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									                         CS NO.4627
MHASIBU SAVINGS AND CREDIT CO-OPERATIVE SOCIETY LIMITED




                      ANNUAL REPORT
                           AND
               AUDITED FINANCIAL STATEMENTS
           FOR THE YEAR ENDED 31ST DECEMBER 2009




                        Auditor

                    Mugo & Company
              Certified Public Accountants
                         NAIROBI
            Agip House (next to Times Tower)
                    www.mugo-co.com
MHASIBU SAVINGS AND CREDIT SOCIETY LIMITED CS/4627
MANAGEMENT COMMITTEE REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST DECEMBER 2009

CONTENTS                                                   PAGE

Annual report                                               1-2

Statement of the management committee's responsibilities    3

Report of the independent auditor                           4

Sacco statistical data                                      5

Financial Statements:

       Statement of comprehensive Income                    6

       Statement of financial position                      7

       Statement of changes in equity                       8

       Statement of cash flows                              9

       Notes                                               10-18
MHASIBU SAVINGS AND CREDIT CO-OPERATIVE SOCIETY LIMITED CS/4627
REPORT OF THE MANAGEMENT COMMITTEE
FOR THE YEAR ENDED 31ST DECEMBER 2009

The Management Committee submits its report and audited Financial statements
for the year ended 31st December 2009 which show the state of the society's
financial affairs.

         1 PRINCIPAL ACTIVITY
           The principal activity of the society is to promote thrift amongst it's members by
           affording them an opportunity for accumulating their savings and to create there by
           a source of funds from which loans can be made to them exclusively for provident
            and productive purposes at fair and reasonable rate of interest.

         2 RESULTS
           The results for the year are as shown on page 6 of this report.

         3 DIVIDENDS AND INTEREST
           (i) Dividends
           A dividend of Kshs.6/=(30%) per share has been proposed and accrued as payable
            subject to approval at the Annual General meeting
           ( ii) Interest on members deposits
           The management proposes a 7.5% ( 2008, 6.5%) interest on deposits computed on a
           pro-rata basis accrued as payable subject to approval at the annual general meeting

         4 REGISTERED OFFICE
           The Sacco registered and domiciled in Kenya. The offices of the society are situated at:-
           View park Towers
           6th floor
           Along Uhuru Highway
           P.O Box 31295-00600
           Nairobi

         5 MANAGEMENT COMMITTEE
           The Management Committee members who served during the year are as shown on
           page 2 of this report.

         6 PRINCIPALS BANKERS
           The principal bankers of the society are:-
             Co-operative Bank of Kenya Limited University Way Branch
             Commercial Bank of Africa Limited Mama Ngina street.
         7 AUDITORS
           The Auditor, Messrs Mugo and Co., Certified Public Accountants of Kenya,
           who were re-appointed during the year have expressed their willingness to
           continue in office in accordance with the Co-operative Societies Act 2004.

BY ORDER OF THE MANAGEMENT COMMITTEE


HON. SECRETARY


Date ……………………                      2010


                                                 3
MHASIBU SAVINGS AND CREDIT CO-OPERATIVE SOCIETY LIMITED C/S 4627
MANAGEMENT AND SUPERVISORY COMMITTEE MEMBERS

Management committee
The management committee members who held office during the year were:
          Oliver Charles Adera               Chairman
          Beth Ngunyi Mwisywa                Vice chairperson
          John Kaloki Ilia                   Hon. Secretary
          Stephen Kamau Kangethe             Treasurer
          Paul Were K'angira                 Member
          Patrick Evans Ogutu                Member
          Jonah Njuguna Kariuki              Member - from 11th July 2009
          Joseph Nzou Ndisya                 Member - from 11th July 2009
          Susan Sarah Abuodha                Member - from 4th September 2009
          Isaac Mwangi Kiragu                Vice Chairman - up to 11th July 2009
          Jacklyne Ng'ongo Nyandenje         Member - up to 14th August 2009
          Bright Zacharia Kuya               Member - up to 11th July 2009

Supervisory committee
The supervisory committee members who held office during the year were:

           Phoebe Oyengo Nandwa                    Chairperson
           Michael Kihuha Nyangi                   Secretary - Co-opted in July 2009
           Charles Ndegwa Karira                   Member Co-opted in July 2009
           Dennis Peter Kihara                     Chairman till 18th April 2009
           Fred Odhiambo Otieno                    Member - Up to July 2009

By order of the management committee



HON. SECRETARY




                                               4
MHASIBU SAVINGS AND CREDIT CO-OPERATIVE SOCIETY LIMITED C/S 4627
STATEMENT OF MANAGEMENT COMMMITTEE'S RESPONSIBILITIES
FOR THE YEAR ENDED 31ST DECEMBER 2009

The Co-operative Societies Act requires the Management Committee to prepare financial
statements for each financial year that give a true and fair view of the state of affairs of the
society as at the end of the financial year and of its surplus or deficit. The Management
Committee is required to ensure that the society keeps proper accounting records that
disclose, with reasonable accuracy, the financial position of the society. The Management
Committee is also responsible for safeguarding the assets of the society.

