2016 Annual Report print€¦ · NICOZDIAMOND INSURANCE 2016 ANNUAL REPORT Contents Page Corporate Values 2 Product Overview 3 Distribution 4 Corporate Social Responsibility 5 - 6

N I C O Z D I A M O N D I N S U R A N C E 2 0 1 6 A N N U A L R E P O R T

Contents Page

Corporate Values 2

Product Overview 3

Distribution 4

Corporate Social Responsibility 5 - 6

Corporate Governance 7 - 12

Directorate 13 - 15

Management 16

Chairman’s Statement 18 - 20

Managing Director’s Report 21 - 23

Report of the Directors 24 - 26

Independent Auditors’ Report 27 - 32

Financial Statements 33 - 100

Analysis of Shareholders 101 - 102

Notices to Shareholders 103 - 104

Proxy Form 105


Corporate Values

Our VisionTo provide superior risk solutions underpinned by a high competent, innovative

and dedicated team for the benefi t of all stakeholders.

Our MissionTo be highly visible and preferred provider of innovative risk solutions in

our chosen markets.

Our ValuesProfessionalism – To be trustworthy, competent, respectful,

considerate and acting with integrity

Accountability – Have authority, responsibility, ownership, and meet

stakeholders expectations and transparency

Teamwork – Have shared purpose to achieve common goals

Innovation – Doing something differently, adding value and being cost

effective, continuous improvement and new ideas

Excellence – Being the best, have the art of mastering and should

have superior quality.

2


Product OverviewNICOZDIAMOND offers a wide range of short term insurance

covers under the following classes of business as follows:

Personal Insurance

• Homeowners – covering the private dwelling and all out

buildings, pool pumps, gates and walls.

• Householder insurance – movables covering contents of

the private dwelling house.

• Motor vehicle insurance for motor vehicles with a carrying

capacity of up to 2 tons, used for private purposes.

• All Risks Insurance offering worldwide cover for specifi ed

valuable items such as jewellery, cameras, mobile phones

sporting equipment, cycles, spectacles and laptops which

are normally carried on the person.

Business Combined Insurance

This policy caters for the specifi c needs of the small to medium

sized commercial and industrial business types.

The policies are tailor-made to suit the specifi c requirements

of the business. There is a wide range of products that are

available to cover these sizes of business as well as the larger

corporates.

Commercial Insurance- Assets Policy

This policy caters for the varying needs of corporate businesses.

Underwritten on an Asset based policy wording incorporating

buildings, offi ce contents, stock in trade etc. against fi re,

consequential loss and most types of crime related risks such

as burglary and theft of money, and accidental damage type

of risks.

The broader classes listed below are further split into

numerous insurance products providing cover against most

insurable risks. As the scope of insurance is so broad, those

covers which have broad similarities are grouped together. The

different types of insurance covers would include;

Policy Type Cover Provided

Fire and allied perils Loss or damage to buildings, contents and stock-in-trade caused by fi re

and allied perils explosions, earthquakes, aircraft, non- political riots and

malicious damage

Consequential loss Loss of gross profi t as a result of reduction in turnover following loss

covered under the fi re policy

Accounts receivable On outstanding debit balances which cannot be traced following a loss

by fi re

Theft Loss of contents, stock and machinery as a result of theft

Money Money stolen from the business premises or in-transit to or from the bank

Glass Breakage of external and internal fi xed glass

Goods in-transit Damage to property whilst in transit by road, rail or air

Business all risks Worldwide cover for specifi ed small valuable items

Accidental damage Accidental damage to property at premises

Motor Insurance - Private and light delivery vehicles, commercial trucks and special type

cars, cycles buses and trailers against passenger liability own including

third party and damage and liability to third parties

Engineering Insurance Machinery breakdown and resultant deterioration of stock, plant and

erection all risks, contactors all risks and resultant liabilities

Marine and Aviation Damage to hull and liability to passengers carried therein loss or damage

Insurance to cargo

Fidelity Guarantee Loss due to dishonesty or fraud by employees

Credit Insurance Loan protection against involuntary retrenchment, death sickness and/

disability

Golfers Insurance Policy covers risks associated with golfi ng to both amateurs and

professionals alike

Travel Insurance Traveling emergencies such as: Emergency medical expenses, journey

cancellations, loss of luggage.

