32 1

TABLE OF CONTENTS

Programme ...............................,,,,,,,,,,,,,,,......................................................... 2

Notice of Annual General Meeting ...................................................................... 3

Chairman’s Report.............................................................................................. 4

By-Laws Areas of Amendments........................................................................... 10

Annual General Meeting Supervisory Committee Report ..................................... 12

Statistical Information ....................................................,,,,,,,,,,,,,,,..................... 15

Report of the Directors ...................................................................................... 16

Statement of the Board of Directors’ Responsibilities ......................................... 17

Opinion ............................................................................................................. 18

Director’s Responsibility for the Financial Statements ......................................... 19

Report on other Legal Requirements .................................................................. 20

Statement of Comprehensive Income ................................................................ 21

Statement of Financial Position ........................................................................... 22

Proposed Income and Expenditure Budget 2019................................................ 23

Capital Budget 2019 .......................................................................................... 25

Minutes of 2017 Annual General Meeting............................................................ 26

Min: 10/11/2/2017 – Reading and confirmation of the previous AGM Minutes.

The chairman invited Hon. Secretary Mr. Simon Munyoki to read the minutes of the previous AGM

meeting of 20/2/2016.

The minutes were read and were proposed to be true records.

Proposed by Earnest Mulwa M/No. 10517

Seconded by Jacob Mueke M/No. 7100

Matters arising

1) Mr. Joseph Mbwika M/No. 3684 requested that members of housing be availed next meeting and

that next of kin for deceased to be made aware.

Min: 11/11/2/2017 – A. O. B

The chairman gave a few leaders who came after we had done with introductions to make remarks.

They were.

a) C.I.C officials – Who said their commitment to supporting the Sacco on settling the

claims.

b) KUSCCO officials – Will continue to support the Sacco in trainings.

c) Co-op bank officials – Thanked the Sacco for good performance and urged that we

Patronize their products.

The V/Chairman Mr. Tony M. Kilonzo moved a vote of thanks for every participation during the meeting.

The chairman thanked the members for being attentive and nice deliberations.

He assured that pieces of advices given will be looked into.

The meeting ended with a word of prayer from Rev. Augustus Munuve at 15.10pm.

MINUTES TAKEN BY: ……………………………………………….SIMON M. MUNYOKI

HON. SECRETARY

CONFIRMED AND SIGNED BY:……………………………..DR. JOSEPH M. KITHOME

Annual Report For 2017

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Annual Report For 2017 31Annual Report For 20172

PROGRAMME OF ANNUAL GENERAL MEETING ON 10/02/2018

AT KITUI MULTIPURPOSE TRAINING DEVELOPMENT INSTITUTE.

1. 10:00AM Prayers

2. 10:15AM Introduction

3. 10:45AM Reading of Notice

4. 10:50AM Chairman's Report

5. 12:20 PM Supervisory Report

6. 1:00PM Audited Accounts -2017

7. 1:30PM Budget 2019

8. 2:00PM Confirmation of Auditors for the year ending 31/12/2018

9. 2:30PM Reading and Confirmation of the Previous Minutes.

10. 3:00PM Society's Borrowing Power

11. 3:15PM Chief Guest

12. 3:30PM Closing Prayers

Income

·Interest on loans and advances - Ksh. 501,400,000

·Fees and commission on loan portfolio - 180,000,000

·Investment income - 13,000,000

·Other income - 83,570,000

TOTAL 777,970,000

Expenses.

·Financial cost - Ksh. 8,500,000

·Interest expense - 23,000,000

·Other gains and loss - 37,500,000

·Personal expense - 103,500,000

·Governance - 68,000,000

·Marketing - 14,500,000

·Administrative and statutory expenses - 82,400,000

·Total Expenses 337,400,000

Surplus 440,570,000Proposed capital budget 2018

·Computer systems and printers - 2,000,000

·Office equipment - 1,000,000

·Office furniture and fitting - 1,500,000

·Wide area network - 1,000,000

·System software - 1,000,000

·Buildings - 3,000,000

·Motor vehicle - 3,500,000

·Generators - 2,000,000

TOTAL 15,000,000

The report was adopted for discussion.

Proposed by Mbindyo M/No. 3565BSeconded by Dan Kasyoki M/No. 2638

Matters arising.

No matters arising, members adopted the budget.

Min: 9/11/2/2017 – Appointment of Auditors for the year ending 31/12/2017.The chairman read the list of approved auditors by SASRA for members to choose one.

They were:

a) BMK MUOKI & COMPANY

b) MBIYU MUHIA & ASSOCIATES

c) ONGITI & ASSOCIATES.

The members resolved to have

BMK MUOKI & COMPANY,BOX 71 – 0057,NAIROBI.KSH. 590,000

Proposed by Kenneth Musambi M/No. 5155Seconded by Francis Wambua M/No. 1909

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NOTICE OF ANNUAL GENERAL MEETING

To All Members.

RE: ANNUAL GENERAL MEETING.Notice is hereby given of our Annual General Meeting, to be held at Kitui Multipurpose

thTraining Development Institute on 10 February, 2018 starting exactly at 10.00am. Please observe time.

Agenda.

1. Prayers

2. Introduction

3. Notice to Annual General Meeting

4. Chairman's Report

5. Supervisory Report

6. Audited Accounts -2017

7. Budget 2019

8. Confirmation of Auditors for the year ending 31/12/ 2018

9. Reading and Confirmation of the previous minutes.

10. Society's Borrowing power

11. Closing prayers.

Thank you,

Yours faithfully,

MUEMA MUNYOKIHON.SECRETARY.

CCTHE CHIEF OFFICER,COUNTY MINISTRY OF TRADE, CO-OPERATIVES & INVESTMENTSP.O. BOX 58,KITUI.

SUB COUNTY CO-OPERATIVE OFFICERS,KITUI CENTRAL,KITUI EAST, KITUI WEST, KITUI RURAL, KITUI SOUTH, MWINGI CENTRAL AND MWINGI NORTH SUB COUNTIES.

THE EXECUTIVE SECRETARY THE EXECUTIVE SECRETARYKNUT - KITUI BRANCH KNUT - MUTOMO BRANCH.

THE EXECUTIVE SECRETARY THE EXECUTIVE SECRETARYKNUT - MWINGI BRANCH KUPPET - KITUI COUNTY BRANCH

THE EXECUTIVE SECRETARY THE EXECUTIVE SECRETARYKNUT - KYUSO BRANCH KNUT - MAKUENI COUNTY

2. George Kitana M/No. 16943 had an issue of diversifying products. He was replied that's why we

are requesting for shares drive.

3. Ernest Mulwa M/No. 10517 suggested that board should act fast on failure of ATMS and

dropping of percentage on offsetting. He was replied that issues shall be looked into.

4. Charles Muema M/no. 11312 – Wanted to know who are supposed to vie for elections of board

and Supervisory. DCO replied the member by referring to society by-law No. 37.

5. A member from Lower Yatta requested Kyusyani / Kanyangi to be considered for a collection desk.

The chairman replied the board shall discuss other areas like Ikutha, Tseikuru, Nuu which also

required consideration.

6. Paul Nyenya M/No. 3586 wanted a contact person/group to be engaged to collect rent on our

behalf. Members refused the proposal and said the board should continue managing the

housing.

7. A member wanted to know whether elected board and supervisory do declare their wealth and

should be members made aware. The DCO replied that they do as specified by the law and do

declare to the commissioner but not to members not even the county cooperative office.