The Management Committee accepts responsibility for the annual financial statements, which
have been prepared using appropriate accounting policies supported by reasonable and
prudent judgements and estimates, in conformity with International Financial Reporting
Standards and in the manner required by the Co-operative Societies Act.

The Management Committee is of the opinion that these financial statements give a true and
fair view of the state of the financial affairs of the society and of its operating results.
The Management Committee further accepts responsibility for the maintenance of accounting
records that may be relied upon in the preparation of the financial statements, as well as
adequate systems of internal financial control.

Nothing has come to the attention of the Management Committee to indicate that the society
will not remain a going concern for at least twelve months from the date of this statement.

This report was approved by the Management Committee on …………................and signed on its
behalf by :-



Chairman     ……………………………….                  Dated at Nairobi this......day of………….2010


Treasurer    ……………………………….                  Dated at Nairobi this......day of………….2010


Secretary    ……………………………….                  Dated at Nairobi this......day of………….2010




                                                    5
REPORT OF THE INDEPENDENT AUDITOR TO THE MEMBERS OF MHASIBU SAVINGS AND CREDIT
CO-OPERATIVE SOCIETY LIMITED CS/4627
FOR THE YEAR ENDED 31 DECEMBER 2009

We have audited the accompanying financial statements of Mhasibu Savings and Credit Cooperatives Society
Ltd, set out on pages 6 to 21, which comprise the Statement of Financial Position as at 31 December 2009, and
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.



Management committee's Responsibility for the Financial Statements
The Management Committee members are responsible for the preparation of these financial statements in
accordance with International Financial Reporting Standards and the requirements of the Cooperative Societies
Act. This responsibility includes; designing, implementing and maintaining internal control relevant to the
preparation and fair presentation of financial statements that are free from material misstatement, whether due
to fraud or error, selecting and applying appropriate accounting policies; and making accounting estimates that
are reasonable in the circumstances.


Auditor's Responsibility
Our responsibility is to express an independent opinion of these financial statements based on our audit. We
conducted our audit in accordance with International Standards on Auditing. Those standards require that we
comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the
financial statements are free from material misstatement.

An audit involves performing procedures to obtain evidence about amounts and disclosures in the financial
statements. The procedures selected depended on our professional judgement, including the assessment of the
risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk
assessments, we considered the internal control relevant to the Society's preparation and fair presentation of the
financial statements in order to design audit procedures that were appropriate in the circumstances, but not for
the purpose of expressing an opinion on the Society's internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates made by the
management committee, as well as evaluating the overall presentation of the financial statements.



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

Opinion
In our opinion the accompanying financial statements give a true and fair view of the state of the financial affairs
of the Society as at 31 December 2009 and of the result of its operation and of its cash flow for the year then
ended in accordance with International Financial Reporting Standards and the Co-operative Societies Act.


Report on Other Legal Requirement
As required by Cooperative Society's Act we report to you based on our audit, 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 accounts have been kept by the Society, so far as appears from our
examination of those books; and
iii) the Society's Statement of Financial Position and Statement of Comprehensive Income are in agreement
with the books of accounts.

Mugo & Company
Certified Public Accountants of Kenya

Dated ………………………..                                                     2010

                                                         4
MHASIBU SAVINGS AND CREDIT CO-OPERATIVE SOCIETY LIMITED CS/4627
STATISTICAL DATA
FOR THE YEAR ENDED 31ST DECEMBER 2009
                                                          2009          2008

Continuing members                                        6,105         4,744

Share capital                                        42,202,540    29,816,110

Members deposits                                    710,938,249   561,927,194

Statutory Reserve fund                               20,702,752    15,823,863

Revenue Reserve                                      12,456,865     6,102,071

Loans disbursed                                     523,220,907   451,845,191

Current assets                                      430,151,347   353,470,391

Cash and Cash equivalent                            186,201,426   142,703,409

Current liabilities                                 112,606,797   145,915,109

Working capital                                     317,544,550   207,555,282

Turnover for the year                               101,504,058        #REF!

Surplus for the year after tax                       15,811,300        #REF!

Current ratio                                            3.82:1        2.42:1

Liquidity ratio                                          1.65:1        0.97:1

Expenses expressed as percentage of turnover               84%           47%

Earnings per member                                       2,590       13,169

Returns per member                                      10,008          8,723




                                               5
MHASIBU SAVINGS AND CREDIT CO-OPERATIVE SOCIETY LIMITED CS/4627
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31ST DECEMBER 2009

                                                           2009          2008
                                          Notes           KShs.         KShs.