Liabilities – General, Legal liability to third parties and to employees for death or injury resulting

Employers, Property in incapacitation or professional negligence resulting in fi nancial loss

Owners, Tenants,

Professional and directors

and offi cers

Group Personal Accident Death or disability to insured persons due to an accident

3


Distribution

NICOZDIAMOND has presence in the following markets: Zimbabwe, Zambia, Mozambique and Malawi.

United General Insurance Company Limited (UGI) - MalawiNICOZDIAMOND has a 46% stake in the company as well as a management and technical services contract with the company. The company is the second largest short-term insurance company in Malawi. The results of the Company are consolidated into the group results.

Diamond General Insurance Limited (formerly Cavmont) - ZambiaNICOZDIAMOND has a shareholding of 17,7% and management contract in this company which is a fast growing and recognised brand in the Zambian market. The results are included under associates.

Diamond Seguros - MozambiqueNICOZDIAMOND has a shareholding of 28% and a management contract. The results are included under associates.

BULAWAYOFidelity Life CentreCorner 11th Ave. /Fife Ave.P.O. Box 158Tel: (09) 71532/4, 62001/3, 78408Fax: (09) 71535

GWERUMIPF Building7th StreetBox 688Tel: (054) 222661, 228984Fax: (054) 222663

MUTARE4 Manica Centre118 Hebert Chitepo St.P.O. Box 331Tel (020) 63200, 67500Fax: (020) 63255

MASVINGOGround Floor ZIMRE BuildingHughes St.P.O. Box 306Tel: (039) 263929, 263937Fax: (039) 263937

BRANCH NETWORK IN ZIMBABWE

Diamond Seguros - MozambiqueDiamond General Insurance Limited - Zambia

NicozDiamond Insurance - ZimbabweUnited General Insurance Company Limited (UGI) - Malawi

4


Corporate Social Responsibility

NicozDiamond is one of the leading players in the Zimbabwe short term

insurance market comprised of 23 insurance companies. The company’s

market segments range from individuals right through to large

corporations and the company’s product range depicts its diversifi ed

portfolio. NicozDiamond distributes its products through Bancassurance

partnerships, brokers and agents. The company also operates in the

region through its subsidiaries and associate companies namely: United

General Insurance of Malawi, Diamond General Insurance of Zambia and

Diamond Seguros of Mozambique.

The company’s approach to Corporate Social Responsibility (CSR) is to

make use of its available resources and partnerships to identify and uplift

the lives of the less privileged in the communities in which it operates.

It’s CSR focus is across several areas including providing assistance in

the education of rural children , focusing on health matters for cancer

stricken patients, supporting of talented University students as well as

supporting children’s and old people’s homes in various provinces of

the country. These efforts help NicozDiamond to invest in and improve

communities in partnership with its customers, partners and other

stakeholders. This year, NicozDiamond held its Annual fundraiser under

the theme “Lend a hand, Make a difference” and raised in excess of

$37,000.

For 2016, the company’s major project was to support the Bindura

University of Science Education in its development initiatives of a national

sports academy which facilitates the development of identifi ed talent.

“Lend a hand, Make a difference”

5

Donation to Midlands Children’s Home in Gweru


In addition, NicozDiamond has committed funds to furnish

the classroom block it constructed at Tagwira Primary school

in its efforts to create a conducive learning environment. The

company will also continue to offer support to all homes on its

CSR programme through the provision of their various needs.

As a company, NicozDiamond is also passionate about

providing industrial experience to the youth through its student

attachment & graduate trainee programmes. Furthermore,

the company supports various tertiary institutions through

providing sponsorship at graduation ceremonies. The company

has also taken part in other charity events like corporate

fundraisers, sponsored walks and various fund raising activities.

NicozDiamond is committed to the success and growth of its

CSR programme and is pleased with the participation of its

employees through the donation of cash as well as their time by

volunteering in various CSR initiatives.

Christiansure is a comprehensive insurance package targeted at

Churches and its congregants. This insurance package enables

the company to further assist various communities by giving

back to churches 10% of the premiums that the church or its

congregants would have paid. This package incorporates some

unique features especially tailor made for the Christian segment

of society, with the resources generated being ploughed back

for church and ministry work.

NicozDiamond looks forward to many more years of making a

positive contribution to the lives of those in need as it continues

to proactively identify developmental needs, particularly in

those provinces in the country where the company has thus far

enjoyed less representation and involvement .