Min: 7/11/2/2017 – Audited Accounts 2016

Mr. Daniel M. Muathe presented the accounts – 2016 to the general membership as independent

auditors. The report covered the following.

ØStatistical information

ØStatement of directors responsibilities

ØDirectors responsibility for the financial statements

ØAuditors responsibility for the audit of financial statement.

ØKey audit matters

ØReport of the directors

ØDividend/interest on members deposit

ØReport on legal requirement

ØStatements of

·Comprehensive income

·Financial position

·Cash flows

The report was adopted for discussion

Proposed by Peter Wambua M/No. 10087

Seconded by Ernest Mulwa M/No. 10517

Matters arising.

1) Ernest Mulwa M/No. 10517 asked whether there are new products with reduced interests or

even reducing the current products. The chairman replied we have proposed to have Prime loan

which has low interest of 1.5%.

2) Joseph Mbwika M/No. 3684 praised the auditors for doing a good job and advising the board on

good practices.

Min: 8/11/2/2017 – Budget 2018.

The society Accountant Mr. Cyrus Mutinda presented the budget estimates for the year 2018 with the

following:-

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STCHAIRMAN'S REPORT AND WELCOMING ADDRESS TO THE 41 ANNUAL GENERAL

MEETING OF KITUI TEACHERS SACCO LTD HELD AT KITUI MULTIPURPOSE

THDEVELOPMENT TRAINING INSTITUTE ON 10 FEBRUARY, 2018

OPENING REMARKS.

It is my pleasure to welcome our Chief Guest Vincent Marangu Director

Cooperative Division - Co-operative Bank, KNUT officials, other teacher

leaders, County officers, Members of staff, distinguished Guests and all st

members to our 41 Annual General Meeting. On behalf of the Board of

directors, I will present this report on the activities of the SACCO over

the calendar year 2017 and a brief of the SACCO's financial health for the

year 2017. I would like to welcome you to this important day and

request for your attention and full participation to make the day a success.

1.0 SUCCESSES AND ACHIEVEMENTS

During the year under review the board worked hard to implement the previous years

resolutions and came up with new ideas/innovations which have resulted to good

performance in different areas of our operations as shown below:-

1.1 Financial Performance Review

Given the favorable Macro-economic conditions, the financial sector remained stable. It is in st

this environment that the results of the SACCO upto 31 December 2017, shows continued

growth in all parameters coupled with improved efficiency.

1.1.2 Revenue

Revenue for the year 2017 was 759 million which represents an increase of 23% compared to

Ksh. 619 million in 2016. The main drivers for this were interest on loans, commissions and

transactional fees in FOSA.

1.1.3 Share Capital

The share capital grew by 17% to close the year at Kshs. 154 million up from Ksh. 131 million

previous year. Once again we urge members to consider investing in SACCO shares through

shares drive to grow our esteemed Sacco Society.

1.1.4 Member Deposits.

We thank the members for the impressive growth in deposits by 16% closing at 2.9billion from

2.5billion at close of our last financial year.

1.1.5 Loans to Members.

Our loan book grew from 2.7 billion in the year 2016 to 3.4billion in 2017 which accounts for

an increase of 23%.

11. The members resoluted the maximum borrowing power of Ksh. 300,000,000/=

Proposed by Charles Muthengi M/No. 5201

Seconded by C. Kitonga M/No. 5924.

12. The members approved the shares drive by Sacco.

Proposed by James Muema M/No. 6678

Seconded by James Muneeni M/No. 7942B

13. Members approved the disposal of Society van KBU 879R and purchase of a new one

Proposed by B. M. Sivi M/No. 3942

Seconded by Catherine M/No. 7777

14. Mr. Paul Muthengi M/No. 8085 wanted to know how much we borrowed in 2016. The chairman

replied that although it is a requirement for security purposes we have not borrowed for the last

three years.At this juncture the Chairman Dr. Joseph Kithome invited the Chief Guest Mr. John Mwaka – Ag.CEO SASRA to address the members.

·He praised members for asking questions to know better on Sacco matters.

·He enlightened members on the roles done by SASRA.

·Praised the Sacco board for properly Managing the society

·He strongly emphasized on the growth of the society

·He said SASRA is committed to ensuring that deposit taking Saccos are well managed.

·He said regulator will continue to advice Sacco on how to overcome challenges the sector

has been experiencing for many years.

·Commented Sacco for expanding roles to non-teachers

·He challenged Board to bench Mark with good performing Saccos and other financial

institutions.

·Advised members to live by their mission statement.

Madam Pheles Mathenge moved a vote of thanks to the Chief Guest.

Min: 5/11/2/2017 – Supervisory report.Mr. Robert Kavi chairman supervisory presented the report to the general membership on behalf of his committee. The report covered the following.

ØSociety business

ØBOSA/FOSA

ØLoans and loan recovery

ØExternal Loan

ØMutomo Branch

ØSociety Desks

ØICT

ØCIC

ØTariffs

ØInternal Controls

ØRent arrears

ØGeneral commentsThe report was adopted for discussion .Proposed by Kenneth Musambi M/No. 5155Seconded by Ernest Mulwa M/No. 10517.

Matters arising.

1. Janet Maluki M/No. 9142 had an issue of loans recovery and wanted the Board to look into issues

affecting members. She was replied the board will continue looking into issues being raised but

for loan default, we only attach to guarantors and advised members that members of staff

guarantee themselves.

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1.1.6 Appropriation of the Net Surplus

We are pleased to recommend to you for consideration and declaration of interest on

deposits at 12.2%, dividends on shares at the rate of 13% and housing dividend of 8% for the st

year ended 31 December, 2017. This is an improvement on last year's rate (2016) of 12% on

BOSA deposits/ shares and 7% on housing.

Dividend on shares have higher rate because we are investing the funds on long term

investments as opposed to member deposits. We encourage members to participate in the

shares drive to continue enjoying high returns on investments.

1.2 Micro Credit.

The Sacco started micro credit piloting in June, 2015 through Mutito branch. The model used

is the group loaning where we loan the groups, get savings and loan repayment from the group

and not from individual members. This model has worked well for us compared to individual

loaning within a group (co-guaranteeing).

Formation and registration of groups requires a lot of time and sensitization and this has made

us take long at one branch because we wanted to understand the group needs, identify

challenges and handle them before spreading the same to other branches/areas/satellites.

We have also approached several organizations which support micro credit for capacity

building, funding, value addition and market linkages. So far we have approached PROFIT

(programme for rural outreach in financial, innovation & technology) through Co-op bank and

MESPT(Micro Enterprise Support Programme Trust). We are in the process of negotiations.

1.3 Measures on Loan Default

The Sacco has succeeded in partnering with Trans union for sharing credit information with

other financial institutions. This has helped in accessing credit history, worthiness and the

level of credits with a member at a particular time. This will result to reduced loan default

which has been a challenge. This is in its initial stages and we are going to keenly monitor its

progress to ensure compliance.

1.4 Assistance to Physically Challenged Members.

The Sacco has been assisting physically challenged members through a special desk set for

them at the head office. We have enhanced this service by moving the credit department to

the ground floor where BOSA, FOSA products, services and enquiry are done easily and

conveniently. The other member issues are also handled at the other respective departments.

The same assistance is being offered in our branches at the appraisal/enquiry desk set at the

banking hall.

Challenges facing the society.

·Lunch payment.