Income                                      2         98,804,058    68,294,999
Other operating income                      3          2,700,000    49,083,720
Total income                                         101,504,058   117,378,719

Less expenses:
Administrative expenses                     4          7,925,092     3,931,262
Staff Costs                                 5          8,750,617     7,130,802
Committee expenses                          6          1,884,248     1,243,249
Other operating expenses                    7         10,109,484       791,189
Members expenses                            8            978,796       979,665
Marketing & establishment expenses          9          1,811,624       950,304
                                                      31,459,861    15,026,471

Finance costs                              10         53,428,925    39,752,504

Surplus for the year before tax                       16,615,272    62,599,744

Taxation                                   11            803,972       127,089
Surplus after tax                                     15,811,300    62,472,655




                                      6
MHASIBU SAVINGS AND CREDIT CO-OPERATIVE SOCIETY LIMITED CS/4627
STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 31ST DECEMBER 2009
                                                           2009                          2008
                                         Notes           KShs.                          KShs.
CAPITAL EMPLOYED
Capital and reserves
Share capital                              12        42,202,540                     29,816,110
Capital revaluation reserve                          40,555,115                     49,138,260
Statutory reserve                                    20,702,752                     15,823,863
Retained earnings                                    12,456,865                      6,102,071
Entrance fees                                         5,360,460                      5,360,460
Proposed honorarium                                     500,000                        400,000
Proposed dividends                                   12,660,762                      8,944,833
                                                   134,438,494                     115,585,597

REPRESENTED BY:-

NON-CURRENT ASSETS
Property and equipment                                   17          2,913,143       2,909,577
Intangible Assets                                        18          2,852,214         205,975
Investments                                              19         55,091,883      61,773,028
Deposits                                                 20            228,295         214,295
Loans to members                                         21        488,004,470     407,427,143
                                                                   549,090,005     472,530,018
CURRENT ASSETS
Loans to members                                         21        240,360,410     200,673,070
Trade and other receivables                              22          3,589,511      10,021,000
Corporate taxes recoverable                              23                -            72,912
Cash and cash equivalents                                24        186,201,426     142,703,409
                                                                   430,151,347     353,470,391
CURRENT LIABILITIES
Other savings by members                                 15         21,063,343      78,193,139
Borrowings                                               16         28,243,313      26,867,453
Trade and other payables                                 25         63,144,944      40,854,517
Corporate taxes payable                                  23            155,197             -
                                                                   112,606,797     145,915,109
NET CURRENT ASSETS                                                 317,544,550     207,555,282
NON-CURRENT LIABILITIES
Members deposits                                         13        710,938,249     561,927,194
Other savings by members                                 15            751,125         372,500
Borrowings                                               16         20,506,687             -
Deferred income                                          14                -         2,200,009
                                                                   732,196,061     564,499,703
TOTAL LIABILITIES                                                  844,802,858     710,414,812
TOTAL NET ASSETS                                                   134,438,494     115,585,597


The financial statements set out on pages 6 to 21 were approved for issue by the
Management Committee on ……………...…….… 2010 and signed on its behalf by :

………………….                           …………………...                    ……………………..
CHAIRMAN                           TREASURER                     HON. SECRETARY
                                                 7
MHASIBU SAVINGS AND CREDIT CO-OPERATIVE SOCIETY LIMITED CS/4627
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31ST DECEMBER 2009
                                                                                                             Proposed
                                  Share         Revaluation       Statutory      Revenue     Entrance      Dividends and       Total
                                  Capital        Reserves       Reserve Fund     Reserves      Fees         Honorarium
                                  KShs.            KShs.           KShs.          KShs.       KShs.            KShs.           KShs.
 At 1st January 2008               23,283,880         54,540       13,347,476     5,541,356 4,353,460           7,385,164     53,965,876
 Receipts in the year               6,532,230            -                 -            -                             -        6,532,230
Total comprehensive income                -              -                 -     62,472,655        -                  -       62,472,655
Transfer during the year                          49,083,720        2,476,387   (52,567,107) 1,007,000                               -
Other transfers during the year
   2007- honorarium paid                 -               -                -             -            -           (400,000)      (400,000)
   2007- dividend paid                   -               -                -             -            -         (6,985,164)    (6,985,164)
   2008 -proposed honorarium             -               -                -        (400,000)         -            400,000            -
   2008- proposed dividend               -               -                -      (8,944,833)         -          8,944,833            -
 At 31st December 2008            29,816,110      49,138,260       15,823,863     6,102,071    5,360,460        9,344,833    115,585,597