“Deeds of giving are the very foundations of the world”

Pirkei Avot 1:2

Corporate Social Responsibility (continued)

6

ICZ Clean Up Harare for Insurance Companies

NDI staff taking part in the walk in support of the Cancer Association


OVERVIEW OF SYSTEM OF GOVERNANCE

NICOZDIAMOND and its associated companies is committed to

good corporate governance and is guided by the National Code

on Corporate Governance Zimbabwe and the King Reports

on Corporate Governance. It is committed to the principles of

transparency, accountability, fairness and integrity in all its dealings.

Directors and management are required to observe the highest

ethical standards, ensuring the business practices are conducted

in a manner which, in all reasonable circumstances, is beyond

reproach. The company values ethical behavior and reaffi rms its

commitment to corporate governance principles by complying with

all applicable legislation, regulations and relevant International

Financial Reporting Standards.

The system of corporate governance in place ensures that Directors

and management to whom the running of the company has been

entrusted by shareholders, carry out their responsibilities faithfully

and effectively, placing the interests of the company ahead of

their own. This process is facilitated through the establishment of

appropriate reporting and control structures as detailed below;

BUSINESS ETHICS

The Board, management and staff are guided by the company’s

Code of Ethics. The Code of Ethics supports its commitment to a

policy of fair dealing, honesty and integrity in the conduct of its

business. The Code of Ethics has been reviewed and approved by

the board, communicated and distributed to all employees across

all levels in the company. The company has a whistleblowing policy

and fraud and corruption reporting platform through Deloitte’s Tip-

offs Anonymous. Incidences of unethical practice are reported to

various levels within the company depending on who is involved,

and all reports are investigated to their logical conclusion using

internal or external resources.

BOARD & MANAGEMENT ETHICS

The company believes that it is the responsibility of the Board and

Management to lead by example in observing personal ethical

practices detrimental to the business. As such, all Directors and

key management are required to declare interests which might be

deemed in confl ict with their appointment or contract with the

company. No part of the company’s business was managed during

the year by any third party in which any director or key management

had an interest.

RELATED PARTY TRANSACTIONS

The company has a process in place whereby the directors and key

management have confi rmed that, to the best of their knowledge,

the information disclosed in the company’s annual fi nancial

statements fairly represents their shareholding in the company, both

benefi cial and indirect, interest in share options of the company and

the compensation earned from the company for the fi nancial year.

In addition, the directors and key management have confi rmed that

all interests have been declared

INSIDER TRADING

No director, offi cer or employee may deal either directly or indirectly

in the company’s shares on the basis of unpublished price-sensitive

information regarding its business or affairs. In addition, no director,

offi cer or employee may trade in the company’s shares during closed

periods. Closed periods are from the end of the interim and annual

reporting periods to the announcement of fi nancial and operating

results for the respective periods, and while the company is under a

cautionary announcement.

MECHANISMS FOR COMMUNICATION WITH STAKEHOLDERS

The company has a formal platform for engaging and communicating

with stakeholders. The systems include formal meetings with

investors, annual general meeting, press announcements on interim

and year-end results, analyst and media presentations, company

website and annual reporting to shareholders.

ENTERPRISE RISK MANAGEMENT

The company has fully embraced Enterprise Risk Management and

has in place an enterprise risk management policy that is supported

by the Board through the Audit and Risk Management Committee.

There is an executive risk management committee that is tasked

Statement of Corporate Governance

7


with implementation of the policy and reports to the Audit and

Risk Management Committee on a quarterly basis.

The company management has designed and implemented a

risk management framework whose key objectives are to protect

the company’s capital, enhance value creation, support decision

making and protect the company’s reputation and brand.

The framework, which incorporates the risk management policy,

strategy and plan, aims to ensure that risk management processes

are embedded in critical business activities and functions, and

that risks are undertaken in an informed manner and pro-actively

managed in accordance with the business risk appetite.

This includes identifying and taking advantage of opportunities

as well mitigating adverse impacts of risk. The approach to

risk management includes being able to identify, describe and

analyze risks at all levels throughout the organisation, with

mitigating actions being implemented at the appropriate point

of activity. The very signifi cant, high impact risk areas and the

related mitigating action plans are monitored at executive level.

Risks and mitigating actions are given relevant visibility at various

appropriate forums throughout the organisation.

The company has documented its approach towards Information

and Communication Technology (ICT) in the ICT Information

Security Policy. The document covers all policies relating to ICT and

guides staff on usage of the company ICT facilities. The document

also covers physical and environmental security, communications

and operations as well as access control. The Company also has

a Disaster Recovery Plan which contains appropriate business

continuity plans and identifi ed resources that will ensure the

implementation of recovery procedures, if a disaster occurs.