·Misinformation.

·ATM failures.

Proposals.

·Share drive

·Lunch payment

·Disposal of SACCO van KBU 879R in 2018.

·Maximum borrowing power.

Board of directors commitment.

Conclusion.

The report was adopted for discussion,Proposed by Sylvester Kilonzi- M/No. 6598Seconded by Janet Maluki - M/No. 9142.

Matters Arising.

1. Juma Kungu M/No. 9710 requested the SACCO and C.I.C officials to streamline the claims by

next of kin for deceased members. Chairman replied that members of the family concerned

should send death certificate and claims in good time as CIC is co-operating and hastening in

settling the claims.

2. Joseph Mbwika, M/No. 3684 appreciated the rise of dividend from 11% to 12% and requested

that more is expected. The chairman replied that the board will try to do their best.

3. Dividends rate payable was proposed by: Sylvester Kilonzi M/No. 6598

Seconded by Nzonzi Mbindyo M/No. 3565B.

4. Juma Kungu M/No. 9710 was of the idea of one form for loans. The chairman replied that already

we are now having one form for BOSA Loans and another for FOSA Loans for members just to tick

the appropriate.

5. Charles Muema M/No. 11312 wanted to know more about Doctor, where he comes from, and

station. The Chairman replied he comes from Mwingi East, a head teacher of Lundi Primary.

6. Madam Kasina M/No. 6540 advised the board to source for good persons who can advice on

effects of climate change so that members can have the knowledge. It was observed as a good

idea and will be discussed.

7. Nyamai Sila M/No. 4741 wanted to be given the names of CSR beneficiaries and where they

come from and whether extension to county and day schools can be considered. The chairman

replied we go as per electoral zones under supervisory areas and those needy students who had

scored 350 marks and above as we need the value of our money.

8. Juma Kungu M/No. 9710 congratulated the board on achievement and requested trophies be

displayed. Chairman replied the trophies are already displayed and members can see them.

9. Charles Muema M/No. 11312 was of the idea of Micro-credit be extended to other branches.

The chairman replied CEO and her team of Management are coming up with a comprehensive

report.

10. Members had the following advices.

a) Kiema C. Musee – M/No. 11235 said measures be taken to loan defaulters.

b) Joseph Mbwika M/No. 3684 congratulated the board and staff for good work and assisting

needy members.

c) Paul Nyenya M/No. 3586 suggested we do what Mshwari does to their defaulters.

d) Joseph Mbwika M/No. 3684 suggested ATM failures be consulted with co-op bank to come

to an end.

e) Ben Sivi M/No. 3942 – Suggested lunch be added to Ksh. 1000/=.

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1.5 ATM Banking

The ATM Link is up and running and incase of failure, we have a backup link. This enables the

ATM service to be up & running 24/7, seven days a week.

1.6 AGM Lunch Payment

The board has increased lunch payment from Ksh. 500 to Ksh. 1000 through cash for AGM. In

future we may think of a better/safer mode of lunch payment because the current one poses a

security risk.

1.7 CIC Refunds.

Co-operative insurance company has been our insurer for all the insurance policies including

loan guard. During the year under review, CIC has refunded members loans and burial rider

(Ksh. 50,000) Totaling to Ksh. 6,408,583.27 and Ksh, 2,200,000.00 respectively.

However we were faced with some delays for some cases due to delay or failure to present the

required documents. I kindly request members to assist next of kins to present documents

early enough for quick processing of the refunds.

1.8 Shares Drive.

Currently each member is expected to have at least 100 shares of shs. 100 each. This

mandatory shareholding shall remain, however members are persuaded to increase

shareholding to an average of 200 shares at the same par value of shs. 100. Given we have a

clear destination to invest the funds, i.e buy back members' other loans, expand branch

network and assure members of good returns on their investment. The purpose of the shares

offer is to improve the Sacco's liquidity and capital structure to finance the growth and

expansion of the society in accordance with its business plan within the regulatory framework.

The SACCO targets to raise Ksh. 300m.

1.9 Disposal of the Old VAN and purchase of New VAN

During our AGM we proposed to dispose the SACCO VAN KBU 879R (14 seater) and purchase

a more spacious VAN. The new SACCO VAN was bought KCN 518Q(18 seater) at Ksh. 3.5m.

The SACCO has advertised for the disposal of KBU 879R and is waiting for interested parties

to make their offer.

1.10 Loaning to other Organization/Institutions

Previously we were faced with a challenge of loan default by members from other

organizations & institutions and the board resoluted to be signing a memorandum of

understanding between the SACCO and the staff members of those institutions.

8. Madam Mukungi introduced county officials and praised the good work done by the society

officials.

9. Daniel Muthama Muathe introduced himself as the one who has been the external auditor.

10. Mr. Joseph Mutemi, from the sub-county co-operative office, introduced himself and other

co-operative officials.

11. Mr. Vincent Marangu of co-op bank introduced himself and praised the Sacco for the growth and

good returns to members and requested members to support the Sacco. He also introduced his

colleague.

12. Mailu Kimanzi introduced himself and other KEPSHA officials.

13. Monica Hasina,KNUT Treasurer Mutomo introduced herself and gave an apology for the branch

chairman.

14. KNUT Executive Secretary, Mr. Simon Ndingo introduced KNUT officials from Kitui and

introduced the chairman, Eastern region. He said KNUT will continue to support the Sacco

officials. He advised the board to check on the processing fee and a possibility of housing

members to have their own meeting.

15. Mr. Jonathan K. Mutambu, NEC member praised the Sacco and brought greetings from the

National Executive Secretary, Mr. Wilson Sossion. He enlightened members on:-

·Teachers working on weekends, promotion, CBA and other KNUT reports from the

headquarters.

Min:3/11/2/2017 - Notice To Annual General Meeting.The Chairman, Dr. Joseph Kithome invited the Hon. Secretary, Mr. Simon Munyoki to read the notice to the general membership. The notice was read and members confirmed to have received the notice in good time.Proposed by Daniel Musyoka M/No. 4524Seconded by Rose Kasina M/No.2075

Min: 4/11/2/2017 - Chairman's Report.The Chairman, Dr. Joseph Kithome presented the report on behalf of the board of Directors.The report covered the following:

ØGeneral overview

ØAppropriation of the net surplus.

ØBoard of directors elections/supervisory election.

ØProducts and services.

ØPrime loan.

ØM-pata loan.

ØEducation to board of directors, staff and members.

ØCorporate social responsibility.

ØSacco achievements.

ØAwards received.

ØLiquidity position

ØMicrocredit facility.

ØICT

ØLoan default.

ØImproved services.

Other information:

·Change of pay point.

·T-pay.

·Credit Reference Bureau services.

·Partnership with post bank for Money Gram and western union.

·Strategic plan 2015-2019

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This will assist the SACCO to get commitment from such organizations in case of retirement or

dismissal to enable them to channel their terminal benefits through the SACCO to clear the

outstanding loan balances.

1.11 Election Registers

The SACCO has developed registers as per the electoral zones to ensure that those who vote

are the bonafide members.

1.12 Product Review and Awareness

The SACCO reviewed existing products as follows:-

·Investment loan period increased from 72 months to 84 months

·Hekima loan interest reviewed from 4% reducing to 2.1% flat rate to enable the

members to qualify for more and streamline the monthly repayment.

·The SACCO also developed new on-line advance through mobile which is getting

popular with members – MPATA.