At 1st January 2009               29,816,110      49,138,260       15,823,863    6,102,071     5,360,460       9,344,833     115,585,597
Receipts in the year              12,386,430             -                -            -                             -        12,386,430
Total comprehensive income               -                                      19,515,556           -               -        19,515,556
Transfer during the year                          (8,583,145)       4,878,889                                                 (3,704,256)
Other transfers during the year
   2008- honorarium paid                 -               -                -             -            -          (400,000)       (400,000)
   2008- dividend paid                   -               -                -             -            -        (8,944,833)     (8,944,833)
   2009 -proposed honorarium             -               -                -        (500,000)         -           500,000             -
   2009- proposed dividend               -               -                -     (12,660,762)         -        12,660,762             -
At 31st December 2009             42,202,540      40,555,115       20,702,752    12,456,865    5,360,460      13,160,762     134,438,494




                                                                    8
MHASIBU SAVINGS AND CREDIT CO-OPERATIVE SOCIETY LIMITED CS/4627
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31ST DECEMBER 2009
                                                                   2009            2008
                                                     Notes        KShs.           KShs.
Operating activities
Cash generated from operations                        26     49,112,880     15,348,791
Tax paid                                              23       (575,863)      (139,300)
                                                             48,537,017     15,209,491
Investing activities
Dividend paid                                                (8,944,833)     (6,985,164)
Loan disbursement                                          (523,220,907)   (451,845,191)
Loan repayment by members                                   400,742,230     358,069,118
Purchase of property and equipment                    17       (799,197)     (1,467,339)
Purchase of intangible asset                          18     (3,376,947)       (235,400)
Honorarium paid                                                (400,000)       (400,000)
Interest from deposits, saving and other investments   2      5,712,794       1,097,003
Dividend income                                        2        620,998         654,500
Investment in subsidiary                              19         (2,000)
Investment in apex organisations                      19     (1,900,000)       (617,530)
Net cash used in investing activities                      (131,567,862)   (101,730,003)

Financing activities
Increase in share capital                        12          12,386,430      6,532,230
Members deposits received                        13         170,681,198    134,927,194
Members deposits refunded                        13         (21,670,143)   (10,547,638)
Other savings by members                         15             378,625         71,000
Increase in Clients fund                         15         (57,129,796)    78,193,139
Long term borrowings                             16          20,506,687             -
Short term borrowings                            16          43,993,313     20,000,000
Loans repaid                                     16         (42,617,453)   (42,313,700)
Cash generated from financing activities                    126,528,861    186,862,225

Increase in cash and cash equivalents                        43,498,016    100,341,713

Balance at 1st January                                      142,703,409     42,361,696

Balance at 31st December                                    186,201,425    142,703,409

Cash and cash equivalents

Cash and bank balances as at 31st December       24         186,201,425    142,703,409




                                             9
      MHASIBU SAVINGS AND CREDIT CO-OPERATIVE SOCIETY LIMITED CS/4627
      NOTES
      FOR THE YEAR ENDED 31ST DECEMBER 2009

1     Accounting policies
      The principal accounting policies of the society, which are set out below, conform with standards issued
      by the International Accounting Standards Board and which have been applied.

(a)   Basis of accounting
      The financial statements are prepared in accordance and comply with International Financial Reporting
      Standards ( IFRS) .The Financial statements are prepared under the historical cost convention.

(b)   Interest on members loans
      Interest on members' loans is calculated at the rate of 1% per month based on the outstanding loan as
      at 15th of every month

(c)   Investments
      Investments are stated at market value. Adjustments have been made for unrealized gains and losses
      arising from market valuation at year end and included in the revaluation reserves account,only
      realised gains or loss on such investments are charged to income statement. Dividend income is
      recognisesd as and when it becomes receivable.

(d)   Property and equipment
      All property and equipment are initially recorded at cost and subsequently stated at historical cost less depreciation.

      Depreciation is calculated on a reducing balance basis to write down the cost of each
      asset to their residual values over their estimated useful life as follows:
      Motor Cycle                                                            25.0%
      Furniture, fittings and equipment                                      12.5%
      Computers & accessories                                                33.3%

      Intangible assets
      The expenditure on acquisition of the Enterprise Resource Planner is capitalized and amortized over its
      useful life on a reducing balance basis over the expected useful life ata rate of 20%.
(e)   Taxation
      Current taxation is provided for on the basis of the results for the year as shown in the financial
      statements adjusted in accordance with the Tax registration. No deferred tax has been provided for as
      there are no timing differences
(f)   Retirement benefit
      The society contributes to a defined contribution benefit pension scheme for its employees. It also
      makes contribution to statutory pension fund, the National Social Security Fund. The Society's
      contributions are charged against income for the year.
(g)   Registration
      The society is registered under the Co-operatives Societies Act No. 12 of 1997. The registration
      number is CS/4627 and was registered on 16th April 1986 by the Registrar of Co-operative Societies.

(h)   Entrance fees fund
      This has been maintained as a separate reserve fund in line with By-law No.27 of the Society.

(i)   Dormant members
      For the purposes of these financial statements, dormant members balances have been merged with
      members deposits.
(j)   Treasury bills
      Treasury bills are stated at a redemption value less unearned discount.