ACCOUNTABILITY AND INTERNAL CONTROL

The directors are required by the Companies Act to maintain

records and prepare fi nancial statements, which fairly present the

state of affairs of the company as at the end of the fi nancial year

and the results of its operations for that year, in conformity with

International Financial Reporting Standards.

Statement of Corporate Governance(continued)

8


Board Composition

The Board has a unitary board structure, which at 31 December 2016 comprised the following:

Composition of Board and Board Committees:

Audit & Risk Executive

Director Status Board Management Remuneration ICT Manpower Investment Nominations

James Karidza Independent

Non-Executive

Director (Chairman) (Chairman)

Thembiwe Mazingi Independent

Non-Executive

Director (Vice-chair) (Chairman) (Chairman)

Grace Muradzikwa Managing Director

Bruce Campbell Independent

Non-Executive

Director (Chairman)

Rachel Pfungwa Independent

Kupara Non-Executive

Director (Chairman)

Nester Mukwehwa ** Independent

Non-Executive

Director

Kiritkumar Naik** Independent

Non-Executive

Director

Daphine Tomana Independent

Non-Executive

Director

Robert C. von Seidel Independent

Non-Executive

Director

** appointed 6 December 2016

In accordance with the company’s articles of association, directors are required to retire by rotation at intervals of three years. Directors

retiring by rotation who avail themselves may be reelected at the AGM at which they retire. New directors may only hold offi ce until the

next AGM, at which they will be required to retire and offer themselves for election.


9


Board Expertise

Collectively, the directors possess a wide array of skills, knowledge

and experience, and bring independent judgment to board

deliberations and decisions, with no one individual or group having

unfettered powers of decision-making. Board members possess

skills that include Insurance, Legal, Regulatory and compliance,

Accounting and Financial Management, Investments, Audit & Risk

management and Human Resources Management.

The main responsibility of the Board is to support good corporate

governance, strategy formulation and guide policy implementation.

Board members are allocated to serve on committees of the Board

in their areas of strategic strength and expertise. During the year,

no major changes in the Board structure took place which could

be deemed signifi cant to the company’s operations and strategies.

Board Induction

On appointment, new directors have the benefi t of induction

activities aimed at broadening their understanding of the company

and markets within which it operates. The Company Secretary

ensures that directors receive accurate, timely and clear information.

Board Evaluation

The Board has in place a formal self-evaluation process of the Board

and the assessment of the Chairman’s performance by the Board.

This process is conducted annually and is an integral element of the

board’s activities to review and improve its performance continually.

The committees of the Board review matters on behalf of the

Board and make recommendations for consideration by the Main

Board .The power, duties and responsibilities of the committee are

governed by their respective Charters as approved by the Board and

they work closely with key management in discharging their duties.

The committees are The Audit & Risk Management Committee,

Nominations Committee, Executive Remuneration Committee,

Investments Committee and the Manpower Committee. In 2014

an Adhoc Board committee was commissioned to oversee an ICT

system project, the ICT Board committee and it will be dissolved

once the project is signed off.

Board Committee Structures and Responsibility

The Board committee structure is illustrated below:


10


The committee composition and key roles are tabulated below;

Committee Composition

Audit & Risk Management Mrs. RP Kupara (Chair)

(Meets once a quarter) (2 non- Executive Directors

and Managing Director)

Investments Mr. Bruce Campbell (Chair)



Manpower Committee Mrs. TC Mazingi (Chair)



Executive Remuneration Mr. James Karidza (Chair)

(Meets as and when required (3 non- Executive Directors)

but at least once a year)

Nominations Mr. James Karidza (Chair)

(Meets as and when required (3 non- Executive Directors)

but at least once a year)

ICT Board committee Mrs TC Mazingi (Chair)

(Adhoc) (2 non- Executive Directors


Roles and Responsibilities

The Audit and Risk Management Committee monitors internal control

policies and procedures designed to safeguard company assets and

to maintain the integrity of fi nancial reporting. Among the specifi c

responsibilities set out in its Charter, the Audit and Risk management

Committee reviews all published accounts of the company; reviews

the scope and the independence of the internal and external audits;

monitors and assesses the systems for internal compliance and control

and advises on the appointment, performance and remuneration of

external auditors

The committee is responsible for the formulation of the Investment

Policy of the company and reviewing investment strategy for compliance

with such policy.