·The SACCO has made all the BOSA and FOSA Loans available to members and

members are supposed to seek credit advice on the best option before loan

application.

·FOSA loans were made self-guaranteed.

1.13 Awards Received.

We participated in the Ushirika Day celebrations 2017 and awarded the following elegant

trophies for excelling in various competitive slots

·Best Society in ICT - Kitui County

·Best managed society - ,,

·Best average saving urban Sacco - ,,

·First Co-operative Society to hold AGM - ,,

2.0 ACKNOWLEDGEMENTS

Kindly allow me for your continued support which has continually

made us meet our obligations as a SACCO through your diligence, patronage and advice.

We would like also to thank the board and staff for their dedicated efforts and huge

contribution in the SACCO Governance and policy frame work which has seen the SACCO

grow from one level to the other. Very soon we will attain the four Billion mark for giant

SACCOs.

to thank all of you members

KITUI TEACHERS SACCO SOCIETY LTD.TH TH

MINUTES OF THE 40 ANNUAL GENERAL MEETING HELD ON 11 FEBRUARY, 2017 AT

KITUI MULTI PURPOSE DEVELOPMENT INSTITUTE.

Present.1. Members totaling to 51822. Members of the board and Supervisory3. Kitui Teachers Sacco employees4. Former chairman Mr. Anthony K. Mbiti5. Former Board director Boniface Nguku6. KNUT Officials – Kyuso, Mwingi, Kitui and Mutomo7. Kitui County KNUT officials 8. Co-op bank officials.9. County and sub-county co-operative officials.10. External auditors.11. Kuscco officials.12. KEPSHA officials.13. C.I.C officials.14. Chief Guest-John Mwaka - Ag. CEO SASRA.

Items of Agenda.

1. Prayers.

2. Introduction.

3. Notice to annual general meeting.

4. Chairman's report.

5. Supervisory report.

6. Audited accounts-2016

7. Budget 2018

8. Appointment of auditors for the year ending 31/12/2017.

9. Reading and confirmation of the previous minutes.

10. Society's borrowing power.

11. Closing prayers.

Min: 1/11/2/2017 - Prayers.The chairman Joseph M. Kithome called the meeting to order at 10.18am and requested Dominic M. Kyenza M/No. 1065 to pray for the start of the meeting.The chairman welcomed the members for the meeting and wished them nice discussions.

Min: 2/11/2/2017 - Introductions.The introductions were carried as follows:-

1. The chairman introduced the board of directors.

2. Mr. Robert Kavi introduced supervisory committee members.

3. The CEO Madam Florence Mutua introduced the management staff and reported that other staff

were engaged elsewhere on day's duties.

4. Former chairman Mr. Anthony K. Mbiti introduced himself and wished members fruitful

deliberations.

5. Former director Mr. Boniface Nguku introduced himself and encouraged members to fully

participate in the discussions of the day.

6. KNUT chairman Kyuso, Mr. Jerimoth Mwasya introduced officials from Kyuso branch and thanked

Sacco officials and society in general for good work.

7. KNUT Executive Secretary Mwingi branch, introduced officials from Mwingi branch and said the

branch fully supports Kitui Teachers Sacco.

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We would not forget to thank the following stakeholders for their continued support.

·Kenya teachers SACCO Association

·Cooperative bank and other Banks

·KUSCCO

·CIC

·CAK

·Kerussu

·Teachers Service Commission

·County Governments among others

3.0 BOARD ELECTION

The rotation rule still applies to the Board members and Supervisory Committee members. The

members who were due for rotation went for election at their respective zones as follows:

3.1 Board of Directors

1) Muema Munyoki - Hon. Secretary - Nzambani & Kisasi Electoral Zone

2) Isaiah Masya - Director - Kyuso, Tseikuru & Mumoni Electoral

Zone

3) Janet Queen Kasina - Director - Mwingi central / Migwani Electoral Zone

3.2 Supervisory Committee

1) Mr. Boniface Makonge - Secretary - Supervisory Committee - Kyuso, Tseikuru,

Mumoni, Mwingi East, Mwingi Central and Migwani

Electoral Zones.

4.0 PROPOSALS / FUTURE PLANS

4.1 Modernization of Plazas

The SACCO is engaged in major renovations and alterations of the existing plazas to take the

modern shape and structure.

4.2 Expansion of Branches and Agency Banking/POS

We are expanding Agency Banking and Members will soon be able to withdraw from our own

agents alongside other agents. This will help in taking services closer to members in areas

where we have no offices.

Our thanks also go to all the other organizations & institutions which have supported us so

much. The success of our SACCO is for us all.

-

DETAILS AMOUNT

Computer Systems and Printers 2,000,000.00

Office Equipment 1,000,000.00

Office Furniture and Fitting 1,500,000.00

Wide area Network 1,000,000.00

System software 1,000,000.00

Buildings 3,000,000.00

Generators 2,000,000.00

TOTAL 11,500,000.00

Education to Members 5,000,000.00

Shares Drive Expenses 12,000,000.00

17,000,000.00

SUPPLIMENTARY CAPITAL BUDGET 2018

Buildings (Plazas Facelift) 5,000,000.00

MAKUENI BRANCH FOSA

Land 1,500,000.00

Computer Systems and Printers 1,600,000.00

Office Equipment 1,700,000.00

Office Furniture and Fitting 500,000.00

Wide area Network 1,000,000.00

System software 2,200,000.00

Buildings 8,000,000.00

Generators 1,500,000.00

18,000,000.00

TOTALS 23,000,000.00

PREPARED BY VERIFIED BY CONFIRMED BY

CYRUS MUTINDA DOMINIC NGUNYU FLORENCE MUTUA

FINANCE MANAGER AUDIT MANAGER C E O

PROPOSED CAPITAL BUDGET 2019

SUPPLIMENTARY OPERATING BUDGET 2018

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4.3 WEB based Banking

This is transacting through the internet on an encrypted HTTPS (Secure connection) browser

through either smart phones, computers or laptops. Log in will be based on personal details;

either I.D Number or Member Number and a Pin/ Password. Members will be able to;

- View both Fosa & Bosa statements

- Withdraw from their savings account to Mpesa

- View their loans status

- Apply loans online

- Approve their guarantorship to a particular member

- Block their ATM Card incase its stolen or lost

- Transfer funds from one account to another

- Airtime top up from account

Web based system is a secure connection system.

4.4 Microcredit roll out

We are planning to roll it out to the other branches within the course of this year.

4.5 Society's LOGO

Due to the changing financial sector, the current logo used by the Sacco is more of academic

than financial. We propose to change the Logo to KTS which is the short form of Kitui Teachers

SACCO and also change the logo photo

4.6 Makueni Fosa at Makindu

We are proposing to put up a full pledged branch at Makindu in 2018

This will be owned by all members and we are proposing each member to contribute Kshs. 100

for five months for additional equity shares of 500.

4.7 Sacco personal cheques

Cheques remain an important bill of exchange in today's commerce and with expansion of

deposit Taking SACCO business particularly financing SMEs and general membership, it is a

necessity.

Our members have been requesting to be issued with cheques for cash withdrawal and settling

of their bills. However deposit taking SACCOs as non-banking institutions are not allowed to

issue cheques in their own names because they don't hold reserve account with CBK and are

not members of Automated clearing house.