                                                             10
       MHASIBU SAVINGS AND CREDIT CO-OPERATIVE SOCIETY LIMITED CS/4627
       NOTES (CONTINUED)
       FOR THE YEAR ENDED 31ST DECEMBER 2009

(k)    Cash flow
       For the purpose of the cash flow statement, cash equivalents include short term liquid investments which are readily
       convertible to known amounts of cash.

(l)    Borrowings
       Interest bearing loans are recorded at the proceeds received. Finance charges are recognized on the accrual basis and
       are added to the carrying amount of the related instrument to the extent that they are not settled in the period they arise.


(m) Interest on members deposits
    This is calculated at the compounded rate of 7.5% per annum.

(n)    Membership
       Membership in the Co-operative Society is restricted to individual persons who are members of ICPAK and their
       employees, qualified accountants who are not members of ICPAK, KASNEB students, spouses to Mhasibu members,
       employees of Institutions that offer accounting training and KASNEB.

(o)    Statutory reserve
       This is undistributable reserve set aside in accordance with the Co-operative Act.

(p)    Revenue reserve
       This represents accumulated distributable reserves held by the Sacco to finance future growth.

(q)    Members deposits
       This represent money contributed by members over their share contribution.

( r)   Critical Accounting estimates and judgements
       Estimates and judgments are continually evaluated and are based on historical experience and other factors, including
       experience of future events that are believed to be reasonable under the circumstances.

       (i) Critical accounting estimates and assumptions
       Income taxes
       The Society is subject to income taxes in Kenya. Significant judgment is required in determining the Society's provision for
       income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during
       the ordinary course of business. The Society recognizes liabilities for anticipated tax audit issues based on estimates of
       whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were
       initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such
       determination is made.

       (ii) Property and equipment
       Critical estimates are made by the Management Committee in determining depreciation rates for property, plant and
       equipment. The rates used are set out in Note (d) above.

(s)    Financial risk management objectives and policies

       The Society's activities expose it to a variety of financial risks, including credit risk and the interest rates. The Society's
       overall risk management programme focuses on the unpredictability of the financial markets and seeks to minimize
       potential adverse effects on its financial performance, but the Society does not hedge against risks.

(t)    Comparatives
       Where necessary, comparatives figures have been adjusted to conform to changes in presentation in the current year.




                                                                    11
    MHASIBU SAVINGS AND CREDIT CO-OPERATIVE SOCIETY LIMITED CS/4627
    NOTES (CONTINUED)
    FOR THE YEAR ENDED 31ST DECEMBER 2009
                                                            2009           2008
                                                          KShs.           KShs.
2   Income
    Interest on loans                                 76,521,814      63,262,620
    Interest on fixed deposits and call deposits       4,319,650         201,272
    Interest from Savings & ESS account                  189,354             -
    Interest from KUSCO savings                          352,979         249,743
    Dividend income                                      620,998         654,500
    Interest from treasury bills & bonds                 320,145         217,005
    Interest from Old mutual                             530,666         428,983
    Interest on late remittance of members deductions  1,251,980         429,276
    Commission on loan repurchase                      2,604,972       1,844,600
    Entrance fees                                      1,591,500       1,007,000
    Commission earned on members products             10,500,000             -
                                                      98,804,058      68,294,999
3   Other operating income
    Gain in value of investments                             -        49,083,720
    MESPT grant                                        2,700,000             -
                                                       2,700,000      49,083,720
4   Administrative expense
    Audit fees                                           150,800         116,000
    Internal audit fees                                      -            65,000
    Consultancy                                          232,750         254,900
    Subscription                                          24,000          60,000
    Office expenses                                      334,390         205,734
    Office insurance                                      63,253          34,739
    Printing and stationery                              419,357         412,628
    Legal fees                                            30,000           3,500
    Rent expenses                                      1,008,538         967,159
    Repairs and maintenance                              367,619         100,700
    Committee training                                    94,440         127,200
    Telephone,email and postage                          878,901         599,627
    Travelling expenses                                  345,785         257,570
    Security charges                                     108,264         108,554
    Supervision fees                                      22,780          11,600
    Business Disaster & Recovery plan                        -           263,590
    Licences                                                 -            65,200
    Project expenses                                   1,548,432             -
    Computerization                                    1,775,937             -
    Annual planning meeting expenses                     519,846         277,561
                                                       7,925,092       3,931,262
5   Staff costs
    Social security benefits                              21,200          24,200
    Pension contributions - defined benefits scheme      231,773         147,810
    Salary and wages                                   7,531,597       6,511,639
    Staff benefits                                       662,703         380,953
    Staff training                                       248,850          66,200
    Staff welfare                                         54,494             -
                                                       8,750,617       7,130,802

    The average number of permanent employees as at end of
    the year were:                                           13               9
                                              12
     MHASIBU SAVINGS AND CREDIT CO-OPERATIVE SOCIETY LIMITED CS/4627
     NOTES (CONTINUED)
     FOR THE YEAR ENDED 31ST DECEMBER 2009
                                                              2009          2008
                                                             KShs.         KShs.