The committee is responsible for the company’s Human Resources Policy

issues and terms and conditions of service. The company continues to

subscribe to a compensation philosophy, which ensures that it attracts

and retains skilled personnel. Staff compensation levels and manpower

development proposals made by the committee are presented to the

Board for approval.

The committee is responsible for ensuring that senior executives are

competitively remunerated line with their contribution to the company’s

operating and fi nancial performance, at levels which take into

account industry and market bench marks as well as affordability and

sustainability.

The committee has a role of identifying and making recommendations

to the Board on the appointment of any executive and non-executive

Directors. The committee also reviews and evaluates the performance

and effectiveness of the Board

The committee was established to assist the Board with oversight on the

System replacement project.


11


BOARD AND EXECUTIVE MANAGEMENT REMUNERATION

Executive Remuneration

The remuneration of senior management is determined

by taking into consideration market comparisons and an

assessment of performance related to the achievement of

documented measurable performance targets. Strategic and

business objectives, which are reviewed periodically, as well as

a general assessment of performance, are taken into account.

The remuneration structure at senior management level consists

of guaranteed pay, variable pay in the form of performance and

bonus scheme and long term incentives in the form of employee

share option scheme.

Basic Salary

The basic salaries of executive management are subject to annual

review by the Executive remuneration committee and the Board

and are set with reference to relevant external market data as

well as the assessment of individual performance. All salary

reviews of executive management are approved by the executive

remuneration committee.

Incentive Bonus Scheme

The incentive bonus scheme in place applies to all staff in the

organisation where bonus parameters are set in relation to the

achievement of company objectives per the Balanced Scorecard

for the year.

Share Option Scheme

The objective of the share incentive schemes is to strengthen

the alignment of shareholder and employees’ interests’. Under

the share option scheme, all permanant employees of the

company are awarded share options based on their grade in the

organisation, their individual performance in the year and the

years served in the organisation. The allocation criterion is applied

equally across both management and staff and all permanent

staff of the company are eligible per the scheme rules.

Non-Executive Directors’ Remuneration

Non-executive directors receive fees for their services as directors

on the company board and board committees, on the basis of

a fi xed quarterly retainer fee and a sitting fee. Directors’ fees

are recommended by the Remuneration committee taking into

considering market data, considered by the Board, and proposed

to the shareholders for approval at each AGM.


12


James Karidza

Non-Executive Chairman

Bruce Campbell

Non-Executive Director

Daphine Tomana


Thembiwe Chikosi Mazingi

Non-Executive Vice Chairman

Rachel Pfungwa Kupara


Kiritkumar Naik


Grace Muradzikwa

Managing Director

Robert C von Seidel


Nester Mukwehwa


13

Directorate


James Karidza – Independent Non-Executive Chairman

BAcc (UZ), CA (Z)

Mr. James Karidza is a qualifi ed Chartered Accountant and a

holder of a Bachelor of Accountancy degree from the University

of Zimbabwe. He did his articles of clerkship with KPMG. He has

served as the Chief Finance Offi cer for Cimas Medical Aid Society,

Group Finance Director for Migdale Holdings (Private) Limited and

Group Finance Director for SMM Holdings (Private) Limited. James

has been on a number of Boards of Zimbabwean and foreign

companies including manufacturing, banking, mining and services

operations where he chaired various board committees. He is a

keen golfer and enjoys farming.

Thembiwe Chikosi Mazingi – Independent Non-Executive

Vice Chairman

BL (UZ), LLB (UZ), MBA (UZ)

Mrs. Thembiwe Mazingi holds a Masters in Business Administration

(MBA), Bachelor of Laws and Bachelor of Law degrees from the

University of Zimbabwe. She is also a holder of Advanced Corporate

Law and Securities Law, Advanced Programme in Value-Added

Tax and Post-graduate Certifi cate in Advanced Taxation, all from

UNISA. Thembiwe is registered as a legal Practitioner of the High

Court of Zimbabwe. She has more than 28 years experience as a

Legal Practitioner in private practice and currently partner in law

fi rm, Coghlan, Welsh & Guest. Her assignments include providing

legal services and advice in the law of property, conveyance and

notarial practice, trusts, estate planning, taxation, commercial law,

corporate compliance and regulatory issues. Thembiwe is a member

of the Law Society of Zimbabwe and is also non-executive director

for National Tyre Services, African Century Leasing Company and

Ariston Holdings. She is also a past board member of Zimbabwe

Allied Banking Group, Zimbabwe Electricity Supply Authority and

Fidelity Asset Management.