EXPENSESFINANCE COSTAtm card charges and commission Exprnse 2,500,000 16,265Bank Charges and Ledger fees 1,500,000 1,016,454T S C Charges on By-Products 4,000,000 3,154,403Bad debts 1,500,000 0

9,500,000 4,187,121INTEREST EXPENSESInterest and fees Expenses on Fosa deposit 35,000,000 28,013,545Interest and fees Expenses on Bank Loan 5,000,000

40,000,000 28,013,545Other Gains and LossAllowance for Loan Loss 20,000,000 15,504,459Allowance for Unreconcilled Loans 19,000,000 18,700,008Allowance for Other Assets - 127,327Depreciation and Amortization 12,000,000 9,940,776

51,000,000 44,272,569PERSONNEL EXPENSESStaff Basic Salary 32,000,000 25,732,298Staff House Allowance 16,000,000 12,866,172Staff Over Time And Wages To Casuals 9,000,000 7,437,321Staff Resposibility Allowance 6,000,000 3,549,000Staff Medical Allowance 6,000,000 3,872,503Staff Hardship Allowance 4,000,000 2,573,240Staff Salary Arrears 2,000,000 696,900Staff Cash Risk Allownce 2,500,000

1,446,500

Staff provident Fund 8,000,000

5,146,460

Staff Travelling And Susistence Allowance 7,000,000

5,324,286

Provision For Staff Gratuity 10,000,000

5,080,608

Staff N S S F 1,000,000

633,960

Staff Education 7,000,000

4,212,198

Other Staff Allowance 11,000,000

9,079,095

121,500,000

87,650,541

GOVERNANCE EXPENSESDirectors Travelling And Subsistence 9,500,000

5,476,814

A G M / S G M Expenses 8,000,000

5,628,610

Member Other Expenses 4,000,000

2,215,940

Directors Sitting Allowance 5,000,000

1,508,538

Board Other Allowance 35,000,000

31,203,071

Board And Members Education 22,500,000

20,594,740

84,000,000

66,627,714

MARKETING EXPENSESMarketing and Promotions 8,000,000

6,624,825

Public relations and Advertsement 6,000,000

4,753,700 Entertainment Expenses 6,500,000

5,984,854

Shares Drive 10,000,000

30,500,000

17,363,379

ADMINISTRATION AND STATUTORY EXPENSESMembership Subscriptions 2,000,000

1,534,400

Postage And Telephone 3,000,000

5,464,563

Printing And Stationery 8,000,000

6,302,161

Insurance 16,000,000

13,184,220

Audit and Supervision 1,000,000

590,000

Accountancy 3,500,000

1,927,080

Consultancy 7,000,000

5,718,892

Security 6,000,000

3,925,960

Repairs Of Buildings 3,000,000

S M S Charges 2,000,000

NACCOs & Apex Bodies Exp. 5,000,000Cash in Transit 1,500,000 834,173SASRA License Levy 6,000,000 2,254,765Motor Vihicle Running Exp 3,000,000 1,326,010Legal Fees 3,000,000 2,077,000Transport 4,000,000 3,815,339Repairs & Mantainance 4,000,000 4,532,039Fuel,Water and Electricity 4,000,000 2,463,827Computer repairs and running Exp 2,000,000 2,585,257Software mantainance contract 3,000,000 4,205,942Office Expenses 4,000,000 3,187,645Cleaning and sanitation 1,000,000 405,715Rent & Rates 6,000,000 4,881,800Licences 500,000 76,150Donations and C S R Expenses 5,000,000 1,631,907

103,500,000 72,924,844

OPERATING EXPENSES 440,000,000 321,039,713.29APPROPRIATIONSMember Rebates On Deposits 380,000,000 292,818,081Dividends on Members Shares 70,000,000 20,013,509Housing Dividends 8,000,000 3,841,339Tax provision 8,000,000 5,874,618Honoraria/Bonuses 5,000,000 4,000,000Surplus transfared to Reserves 145,570,000 111,541,591

616,570,000 438,089,139TOTAL 1,056,570,000 759,128,852

- -

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In view of this, SACCOs are allowed to enter into contractual relationships with commercial

banks for the purpose of issuing Cheques to their membership upon approval of contractual

agreement by SASRA, the SACCOs regulator.

Therefore Kitui Teachers SACCO proposes to introduce issuance of personal Cheques to the

members in partnership with Co-operative Bank.

4.5 Corporate Social Responsibility.

The society has continued to give back to the society through visiting special schools in all

electoral zones and sponsoring bright needy children from three electoral zones annually.

During the year 2017, we visited 8 special schools and one children's home. To date we have

sponsored a total of 9 students in national and county schools.

4.9 Amendment of by-law

There is need to review and amend the SACCO by-law to conform to the current SACCO needs

and operations. See below for discussion and resolution.

By- law Current Proposed Change

NO. 10, (i) Admission

into membership

An applicant shall be

admitted to membership

on application upon

payment of an entrance

fee of Kshs. 230 and at

least one share of

Kshs. 100

An applicant shall be admitted

to membership on application

upon payment of an entrance

fee of Kshs. 1000 and at least

100 shares of Kshs. 100

NO. 37 (f) Eligibility for

membership to the

board. No person shall

be eligible for

membership in the board

of director if he/she:-

Does not have a

minimum shareholding of

Kshs. 150,000

Does not have a minimum of

50 shares of Kshs. 100 each

(50,000 shareholding) and

a minimum deposit of

Kshs. 100,000

CS 2480 KITUI TEACHERS SAVINGS AND CREDIT CO-OPERATIVE SOCIETY LIMITED

PROPOSED INCOME AND EXPENDITURE BUDGET FOR FINANCIAL YEAR 2019

DETAILS PROPOSED 2019 ACTUALS 2017INCOME

Interest on loans and advances

Interest on Sacco personal loansInterest on Normal loans 210,000,000 183,938,750Interest on Investment loans 300,000,000 189,872,048Interest on Old System loans - 4,225Interest on Emergency loans 20,000,000 14,046,811Interest on Car loans 300,000 229,918Interest on Hekima loans 60,000,000 35,877,295Interest on Special loans 35,000,000 22,358,727Interest on M-Pata loans 400,000 280,962Interest on One Off Advance 10,000,000 8,073,710Interest on Prime Loan 5,000,000 2,601,767Interest on Karibu loans 150,000 131,163Interest on Biashara loans 100,000 84,988Interest on Super loans 60,000,000 58,409,757Interest on House loans 5,000,000 496,832Interest on salary advance loans 6,000,000 4,184,802

711,950,000.00 520,591,754

FEES AND COMMISSION ON LOAN PORTFOLIO

Commission on Loans Insurance 20,000,000 13,654,632Commission on Bosa deposit top up 12,000,000 8,973,672Bosa loan Processing fees 35,000,000 28,171,799Commission on Fosa Loan Clearing 500,000 275,051Commission on Fosa Loan Offesting 25,000,000