6    Committee expenses
     Committee sitting allowances                          1,252,829      640,581
     Committee travelling allowances                         631,419      602,668
                                                           1,884,248    1,243,249

7    Other operating expenses
     Depreciation                                            795,631     761,764
     Amortisation                                            730,708      29,425
     Loss in value of investments                          8,583,145         -
                                                          10,109,484     791,189

8    Members expenses
     AGM expenses                                           499,844      584,318
     Education expenses                                     478,952      395,347
                                                            978,796      979,665

9    Marketing & establishment expenses
     Advertising and promotion                             1,811,624     950,304

10   Finance costs
     Bank charges and interest                             1,688,601      862,898
     Interest on Co-op loan                                      -         78,817
     Interest fon KUSCO loan                                 270,666    1,737,649
     Interest on Jitegemmee loan                             536,990    2,019,340
     Insurance premium risk management                       934,500      900,000
     Interest on ESS loan                                  1,558,851    1,719,043
     Interest on members deposits                         48,439,317   32,434,757
                                                          53,428,925   39,752,504

11   Taxation
     Corporation tax at a rate of 30% based on 50%
     of income earned other than income attributed
     direct from members                                    803,972      127,089




                                                     13
    MHASIBU SAVINGS AND CREDIT CO-OPERATIVE SOCIETY LIMITED CS/4627
    NOTES (CONTINUED)
    FOR THE YEAR ENDED 31ST DECEMBER 2009
                                                              No. of shares              Value

12 Share capital
   At 31 December 2008
   Authorised Share capital                                           Unlimited       Unlimited

    At 31 December 2009
    Authorised Share capital                                          Unlimited       Unlimited

    At 31 December 2008
    Issued and fully paid up                                          1,490,805     29,816,110

    At 31 December 2009
    Issued and fully paid up                                          2,110,127     42,202,540

                                                                           2009           2008
                                                                          KShs.          KShs.
13 Members deposits
   As at 1st.January 2009                                           561,927,194    437,547,638
   Deposits received during the year                                170,681,198    134,927,194
   Deposits refunded during the year                                (21,670,143)   (10,547,638)
                                                                    710,938,249    561,927,194
14 Deferred income
   This relates to a grant from MESPT for the installation of ERP
   The amount in the balance sheet as contribution by the
   donor for the year ended 31st December, 2008                             -        2,200,009

15 Other saving by members
   Children/holiday scheme                                             600,625        228,000
   Education Saving Scheme                                             150,500        144,500

                                                                       751,125        372,500

    Plot buying scheme Deposits                                      21,063,343     78,193,139


16 Borrowings
   Non-current
   KUSCO loan                                                        20,506,687            -
   Current
   KUSCO loan                                                        22,993,313      8,431,420
   Jitegemee trust fund                                                     -       11,675,617
   Co-operative bank                                                        -           93,750
   Co-operative bank-ESS Loan                                         5,250,000      6,666,666
                                                                     28,243,313     26,867,453




                                                        14
   MHASIBU SAVINGS AND CREDIT CO-OPERATIVE SOCIETY LIMITED CS/4627
   NOTES (CONTINUED)
   FOR THE YEAR ENDED 31ST DECEMBER 2009

17 Property and equipment
                                                Motor    Furniture,fittings   Computers &
                                                Cycle        & equipment       Accessories         Total
                                                KShs.                KShs.          KShs.         KShs.

   Year ended 31st December 2008
   Opening Carrying Values                          -           1,734,819          469,184    2,204,003
   Additions                                        -             480,530          986,809    1,467,339
   Charge for the year                              -            (276,919)        (484,846)    (761,765)
   Closing Carrying Values                          -           1,938,430          971,147    2,909,577

   At 31st December 2008
   At Cost                                          -           3,136,265        2,521,659     5,657,924
   Accumulated depreciation                         -          (1,197,835)      (1,550,512)   (2,748,347)
   Net Carrying Values                                          1,938,430          971,147     2,909,577


   Year ended 31st December 2009
   Opening Carrying Values                       -              1,938,431          971,147    2,909,578
   Additions                                 165,900              107,825          525,472      799,197
   Charge for the year                       (41,475)            (255,782)        (498,374)    (795,631)
   Closing Carrying Values                   124,425            1,790,474          998,245    2,913,144

   At 31st December 2009
   At Cost                                   165,900            3,244,090        3,047,131     6,457,121
   Accumulated depreciation                  (41,475)          (1,453,617)      (2,048,886)   (3,543,978)
   Net Carrying Values                       124,425            1,790,473          998,245     2,913,143