Grace Muradzikwa – Managing Director

Bachelor of Administration, MBA, AIISA, FIISA, IPM Diploma

Mrs. Grace Muradzikwa holds a Masters in Business Administration

and Bachelor of Administration degree from the University of

Zimbabwe. In addition, she is an Associate of the Insurance Institute

of South Africa (AIISA) and Fellow of the Insurance Institute of

South Africa (FIISA). She also holds an IPM Diploma in Personnel

Management. She has been at the helm of NicozDiamond for many

years and has over 2 decades of insurance experience spanning

all facets of Short-term Insurance and Reinsurance. Grace holds

directorships in various local and regional companies and is a

member of different professional affi liations. She has received

awards such as Zimbabwe National Chamber of Commerce

Business Woman of the Year, 2009 IOD Director of the Year 2013

Megafest Leadership Award and 2014 Megafast Award. She is a

non-executive Director to Buy Zimbabwe, Africa university, Bindura

University and the current acting Chairman for CFI Holdings.

Bruce Campbell – Independent Non-Executive Director

MBL (UNISA), Bachelor of Arts (NU) FllSA, AllSA

Mr. Bruce Campbell is a qualifi ed and seasoned insurer who is

a Fellow of the Chartered Insurance Institute of London and also

holds an Associateship from the same institute. He holds a Master

of Business Leadership from UNISA and has a Bachelor of Arts

Degree from Natal University. He has been Chief Executive Offi cer

of Mutual and Federal Insurance Company in South Africa for

ten years between 1998 and 2007 and oversaw the successful

acquisition and integration of the Protea Insurance Company and

Commercial Union. He has also been chairman and Chief Executive

Offi cer of the Alexander Forbes Group between 2007 and 2010.

He has served on the Board of Credit Guarantee as chairman, on

the RMI insurance company Zimbabwe as Board chair and also

as a Director of Mutual Federal in Namibia and the South African

Insurance Association Board. He is currently an independent

Director of Santam South Africa and sits on several other non-

insurance Boards.

Rachel Pfungwa Kupara – Independent Non-Executive

Director

B.Acc (Hons,) CA (Z), MBA

Mrs. Rachel Pfungwa Kupara is a Chartered Accountant (Zimbabwe)

who holds a Masters in Business Administration (MBA) from the

University of Bradford, England. She obtained an Accountancy

degree at the University of Zimbabwe and did her articles of clerkship

at Ernst & Young Zimbabwe. Her work experience spans over 31

years in Audit, Insurance, Banking and Agriculture. She has held

various Finance Director and Managing Director positions during

her working career. She has also served as a non executive Director

on the Boards of Reserve Bank of Zimbabwe, Afre Corporation,

Air Zimbabwe, Zimbabwe Open University and Ariston Holdings.

Currently, other than serving on the NicozDiamond Board, she is

also a non-Executive Director for Dairiboard Holdings Limited, ZIB

Insurance Brokers, Briolette Investments (Pvt) Ltd, Tongaat Hulett

Limited(SA) and Zimbabwe International Film Festival Trust.

Directorate(continued)

14


Robert Cron von Seidel – Non-Executive Director

CA(ICAEW) BBsc. (University of Capetown).

Mr Robert Cron von Seidel is a Chartered Accountant (ICAEW) with

a Bachelors in Business Science from Capetown University. He has

vast experience in fund management acquired over 24 years. He

currently sits on the Zimre Holdings and Dairiboard Boards amongst

others. He currently manages and provides investment advice in

South Africa.

Daphine Tomana - Non-Executive Director

BL(UZ)

Mrs Daphine Tomana holds a Bachelor of Laws (Honours) from the

University of Zimbabwe. Daphine is a registered Legal Advisor, Legal

Practitioner, Corporate Legal Services Manager and a Bank Examiner.

She has more than 18 years’ experience as a Legal Practitioner,

Bank Examiner and Corporate Legal Services and currently with

Zimbabwe Newspapers (1980). Her assignments include providing

legal services and advice drafting agreements and opinions,

attending Court sessions, Managing legal matters, Responding

to claims made for and against the company, Administration of

the Head Offi ce, reviewing legislation applicable to the company,

Research, Handling insurance and processing all insurance claims

by the company, conducting workshops on defamation and Labour

matters. Daphine is a Non – Executive Board Member for Agribank

and she is also the Vice Chairman for NSSA. She is also a past

Commissioner with the Media and Information Commission.