19,463,371

Advance Processig fees 13,000,000

8,760,275

Commission on Loans Cleared by Cheque 5,000,000

4,066,164

Capitalized interest Fees 500,000

244,486

Commission on Bosa Loan offsetting 75,000,000

71,153,067

Bank Loan Offsetting 50,000,000

236,000,000

154,762,517

INVESTMENT INCOME

Dividends from Investment 2,000,000

1,536,330

Rent receivable 5,000,000

4,711,500

7,000,000

6,247,830

OTHER INCOMES

Commission on affidavit 50,000

14,000

Commission on Interest Processing -

4,827

Commission on Cheque clearance 200,000

87,007

Commission on withdrawal 25,000,000

19,673,580

Commission on Cheque sale 50,000

20,450

Commission on Bounced cheque 15,000

13,744

Salary Processing fees 26,000,000

18,529,400

Commission on Direct M- Banking. 10,000,000

7,223,596

Commission on Rebates Advance 15,000,000

13,653,173

Commission on Agency Banking. 300,000

206,699

Commission on Atm Card renewal. 3,000,000

1,300

Commission on M-banking. 100,000

66,201

Sale of Bank Statements 500,000 337,020 Photocopyng fees 50,000

23,198

Dividends Processing fees 4,000,000

2,504,400

Commission on Standing Order 300,000

221,873

Sale of Loan forms 500,000

484,370

Bosa file closing fees 100,000

69,678

Sundry Income income 200,000

135,147

Commission on account closure 5,000

300

Commission on overdrawn account -

3,386,603

Commission on Atm withdrawal 1,000,000

944,989

Commission on Atm issuance 500,000 258,050Commission on Atm replacement 200,000 82,550Commission on SMS Banking 8,000,000 5,734,800Commission on M-pesa 300,000 206,892Commission on group accounts 250,000 122,200Entrance fees 1,000,000 993,000Interest from Bank Saving Account 5,000,000 2,527,705

101,620,000 77,526,751TOTAL 1,056,570,000 759,128,852

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5.0 CHALLENGES

The Sacco has been facing challenges while conducting education to members in some

centers. Such includes:-

i. Members collecting education material and lunch and leaving immediately.

i. Lack of order and patience in lunch payment hence difficult in using registers.

iii. Insecurity of the cash, the staff and the members present.

iv. Attendance- The percentage of members educated compared to the overall

membership is about 28% which is very low.

Way Forward.

Due to the above challenges we do propose education to members to be enhanced through

the following means alongside our normal method.

- Magazines

- Website

- Radio announcements

CONCLUSION

I would like to reiterate that we are cautiously optimistic about the year ahead despite the

challenges we may face on our way. We will continue to deliver on our strategic goals which

drive operational performance and create value for our shareholders as well as our

communities.

We remain strongly committed to creating shared value with all our stakeholders.

Thank you and God bless us all.

DR. JOSEPH M. KITHOME

CHAIRMAN

ON BEHALF OF:

BOARD OF DIRECTORS

1. TONY M. KILONZO - V/CHAIRMAN

2. AUGUSTUS MUNUVE - TREASURER

3. SIMON M. MUNYOKI - HON. SECRETARY

4. ISAIAH K. MASYA - MEMBER

5 ALFRED M. MUTUA - MEMBER

6. HARRISON M. NYUMU - MEMBER

7. PHELES M. MATHENGE - MEMBER

8. JANET Q. KASINA - MEMBER

CS 2480 KITUI TEACHERS SACCO SOCIETY LTD

STATEMENT OF FINANCIAL POSITION AS AT 31st DEC 2017

ASSETS NOTES 2017 2016

CASH AND CASH EQUIVALENT

Cash in Hand 12 18,380,575

8,951,786

Cash at Bank 13 301,144,460

252,322,946

TOTAL CASH AND CASH EQUIVALENT 319,525,035

261,274,732

Prepayments and Sundry receivables 14 37,789,042

129,546,984 Other Investments-Shares/Stocks 15 16,632,584

14,475,750

Loan to Members 16 3,384,582,841

2,759,937,480 3,439,004,467

2,903,960,215

PROPERTY PLANT AND EQUIPMENT

Property and Equipments 17 99,487,654

102,755,397

Intangible Assets 10,665,525

7,330,534

Other Assets 18 127,327

Teller Shortage-Mutomo 510,000

610,000

110,663,179

110,823,258

TOTAL ASSETS 3,869,192,681

3,276,058,204

LIABILITIES

Members deposits 2,400,203,456

2,079,425,599

Members Savings 532,312,497

444,278,845

Curent income tax Payable 874,618

1,399,231

Dividends and interest Payable 19 316,672,929

268,718,806

Payables and accrued Expenses 20 33,378,504

30,150,438

INTEREST BEARING LIABILITIES

External borrowing (Co-op Bank Loan) 21 -

-

TOTAL LIABILITIES 3,283,442,005

2,823,972,919

EQUITY

Share Capital 22 153,950,070

131,851,424

Total Reserves 23 383,783,871

272,154,392

Totals Other Equity Equity 24 48,016,735

48,079,470

585,750,676

452,085,285

TOTAL LIABILITIES AND EQUITY 3,869,192,681

3,276,058,204

The financial statements on pages 12 to 22 were approved and authorized for issue by the

Board of Directors on………………………………. 2018, and were signed on its behalf by:-

…………………………………………. Chairman

………………………………………….. Member

…………………………………………..Member

15/01/

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2112

STSUPERVISORY COMMITTEE REPORT DURING THE 41 ANNUAL GENERAL MEETING

HELD AT KITUI MULTIPURPOSE CENTRE ON 10/02/2018.

The Chief Guest, Board of directors, KNUT officials, County officers, KUPPET, BBF/BBS, KEPSHA, KIPSA,

KISHA, All invited guests, members of staff, fellow cooperators, Ladies and gentlemen. On behalf of

the supervisory committee, allow me to take you through our report.

The committee is composed of three elected members representing the entire society membership.

These committee members represent the following electoral zones.

a) Kyuso, Tseikuru, Mumoni, Mwingi East, Mwingi Central and Migwani Sub-Counties

currently represented by Mr. Boniface Makonge.

b) Kitui Central, Katulani, Lower Yatta, Kitui West and Matinyani Sub-Counties currently

represented by Mr. Robert Kavi.

c) Mutomo, Ikutha, Nzambani Kisasi and Mutito Sub-Counties represented by Mr. Judah

Mwangangi Mutunga.

The Supervisory committee is by law mandated to check, monitor and investigate all society affairs and

financial transactions in view of ensuring that it is run in accountable and transparent manner.

Honourable members, allow me now to present to you our years observations.

Society Core Business.

Honourable members, the society's main business is to offer savings and credit services to its

members. The Supervisory committee has noted the following during the year, 2017.

- Loans in the course of the year were granted with no backlog.

- Savings from members increased by 15% .

- The society's membership increased from 16909 in 2016 to 18814 in 2017 registering an

increament of 1905

Dear Members, the growth of our society depends on all of us and we urge you to continue saving and

patronizing our products.

LOANS .

During the year 2017, the Supervisory committee noted that there is risk of losing society's funds

through default on loans advanced to non –teaching staff. The Committee advised Management Board

to engage the CEO's of various institutions to come up with agreeable solutions.

BOSA/FOSA.

The activities in BOSA/FOSA are key to society's income. These activities include loaning, savings,

deposits, M-banking among others. As Supervisory committee reported in our previous AGM,

concerning investment loan balances not agreeing with payslip and the system, we now report that

the reconciliation was done.

The Supervisory committee also previously reported that deductions from other institutions were

taking long via check off. We recommended a follow up by the Management Board and now we

confirm that action was taken.

