132,658 6,487,474 Financial investments- held to maturity - 7,536,765 Loans and advances to customers 58,615,019 47,805,118

Other assets 1,336,671 1,449,303 Deferred tax asset - 45,772 Current tax asset 297,970 29,460 Property and equipment 2,854,414 2,669,159 Intangible assets 376,939 60,223 Total assets 79,613,671 66,083,274

LIABILITIES AND EQUITY Customer deposits 24,789,796 13,772,783 Excess savings over loan insurance fund 3,648,526 3,154,232

Loan insurance fund 8,746,240 8,781,372 Other liabilities 5,050,758 4,378,078 Amount due to related company 371,640 371,640 Debenture 4,281,663 4,281,663 Borrowed funds 14,493,640 16,130,703 Deferred grants 238,533 109,760 Deferred tax liability 44,992 - Total liabilities 61,665,788 50,980,231

Shareholder’s equity

Share capital 6,001,750 6,001,750Retained earnings (page 10) 10,725,088 8,253,498 Regulatory reserves 1,221,045 847,795 Total equity 17,947,883 15,103,043Total liabilities and equity 79,613,671 66,083,274

The financial statements were approved by the Board of Directo rs on 24th March 2011 and signed on its behalf by:- Directo r (Chairman): .................................................................... Managing Directo r: ..................................................................

Directo r: ....................................................................................... Secretary: .......................................................................................

STATEMENT OF FINANCIAL POSITIONAS AT 31 DECEMBER 2010

Financial Statement


STATEMENT OF CASHFLOWS

2010 2009

Ushs ‘000 Ushs ‘000

Cash flow from operating activities 12,817,576 8,641,223

Cash flow from investing activities

Available for sale reserve - 207,535

Proceeds from disposal of assets 6,334 57,236

Purchase of property and equipment (1,203,517) (1,524,304)

Acquisition of intangible assets (504,903) (48,303)

Net cash flow from investing activities (1,702,086) (1,307,836)

Cash flow from financing activities

Capital grant received 166,757 93,535

Loans repaid (6,907,063) (6,565,333)

Long term loans 5,270,000 4,730,000

Net cash flow from financing activities (1,470,306) (1,741,798)

Net increase in cash and cash equivalents 9,645,184 5,591,589

Cash and cash equivalents at beginning of the year 6,487,474 895,885

Cash and cash equivalents at end of the year 16,132,658 6,487,474

Financial Statement


STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2010

Share Retained Statutory Available for Total

capital earnings reserves sale reserve equity

Ushs’000 Ushs’000 Ushs’000 Ushs’000 Ushs’000

At 1 January 2009 6,001,750 6,136,918 610,893 (145,274) 12,604,287

Profit for the year - 2,353,482 - - 2,353,482

Available for sale financial instruments

- - - 145,274 145,274

Transfer to regulatory reserve - (236,902) 236,902 - -

At 31st December 2009 6,001,750 8,253,498 847,795 - 15,103,043

At 1 January 2010 6,001,750 8,253,498 847,795 - 15,103,043

Profit for the year 2,844,840 2,844,840

Transfer to regulatory reserve (373,250) 373,250

At 31 December 2010 6,001,750 10,725,088 1,221,045 - 17,947,883

Financial Statement


General Information

FOR THE YEAR ENDED 31 DECEMBER 2010

Principal Place Of Business: Met ropole House Plot 8-10 Entebbe Road P. O. Box 7566 Kampala

Registered Office: Met ropole House Plot 8-10 Entebbe Road P. O. Box 7566 Kampala

Solicitors And Company: Sebalu & Lule

Secretary Advocates and Legal Consultants EADB Building Plot 4 Nile Avenue P. O. Box 2255 Kampala

Auditors: KPMG 3rd Flo o r, Rwenzo ri Courts Plot 2 & 4A , Nakasero Road P. O. Box 3509 Kampala


BANKERS: Stanbic Bank Uganda Limited 17 Hannington Road Crested Towers P. O. Box 7131 Kampala Barclays Bank Uganda Limited Kampala Road P. O.Box 7101 Kampala, Uganda