18 Intangible Assets
   Amortisation                       Computer software
                                          Kshs.
   Year ended 31st December 2008
   Opening Carrying Values                       -
   Additions                                 235,400
   Charge for the year                       (29,425)

   Closing Carrying Values                   205,975

   At 31st December 2008
   At Cost                                   235,400
   Accumulated amortisation                  (29,425)

   Net Carrying Values                       205,975

   Year ended 31st December 2009
   Opening Carrying Values                    205,975
   Additions                                3,376,947
   Charge for the year                       (730,708)

   Closing Carrying Values                  2,852,214

   As at 31st December 2009
   At Cost                                  3,612,347
   Accumulated amortisation                  (760,133)

   Net Carrying Values                      2,852,214

                                               15
   MHASIBU SAVINGS AND CREDIT CO-OPERATIVE SOCIETY LIMITED CS/4627
   NOTES (CONTINUED)
   FOR THE YEAR ENDED 31ST DECEMBER 2009
                                                                2009           2008
                                                               KShs.          KShs.

19 Investments
   Investment in unquoted companies:
   As at start of the year:
   Uchumi Supermarket Limited                                 79,800         79,800
   Uchumi 10% Debenture stock                                 45,000         45,000
   Co-operative Insurance Company of Kenya                 1,987,540      1,987,540
   KUSCO shares                                              620,000        620,000
   Mhasibu Investments Company Ltd                         3,961,388      3,961,388
                                                           6,693,728      6,693,728
   Additions in investment/divestment
   Co-operative Insurance Company of Kenya                   100,000            -
   KUSCO shares                                            1,800,000            -
   Mhasibu Housing Co. Ltd                                     2,000            -
                                                           1,902,000            -
   As at close of the year
   Uchumi Supermarket Limited                                 79,800         79,800
   Uchumi 10% Debenture stock                                 45,000         45,000
   Co-operative Insurance Company of Kenya                 2,087,540      1,987,540
   KUSCO shares                                            2,420,000        620,000
   Mhasibu Investments Company Ltd                         3,961,388      3,961,388
   Mhasibu Housing Co. Ltd                                     2,000            -
                                                           8,595,728      6,693,728
   Investment in quoted companies:
   As at start of the year:
   National Industrial Credit Bank Limited                    84,912        122,000
   Co-operative Bank of Kenya                             54,899,520      5,114,200
   Tourism Promotion Services Limited                         94,868        141,850
                                                          55,079,300      5,378,050
   Additions in investment/divestment
   Co-operative Bank of Kenya                                     -        617,530
                                                                           617,530
   Fair gain/(loss)investment/divestment
   National Industrial Credit Bank Limited                    (23,912)      (37,088)
   Co-operative Bank of Kenya                              (8,545,680)   49,167,790
   Tourism Promotion Services Limited                         (13,553)      (46,982)
                                                           (8,583,145)   49,083,720
   As at close of the year
   National Industrial Credit Bank Limited                    61,000         84,912
   Co-operative Bank of Kenya                             46,353,840     54,899,520
   Tourism Promotion Services Limited                         81,315         94,868
                                                          46,496,155     55,079,300
   Total investments                                      55,091,883     61,773,028




                                             16
        MHASIBU SAVINGS AND CREDIT CO-OPERATIVE SOCIETY LIMITED CS/4627
        NOTES (CONTINUED)
        FOR THE YEAR ENDED 31ST DECEMBER 2009
                                                               2009                 2008
                                                              KShs.                 KShs.
     20 Deposits
        National Social Security Fund - Rent                    204,000               204,000
        Telkom Kenya Ltd - Telephone                             10,295                10,295
        Safaricom                                                10,000                   -
        Zain Kenya                                                4,000                   -
                                                                228,295               214,295

     21 Loan to members
        Non-current loans
        -recoverable after 12 months                                488,004,470    407,427,142

        current loans
        -recoverable within 12 months                               240,360,410    200,673,070
                                                                    728,364,880    608,100,212

     22 Trade and other receivables

        Accrued Income                                                    1,875        163,816
        Other receivables                                             3,008,651      7,396,453
        Prepayments-MESPT                                                   -        2,200,009
        Prepayments                                                         -          110,436
        Co-op Bank - uncredited cash deposits                           578,985        150,286
                                                                      3,589,511     10,021,000
     23 Taxation
        Balance at start of the year                                   (72,912)       (60,701)
        Charge for the year                                            803,972        127,089
                                                                       731,060         66,388

        Less: tax paid                                                 (575,863)      (139,300)
        Balance at end of the year                                      155,197        (72,912)

24      Cash and cash equivalents
        SACCO Balances
        Co-operative Bank of Kenya - current account                 19,916,801     10,194,162
        Co-operative Bank of Kenya - savings account                    792,096      7,003,826
        Commercial Bank of Africa - current account                   8,524,496      1,583,809
        Co-operative Bank of Kenya -Short term                        1,205,509      1,094,305
                                                                     30,438,902     19,876,102