Kiritkumar Naik – Independent Non-Executive Director

Advanced diploma - Mechanical Engineering Technician City and

Guild Institute, London

Mr Kiritkumar Naik is the Managing Director of Rank Zimbabwe. He

currently serves on the Boards of TSL Zimbabwe, Dulux Zimbabwe

and is the current President of the Hindoo Society. He has previously

served on the Boards of Turnall Holdings, William Bain and Co,

ZNCC, Steelnet, Art Corporation, Capitol Insurance and Trinidad

Industries.

Nester Mukwehwa – Non-Executive Director

Masters in Policy Studies, BSc Honours Social Science and

Administration

Mrs. Nester Mukwehwa is currently the Human Resources Director

of Hunyani Paper and Packaging since 2008. She is also a Board

member of NSSA, Chairman of the National Employment Council

for the Printing and Packaging Industry, Independent Arbitrator of

the Ministry of Public Service and Social Service, Chairperson of

Emcoz Labour committee and UZ Council member. She is a highly

experienced human capital specialist and holds a Masters in Policy

Studies and a BSc Honours Social Science and Administration as

well as various HR diplomas.

Directorate(continued)

15


Management

Ms. Cathrine Musakwa Head Strategic Business Unit

Mr. Tinashe Masvaya Head Strategic Business Unit

Mrs. Rebecca Moyo Head Finance

Mr. Elisha Makwarimba Treasury Manager

Mrs. Agnes Mtotela Head Human Resources

Mr. Vusani Mapuke Head IT

Ms. Odiline Kava Head Marketing

Mr. Christopher Tapererwa Business Analyst

Mr. Jabulani Mbengo Head Internal Audit

Mr. Witness Chimboza Branch Controller Mutare

Mr. Ranga Verenga Branch Controller Bulawayo

Mr. Benedict Betera Branch Controller Masvingo

Ms Faith Mariwi Branch Controller Gweru

Ms. Gugulethu NgwenyaGeneral Manager

(Business Development)

Mrs. Grace Muradzikwa

(Managing Director)

Mr. Noel ManikaGeneral Manager

(Operations)

Mrs. Gloria ZvaravanhuGeneral Manager

(Corporate Services & Company Secretary)

MANAGEMENT

16

N I C O Z D I A M O N D I N S U R A N C E 2 0 1 6 A N N U A L R E P O R T 17

When it all falls, will yoube covered or left exposed?


Chairman’s Statement

Motor remains the dominant class of insurance for the short term insurance

sector as well as for the company

INTRODUCTION

I present to you my report of the NicozDiamond

Group of companies for the year ended 31

December 2016.

OPERATIONS OVERVIEW

The economy is estimated to have grown by 0.6% in

2016. On that background, lacklustre performance

was recorded across various sectors with some

recording signifi cant declines in performance. The

short term insurance industry was not spared as

minimal growth was recorded.

The operating environment in the short term

insurance sector continued to be characterised

by subdued growth, liquidity constraints and

softening of rates, affecting the revenue base.

On the cost front, claims were generally on the

increase as infl ation on cost of repairs was high

given the increasing costs of imported parts.

Moral hazard also tends to increase in a declining

economic environment and therefore an increase in

fraudulent claims cannot be ruled out. The fl oods

that affected the country in the last part of the

year and mostly in the fi rst quarter of 2017 have

however not been signifi cant in terms of claims so

far as it appears that most of the affected persons

did not have adequate insurance covers in place.

18


Business acquisition costs also increased for the sector as there

were attendant incremental costs in offering electronic distribution

of cover notes for the motor policies. This was also done to curb

fake cover notes and ensure that the insuring public is protected.

Motor remains the dominant class of insurance for the short term

insurance sector as well as for the company.

Given the constrained growth on revenues, pressure continues to

be exerted on management expenses in order to align them to the

revenues.

The pressure to extend payment plans to clients persisted, distorting

the insurance pool model as intended. In turn this has also

negatively affected the ability to generate new cash for investments

and resultantly dampened investment returns.

The property market continued to be characterised by increased

voids and downward reviews of rentals, which also affected the

ultimate value placed on the properties.

Occupancies of the Group’s properties remained above market

average. Rental collection challenges persisted in the market

though collection effi ciencies for the Group’s properties signifi cantly

improved in the year owing to stringent tenant vetting.