Centenary Rural Development Bank Ltd P. O. Box 137 Bugiri

Citibank Uganda Limited Cent re Court, Ternan Avenue Nakasero Plot No 4 P. O. Box 7505 Kampala, Uganda Crane Bank Limited P. O. Box 2572 Kampala, Uganda

Bank of Africa Plot 45, Jinja Road, P. O. Box 2750, Kampala, Uganda

General Information


Branch Address1 Arua Plot 1 Avenue Road

P. O. Box 905 A rua Telephone: +256476420490

2 Bugiri Plot 1 Mivule Road P. O. Box 170 Bugiri Tel: +256 43 250 130

3 Bushenyi Plot 3 High St reet P. O Box 341, Bushenyi Tel: +256 485 433 929

4 Buwenge Co rner House Kamuli Road P. O. Box 1839 Jinja Tel: + 256 392 718 417

5 City Centre Plot 40-46 Mukwano A rcade P. O. Box 7566 Kampala Tel: +256 414 507 051

6 Fort Portal Branch Plot 23 Rukidi P. O. Box 968 Fo rtpo rtal Tel: +256 483 422 989

7 Entebbe Road Plot 8-10 Met ropole House Entebbe Road P. O. Box 7566 Kampala Tel: +256 041 446297, +256 0414 346930, +256 0414 258150, +256 0312 226265/6

8 Hoima Branch Plot 30 Old To o ro Road Muganywa Cent re Building P. O. Box 168 Hoima Tel: +256 465 40 469

9 Iganga Branch Plot 37/38 Main St reet P. O. Box 170 Iganga Town Tel: +256 43 242 430

10 Ishaka Plot 22 Rukungiri Road P. O. Box 341 Ishaka Tel: +256 485 443 477

11 Jinja Branch Plot 32/34 Main St reet P. O. Box 1839 Jinja Tel: +256 434 121 316

12 Kabalagala Plot 261 Muyenga Road P. O. Box 7566 Kampala Tel: +256 510 447

13 Katwe Plot 413 Katwe Road P. O. Box 7566 Kampala Tel: +256 414 345 709

14 Kawempe Plot 3726 Bombo Road (Lukadde Stage befo re Total Pet rol Station) P. O. Box 7566 Kampala Tel: +256 414 567 155

PML Branch Network addresses


Branch Address15 Nakulabye Nakulabye S J Basiriak Building Hoima Road

P. O. Box 7566 Kampala Tel: +256 414 345 709

16 Mukono Jinja Road next to URA Of fices P. O. Box 541 Mukono Tel: +256 414 290 130

17 Nakawa UMA Show Ground Behind UMA Of fices P. O. Box 7566 Kampala Tel: +256 414 220 751

18 Nateete Plot 122 Masaka Road Block 18 P. O. Box 7566 Kampala Tel: +256 414 272 600

19 Wandegeya Plot 951/2 Bombo-Gayaza Road Round About P. O. Box 7566 Kampala Tel: +256 414 540 078

20 Lugazi Plot 6 Ntenga Road P. O. Box 541 Mukono Tel: +256 414 448 106

21 Masaka Plot 25 Masaka-Kampala Road P. O. Box 351 Masaka Tel: +256 481 420 647

22 Mbarara Plot 59 High St reet P. O. Box 1619 Mbarara Tel: 0485420826

23 Kasese Saad Building P. O. Box 487 Kasese Tel: +256 483 444 151

24 Kabale Plot 143 Kabale P. O. Box 368 Kabale Tel: +256 486 424 207

25 Mbale Plot 15 Republic St reet P. O. Box 2516 Mbale Tel: 0454434235/0757334235

26 Sororti Plot 33/35 Solot Avenue P. O. Box 720 So roti Tel: +256 454 461 632

27 Lira Plot 48 Obote Avenue Lira Town Tel: +256 473 420 283

28 Kabwohe Mbarara Road Opp. Caltex Filling Station P. O. Box 341 Bushenyi Telephone: +256 485 422 939

29 Rukungiri Plot 22 Rukungiri Road P. O. Box 289 Rukungiri Telephone: +256 486 442 483

PML Branch Network addresses

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