        Cash on hand                                                      4,549          3,159
        Treasury bills                                                3,437,420      3,434,267
        Fixed deposit & call account (CBA)                            6,891,774            -
        Fixed deposit & call account (Co-operative Bank of Kenya)    88,656,758     12,417,255
        Unit Trust Investment Fund-Old Mutual                         7,220,534      6,689,868
        Savings for future borrowings (a)                            28,488,145     22,089,619
        Clients Funds -plot buying scheme (b)                        21,063,343     78,193,139
                                                                    186,201,425    142,703,409



                                                        17
     MHASIBU SAVINGS AND CREDIT CO-OPERATIVE SOCIETY LIMITED CS/4627
     NOTES (CONTINUED)
     FOR THE YEAR ENDED 31ST DECEMBER 2009

                                                                                   2009          2008
                                                                                  KShs.         KShs.
     (a) Savings for future borrowings
         Co-operative Bank ESS                                                7,718,901     7,058,827
         KUSCO savings                                                       20,769,244    15,030,792
                                                                             28,488,145    22,089,619
     (b) Clients Funds
         Funds collected from members for the purchase of land
         Deposited in Fixed and Call accounts in:
         Co-operative Bank of Kenya                                                 -      55,000,000
         Commercial Bank of Africa                                           21,063,343    23,193,139
                                                                             21,063,343    78,193,139

25   Trade and other Payables
     SACCO
     Audit fees                                                                 133,400       116,000
     Supervision fees                                                            22,780        11,600
     Unidentified deposits                                                   10,188,400     7,742,278
     Other payables                                                           1,461,836           -
     Accruals                                                                 2,899,211       549,882
     Interest on members deposits                                            48,439,317    32,434,757
                                                                             63,144,944    40,854,517

26   Cash generated from operation
     Reconciliation of profit before tax to cash generated from operations

     Surplus before taxation                                                 16,615,272    62,599,744
     Adjustments
     - depreciation                                                           1,526,339        791,189
                                                                             18,141,611     63,390,933
     - interest on fixed deposits                                            (4,319,650)      (201,272)
     - interest from savings account                                           (189,354)           -
     - interest from KUSCO savings                                             (352,979)      (249,743)
     -Interest from old Mutual unit trust                                      (530,666)      (428,983)
     - dividend income                                                         (620,998)      (654,500)
     - gain in value of investments                                           8,583,145    (49,083,720)
     - interest from treasury bills                                            (320,145)      (217,005)
                                                                             20,390,964     12,555,710
     Changes in working capital:
     - Receivables                                                            6,431,489    (6,950,559)
     - Payables                                                              22,290,427     9,743,640
     Cash generated from operations                                          49,112,880    15,348,791

27   Currency
     These accounts are stated in Kenya Shillings(Kshs)




                                                      18
MHASIBU SAVINGS AND CREDIT CO-OPERATIVE SOCIETY LIMITED CS/4627
NOTES (CONTINUED)
FOR THE YEAR ENDED 31ST DECEMBER 2009                               Appendix 1
                                                           2009           2008
Taxation                                                  KShs.          KShs.

Turnover for the year                               101,504,058    117,378,719
less:
Interest from members' loans                        (76,521,814)   (63,262,620)
Interest on late remittance of members deductions    (1,251,980)      (429,276)
Loss on investment                                          -      (49,083,720)
Dividend income                                        (620,998)      (654,500)
Kusco interest                                         (352,979)      (249,743)
commission on loan repurchase                        (2,604,972)    (1,844,600)
Entrance fees                                        (1,591,500)    (1,007,000)
Commission earned on members products               (10,500,000)           -
Mespt grant                                          (2,700,000)
                                                      5,359,815       847,260

50% thereon                                           2,679,908       423,630

Tax thereon @ 30%                                      803,972        127,089
MHASIBU SAVINGS AND CREDIT CO-OPERATIVE SOCIETY CS/4627
APPROPRIATION ACCOUNT
FOR THE YEAR ENDED 31ST DECEMBER 2009
                                                      2009           2008
                                                      Kshs           Kshs


Balance brought forward                              6,102,071      5,541,356

Surplus for the year after taxation                 15,811,300     62,472,655

Transfer to Revaluation reserves                     8,583,145     (49,083,720)

Transfer to entrance fees                                    -      (1,007,000)

Net distributable surplus                           24,394,445     12,381,935

Transfer to statutory reserve fund (20%)             (4,878,889)    (2,476,387)

Proposed Dividends (30%)                            (12,660,762)    (8,944,833)

Proposed Committee Honorarium                         (500,000)      (400,000)

Retained surplus for the year                        6,354,794        560,715
Retained Surplus carried forward                    12,456,865      6,102,071




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