REQUIRED

Assume you are an expert in financial analysis and an investor has approached you seeking advice on investing in the Nairobi securities exchange (NSE). The investor is considering investing in shares of any two companies but from abundance of caution, he has requested you to analyze any three companies listed in the NSE from which he will pick the best two. Based on importance of prospective analysis approaches , analyze between BritamSafaricom and Absa bank and advice the investor accordingly given thefinancial statements.

ABSA BANK

Consolidated statement of financial position

as at 31 December

Group

Note2019Rm2018Rm

Assets

Cash, cash balances and balances with central banks 2 52 532 46 929

Investment securities 3 116 747 135 420

Loans and advances to banks 4 59 745 53 140

Trading portfolio assets 5 158 348 128 569

Hedging portfolio assets 5 3 358 2 411

Other assets 6 30 343 30 642

Current tax assets 1 682 819

Non-current assets held for sale 7 3 992 239

Loans and advances to customers 8 916 978 841 720

Reinsurance assets 9 886 618

Investments linked to investment contracts 10 20 042 18 481

Investments in associates and joint ventures 11 1 648 1 310

Investment properties 12 513 508

Property and equipment 13 18 620 15 835

Goodwill and intangible assets 14 10 300 8 672

Deferred tax assets 15 3 441 3 431

Total assets 1 399 175 1 288 744

Liabilities

Deposits from banks 16 117 423 121 421

Trading portfolio liabilities 17 59 224 51 632

Hedging portfolio liabilities 17 1 379 1 343

Other liabilities 18 46 355 36 662

Provisions 19 4 064 4 017

Current tax liabilities 172 236

Non-current liabilities held for sale 7 112 124

Deposits due to customers 20 826 293 736 305

Debt securities in issue 21 159 794 160 971

Liabilities under investment contracts 22 29 700 29 674

Policyholder liabilities under insurance contracts 23 4 331 4 168

Borrowed funds 24 21 418 20 225

Deferred tax liabilities 15 227 360

Total liabilities 1 270 492 1 167 138

Equity

Capital and reserves

Attributable to ordinary equity holders:

Share capital 25 1 657 1 655

Share premium 25 10 428 10 205

Retained earnings 95 386 91 237

Other reserves 26 5 807 6 387

113 278 109 484

Non-controlling interest - ordinary shares 4 966 4 737

Non-controlling interest - preference shares 27.1 4 644 4 644

Non-controlling interest - Additional Tier 1 capital 27.2 5 795 2 741

Total equity 128 683 121 606

Total liabilities and equity 1 399 175 1 288 744

Britam

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December

2019 2018

Notes Shs'000 Shs'000

CAPITAL

Share capital 16 252,344 252,344

Share premium 16 13,237,451 13,237,451

Other reserves 17 17,112,694 11,756,927

Accumulated losses 18 (1,306,941) (1,387,488)

Shareholders' funds 29,295,548 23,859,234

Non-controlling interests 26 (iii) 81,278 96,936

Total equity 29,376,826 23,956,170

Assets

Property and equipment 21 1,134,752 1,365,422

Intangible assets 22 2,099,919 2,122,184

Right of use asset 23 (i) 752,613 -

Investment in associate 24 (i) 2,870,170 2,923,611

Goodwill 26 (i) 1,558,433 1,558,433

Deferred income tax36 777,550 633,484

Retirement benefit asset 48 168,038 210,796

Investment properties 27 (i) 15,762,202 15,927,529

Investment in property funds 27 (ii) 652,291 575,021

Financial assets at fair value through other comprehensive income 28 7,231,563 4,710,653

Financial assets at fair value through profit or loss 29 57,751,830 39,281,935

Government securities and corporate bonds at amortised cost 30 15,679,639 16,157,018

Mortgage loans and receivables 31 1,171,693 1,209,394

Loans and receivables to policyholders 32 1,511,273 1,301,118

Receivables arising out of reinsurance arrangements 33 (i) 502,722 703,320

Receivables arising out of direct insurance arrangements 33 (iii) 1,689,488 2,317,194

Reinsurers' share of insurance liabilities 34 3,742,258 3,145,058

Deferred acquisition costs 35 525,997 482,053

Other receivables 37 1,624,170 1,944,610

Current income tax 25 (b) 381,045 320,498

Restricted cash 38 (ii) 80,608 45,601

Cash and cash equivalents 38 (i) 7,575,311 6,721,401

Total assets 125,243,565 103,656,332

Liabilities

Deferred income tax 36 3,721,212 2,831,319

Insurance contract liabilities 39 33,784,402 28,221,461

Payable under deposit administration contracts 43 42,515,955 34,174,911

Liabilities under investment contracts 44 3,002,142 3,003,326

Unearned premiums 45 5,357,764 4,696,248

Lease liability 23 (ii) 844,046 -

Payables arising from reinsurance arrangements 33 (ii) 1,319,214 1,252,887

Borrowings 14 2,352,716 2,786,861

Other payables 46 2,886,175 2,726,947

Current income tax 25 (b) 83,113 6,202

Total liabilities 95,866,739 79,700,162

Net assets 29,376,826 23,956,170

Safaricom

Statement of Financial Position

Group Company

2019 (KShs'm)201820192018

Share capital 14 2,003 2,003 2,003 2,003

Share premium 14 2,200 2,200 2,200 2,200

Retained earnings 14 65,221 75,640 63,846 74,790

Proposed dividend 15 74,923 44,071 74,923 44,071

Total equity 144,347 123,914 142,972 123,064

Non-current liabilities

Payables and accrued expenses 28(a) 1,131 - 1,131 -

Contract liabilities 29(b) 739 - 739 -

1,870 - 1,870 -

Total equity and non-current liabilities 146,217123,914 144,842 123,064

Non-current assets

Deferred income tax 17 1,6022,160 1,566 2,127

Property, plant and equipment 18 125,217121,709124,821121,709

Indefeasible rights of use (IRUs)19 3,5533,8543,5533,854

Investment property 20 845845845 845

Intangible assets 21 7,3868,7567,3808,749

Investment in subsidiaries 22(a)--43124

Investment in associate 22(b) 150145150 145

Prepaid operating lease rentals 23 57455745

Loan to subsidiaries 31(x) ---122

Contract assets 29(a) 965-965-

Restricted cash 26(b) 1,846 1,584 1,846 1,584

Deferred restricted cash asset 26(c)896879896879

142,517 139,977142,510140,083

Current assets

Cash and cash equivalents 26(a) 20,0309,49719,8289,043

Other financial assets 27 8,043 -7,867-

Receivables and prepayments 25 18,126 15,857 17,206 14,999

Inventories 24 1,7751,6051,775 1,605

Current income tax - 503-503

Contract assets 29(a)1,985 -1,985 -

49,959 27,46248,66126,150

Current liabilities

Payables and accrued expenses 28(a)28,70426,46728,911 26,310

Current income tax 349144 255-

Borrowings 16 4,032 4,0404,0324,040

Provisions for liabilities 28(b)3,8944,0283,8944,028

Contract liabilities 29(b) 9,2808,8469,2378,791

46,259 43,52546,329 43,169

Net current assets / (liabilities) 3,700 (16,063) 2,332(17,019)

146,217123,914144,842 123,064