REVENUE NOTES 2,017

2,016

Interest on loans and advances 1 520,591,754

397,976,682

Other interest income 2 2,527,705

5,266,476

Total interest income 523,119,459

403,243,158

LESS:INTEREST EXPENSES

Interest Expenses 3 28,013,545

25,993,112

Interest on Members Deposits 292,818,081

249,531,072

Net Interest Income 202,287,833

127,718,974

OPERATING INCOME

Other Operating Income 4 236,009,393

203,944,395

Decrease in Loan Loss Provision 11,417,896

236,009,393

215,362,291

NET INCOME 438,297,226

343,081,265

EXPENSES

OPERATING EXPENSES

Personnel Expenses 7 87,650,541

78,721,810

Governance Expenses 8 66,627,714

57,166,420

Marketing Expenses 9 17,363,379

11,095,131

Administration and statutory expenses 10 71,292,937

54,239,393

Financial Cost 11 4,187,121

5,055,156

Total Operating Expenses 247,121,692

206,277,910

Depreciation and Amortization 9,940,776

10,690,327

Allowance for Loan Loss 15,504,458.56 -

Allowance for Unreconcilled Loans 18,700,008

18,700,008

Allowance for Other Assets 127,327

1,527,996

TOTAL EXPENSES 291,394,261

237,196,241

Operating Surplus before tax and Donation 146,902,965

105,885,024

Donations Expenses 1,631,907

921,703

Surplus Before Tax 145,271,058

104,963,321

APPROPRIATIONS

Income Tax Expense 5,874,618 4,399,232

Dividends on Members Shares@ 13% 20,013,509 15,822,171

Housing Dividends @ 8% 3,841,339 3,365,563

Honoraria/Bonuses 4,000,000 3,000,000

33,729,466 26,586,966

NET SURPLUS FOR THE YEAR 111,541,592 78,376,355

CS 2480 KITUI TEACHERS SACCO SOCIETY LTD

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31ST DEC 2017

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LOAN BUY OFF.

The Supervisory Committee has noted that some of our members are tied up with bank loans barring

them from enjoying Society's cheap products.

RECOMMENDATION.

The Supervisory Committee has advised the Management board to continue exploring suitable ways to

assist such members back.

PLAZAS.

Head Office.

The Supervisory Committee confirmed that Kenya Power vacated our premises during the year. The

Committee recommended to the Management board to restructure the plaza in order to

accommodate the main departments in the ground floor. This will improve efficiency in service

delivery to all members. Dear members this has been done.

Mwingi Plaza.

The Supervisory Committee had recommended to the Management Board to restructure Mwingi

offices in order to attract customers. The Management board acted and there is progress in the

process of the restructuring.

Society Collection Desks.

Currently the Society has three collection desks. These are Kabati, Masii and Makindu.

The Supervisory Committee discussed with Management board to continue with feasibility study on

increasing the collection desks. The Committee reported in last AGM that the three desks have

effectively supplemented services offered at our society's main branches. It still recommends that

services like Mpesa, Coop bank agency among others be introduced in our desks.

RENTS.

Some tenants in our plaza rooms have huge rent arrears. The Supervisory committee notified the

board of Management to make a follow up.

SHARES DRIVE.

The Supervisory Committee observed that at the end of 2017 the Society had received Ksh.

10,000,000 as shares from members under shares drive. The Committee recommends that the board

of Management should intensify the shares drive exercise in order to meet the proposed targets.

OPERATIONAL CHALLENGES

During the year in review, the Society has faced a challenge in capturing transfer of shares commission –

Ksh. 200/= from one member - seller to another - buyer. This was due to lack of the provision of the

two hundred when making agreement. The Supervisory Committee advised the Management board to

think of opening a window to make it easier for members who wish to sell/transfer shares. This

committee is still waiting for the Management board to look into the matter.

CS 2480 KITUI TEACHERS' SAVINGS AND CREDIT CO-OPERATIVE SOCIETY LIMITED

REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF KITUI TEACHERS'

SACCO LIMITED FOR THE YEAR ENDED 31ST DECEMBER 2017

Report on other legal requirements

As required by the Sacco Societies Act No. 14 of 2008, we report to you based on our audit

that:

i) we have obtained reasonable assurance that the society is solvent and have not identified

any significant concerns with respect to the financial condition of the society's business;

ii) we are not aware of any violation of prudential standards or conditions of the licence and

iii) we are not aware of any other contravention of the Sacco Societies Act No. 14 of 2008.

The engagement partner responsible for the audit resulting in this independent

auditors report was CPA Benjamin Muoki Katunge, Practicing Certificate number 2054

BMK MUOKI & COMPANY

CERTIFIED PUBLIC ACCOUNTANTS (K)

P.O. Box 71-00507

Nairobi

___________________________15/01/2018

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C.I.C

The Supervisory Committee appreciates C.I.C for introducing and paying fifty thousand (50,000/=)

burial expenses to deceased members next of kin.

However there has been delays in remitting the refunds from C.I.C. The Committee recommended to

the Management board to ensure that C.I.C pays promptly upon the reporting the death of a member.

Members should report immediately to the society of a members demise.

INTERNAL CONTROLS.

The committee confirms that the society has adequate internal controls in place. The Management

should regularly evaluate the effectiveness of existing society's internal control systems to ensure that

they move with current financial dynamics.

2017 AGM

In the previous AGM, the Supervisory committee noted with concern that,

- The AGM expenditure was high.

- The mode of payment was cumbersome and tiresome to members.

- Long queues to collect lunch payment affected AGM proceedings.

RECOMMENDATION

The Supervisory committee advised the Management board to come up with modalities to take care of

members welfare.

GENERAL COMMENTS.

Now that the society is growing the Management board should think of diversifying services that meet

the demands of members. Honorable members, we urge you to continue patronizing the society's

products for its growth.

In conclusion members, let us save regularly borrow wisely and pay promptly.

God bless you, God bless Kitui Teachers Sacco.

PREPARED BY:

ROBERT KAVI.

CHAIRMAN.

On behalf of Supervisory Committee.

1. BONIFACE M. MAKONGE ………………………………….SECRETARY

2. JUDAH M. MUTUNGA …………………………………….. ..MEMBER.

CS 2480 KITUI TEACHERS' SAVINGS AND CREDIT CO-OPERATIVE SOCIETY LTD

REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF KITUI TEACHERS SACCO LTD

FOR THE YEAR ENDED 31ST DECEMBER 2017

Directors responsibility for the Financial statements

Auditor’s responsibility for the audit of financial statements

identify and assess the risks of material misstatement of the financial statements, whetherdue to fraud or error,

design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and

appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from

fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,

misrepresentations or the override of internal control. obtain an understanding of internal control relevant to the

audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of

expressing an opinion on the effectiveness of the company's internal control. evaluate the appropriateness of

accounting policies used and the reasonableness of accounting estimates and related disclosures made by

management. conclude on the appropriateness of management's use of the going concern basis of accounting

and, based on the audit evidence obtained, whethera material uncertaintyexists related to events or conditions

that may cast significant doubt on the company's ability to continue as a going concern. If we conclude that a

material uncertaintyexists, we are required to draw attention in our auditor's report to the related disclosures in

the financial statements or, if suchdisclosures are inadequate, to modify our opinion. Our conclusions are based

on the audit evidence obtained up to the date of the auditor's report. However, future events or conditions may

cause the society to cease to continueas a going concern. Evaluate the overall presentation, structure and content

of the financial statements, including the disclosures, and whether the financial statementsrepresent the underlying

transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and

timing of the audit and significant audit findings, including any significant deficiencies in internal control that we

identify during our audit.

The directors are responsible for the preparation and fair presentation of the financial statements that give a true

and fair view in accordance with International Financial Reporting Standards and the requirements of the

Society's Act, and for such internal control as the directors determine is necessary to enable the preparation of

financial statements that are free from material misstatement, whether due to fraud or error.

Inpreparing the financial statements,the directors are responsible for assessing the Society''s ability to continue

as a going concern, disclosing, as applicable, matters related to going concern and using the going concern

basis of accounting unless the directors either intend to liquidate the Society or to cease operations, or have no

realistic alternative but to do so.

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free

from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our

opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in

accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from

fraud or error and are considered material if, individuallyor in the aggregate, they could reasonably be expected

to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional

scepticism throughout the audit. We also:

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ANNUAL REPORT AND FINANCIAL STATEMENTS

2017 2016

Membership - Active 16,232 15,336

- Dormant 2,582 1,573

TOTAL 18,814

16,909

Financial

Total Assets 3,869,192,681

3,276,058,204

Members' Deposits 2,932,515,953

2,523,704,444

External Borrowings -

Loans and advances to Members 3,384,582,841

2,759,937,480

Investments 16,632,584

14,475,750

Core Capital 585,750,676

452,085,285

Share capital 153,950,070

131,851,424

Institutional capital 431,800,606

320,233,861

Total revenue 759,128,852

618,605,449

Total interest Income 523,119,459

403,243,158

Total Expenses 579,526,001

493,414,124

Employees of the Sacco 43 43

Key Ratios

Capital Adequacy Ratio

Core Capital/Total Assets 15

14

Core Capital/Total Deposits 20

18

Institutional Capital/Total Assets 11

10

Liquidity Ratio (15%)

Liquid Assets/Total deposits & Long term liabilities 60 59

Operating Efficiency/Loan quality ratios

Total Expenses/Total Revenue 76 80

Interest on member Deposits/Total Revenue 39 40

Interest rate on member's Deposit 12.2..% 12%

Dividend rate on member's share capital 13% 12%

Dividend rate on member's Housing Shares 8% 7%

Total Delinquency loans/Gross loan portfolio 0.19 0.13

CS 2480 KITUI TEACHERS SAVINGS AND CREDIT CO-OPERATIVE SOCIETY LTD

STATISTICAL INFORMATION AS AT 31ST DECEMBER, 2017

CS 2480 KITUI TEACHERS' SAVINGS AND CREDIT CO-OPERATIVE SOCIETY LIMITED

REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF KITUI TEACHERS'

SACCO LIMITED FOR THE YEAR ENDED 31ST DECEMBER 2017

Opinion

Basis for Opinion

Key audit matters

Key audit matters are those matters that,in our proffesional judgement,were of most significance

in our audit of the financial statements of the current period.These matters were addressed in

the context of our audit of the financial statements as a whole and in forming our opinion thereon,

and do not provide a separate opinion. We found no key audit matters.

Other information

In our opinion the accompanying financial statements give a true and fairview of the financial

position of the companyas at 31 December 2017 and of its financial perfomance and cash flows

for the year then ended in accordance with internationalFinancial Reporting Standards and the

Societies Act

We conducted our audit in accordance with International standards on Auditing [ISAs] .Our

responsibilities under those standards are furtherdescribed in the Auditors responsibilities for the

audit of financial statements section of our report.We are independent of the Society in

accordance with the IESBA code together with the ethical requirements that are relevant to our

audit of the financial statements in Kenya,and we have fullfilled our ethical responsibilities in

accordance with these requirements and the IESBA code.We believe that the audit evidence we

have obtained is sufficient and appropriate to provide a basis for our opinion

Our opinion on the financial statements does not cover the other information and we do not

express any form of assurance conclusion thereon.

We have audited the accompanyingfinancial statementsof Kitui Teachers Sacco Limited set out

on pages 9 to 25 whichcomprise the Society's statementof financial position as at 31 December

2017 and the statementsof profit or loss and other comprehensiveincome, changes in equity and

cash flows for the year then ended, and notes, including a summary of significant accounting

policies.

The directors are responsible for other information. Other information comprises the information

included in the Annualreport, but does not include the financial statements and our auditors report

there on.

Annual Report For 2017Annual Report For 2017

1716

CS 2480 KITUI TEACHERS' SAVINGS AND CREDIT CO-OPERATIVE SOCIETY LIMITED

REPORT OF THE DIRECTORS

The directors submit their report and the audited financial statements for the period st

ended 31 December 2017, which disclose the state of affairs of the society.

INCORPORATION

The society is incorporated in Kenya under the Co-operative Society ACT, Cap 490 and

licensed under the Sacco Societies Act No. 14 of 2008 and is domiciled in Kenya.

PRINCIPAL ACTIVITIES

The principal activities of the society is receiving shares and deposits and giving out

loans to its members.

RESULTS

2017 2016

Shs Shs

Surplus before tax & donations 146,902,965 105,885,024

Tax charge (5,874,618) (4,399,232)

Surplus after tax 141,028,347 101,485,792

Surplus for the year 111,541,591 78,376,355

Interest on Members' deposits 292,818,081 249,531,072

DIVIDENDS/INTEREST ON MEMBER'S DEPOSIT

The Board of Directors is pleased to recommend to the members for approval a

payment based on straight line basis on deposits of 12.2%(2016:12%) in interest and a

dividend of 13%(2016:12%) on the paid up share capital.

DIRECTORS

The Directors who held office during the year and to the date of this report are shown

on page 1

In accordance with the society's by-laws, there are directors who are due for retirement

by rotation.

INDEPENDENT AUDITOR

BMK Muoki & Company was appointed during the year and has expressed willingness

to continue in office in accordance with Sacco Societies Act No. 14 of 2008.

BY ORDER OF THE BOARD

Signature……………………………… Date…………...........…

Secretary

15/01/2018

CS 2480 KITUI TEACHERS' SAVINGS AND CREDIT CO-OPERATIVE SOCIETY LIMITED

STATEMENT OF THE BOARD OF DIRECTORS' RESPONSIBILITIES FOR THE YEAR ENDED ST

31 DECEMBER 2017

The SACCO Societies Act – No 14 of 2008.requires the Board of Directors to prepare financial

statements for each year which 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 operating results for that year in accordance with IFRS.

It also requires the Board of Directors to ensure that the society keeps proper accounting

records which disclose with reasonable accuracy at any time the financial position of the

society.

They are also responsible for safeguarding the assets of the society and ensuring that the

business of the society has been conducted in accordance with its objectives, by-laws and any

other resolutions made at the society's general meeting.

The Board of Directors accepts responsibility for the annual financial statements, which have

been prepared using appropriate accounting policies supported by reasonable and prudent

judgments and estimates, in conformity with IFRS and in manner required by the Sacco

Societies Act No 14 of 2008. The Board of Directors is of the opinion that the financial

statements give a true and fair view of the state of the financial affairs of the society and of its

operating results in accordance with the IFRS.

The Board of Directors further accepts responsibility for the maintenance of accounting

records which may be relied upon in the preparations of financial statements, as well as

adequate systems of internal financial control.

Nothing has come to the attention of the Board of Directors to indicate that the society will not

remain a going concern for at least twelve months from the date of this statement.

Approved by the Board of Directors on…………………………………..and signed on its behalf

by:-

……………………………………… Chairman

………………………………………Treasurer

…………………………………..… Board Member

15/01/2018

Annual Report For 2017Annual Report For 2017

st41 AGM

st41 AGM