The regional investments in Malawi, Zambia and Mozambique

continued to be affected by loss of value from exchange

rate devaluation and a spike in infl ation in the markets. Their

performance was also dampened by the minimal capital levels at

their disposal. During the year the Board made a decision to exit

from the investment in Uganda to allow other shareholders to

capitalise the business.

REGULATORY ENVIRONMENT

The regulatory environment continued to undergo changes in the

various markets. The changes mostly converged on governance and

risk management principles and measures to protect the insuring

public in line with best practice.

Locally, minimum capital requirements for short term insurance

companies were increased from $1.5 million to $2.5 million and

the company was way above the minimum required.

FINANCIAL PERFORMANCE OVERVIEW

In the current fi nancial period, the results from FICO Uganda were

shown under Discontinued Operations as the investment was

disposed with effect from 30 September 2016. Resultantly the

2015 Group Statement of Comprehensive income was restated

to remove FICO contribution from Continuing to Discontinued

Operations.

The Group performance for the year was negatively affected by

the loss of US$533,673 that was booked on disposal of FICO. The

loss mainly emanated from unrealised foreign exchange losses on

the investment which accumulated over the years and were only

realised on disposal. In addition, the performance of UGI Malawi

was signifi cantly impacted by the infl ationary pressures in the

market which saw claims and other costs growing faster than the

rate at which revenues reacted. This resulted in the entity posting

its worst performance since inception.

The Group made an overall profi t after tax of $959,798 from

continuing operations and $426,125 after incorporating

discontinued operations. This was largely buoyed by the good

performance from the company which posted a profi t after tax of

US$1,725,016, a signifi cant improvement in performance from the

US$119,124 of 2015.

There was a reduction of 5% in gross premium written mainly

affected by the Malawi performance. Claims costs increased by 5%

whilst operating expenses reduced by 15% as the cost containment

measures taken by the company bore fruit.

Net Investment income increased by 18% in the year as the

investment returns for the company from quoted equities and fi xed

income securities improved signifi cantly. In line with the market, the

company also recorded devaluations on most of its properties but

Chairman’s Statement(continued)

19


recorded gains on Diamond Villas which were previously carried at

cost whilst still under development.

Associates contributed negatively to Group profi tability mainly from

the Mozambique and Zambian associates due to factors highlighted

above.

The Group generated positive cash from operations of $903,206

in the year, though at a signifi cantly reduced level compared to

prior year. The company however recorded cash from operations

of $700,720 whilst the subsidiary in Malawi recorded negative cash

from operations amidst the high infl ationary pressure on expenses

in the market.

The Group’s consolidated statement of fi nancial position declined

by 0.3% after the elimination of FICO. The Company’s capital

increased to $12.4 million from $11 million in 2015 and was well

above the minimum statutory capital requirement for short term

insurance companies in Zimbabwe of $ 2,5 million.

INDEPENDENT RATING AND CERTIFICATION

The company maintained its A-rating for claims paying ability by

Global Credit Rating (“GCR”) of South Africa and also maintained

its certifi cation on the ISO Standard, ISO 9001:2008.

SOCIAL RESPONSIBILITY

The company maintained loyalty to its charitable causes in the year.

DIRECTORATE

Mr Paul Brien resigned from the Board with effect from 22 August

2016. Sincere Board gratitude is extended to him for his years of

invaluable service.

The Board welcomed Mrs Nester Mukwehwa and Mr Kiritkumar

Naik onto the Board with effect from 6 December 2016.

In terms of Article 77 of the Company’s Articles of Association, Mrs

T.C Mazingi retires by rotation and being eligible; offers herself for

re-election at the next Annual General Meeting of the Company.

DIVIDEND

The Performance of the Group was negatively affected by

the discontinued operation, FICO Uganda, and the unusual

performance from UGI Malawi. The company, however, exhibited

strong performance and it is on that basis that the Directors are

proposing a fi nal dividend of 0.074 cents per share for 2016. The

Group has adequate retained earnings to cover the dividend. A

dividend notice with more information will be published in due

course.

OUTLOOK

The Group and Company remain optimistic for a profi table outlook

despite the subdued economic performance expectations. For the

company, focus will continue to be exerted on business retention,

good service and convenience to customers, cost containment and

aggressive risk management.

For the Group, turning the regional subsidiaries and associates to

profi tability through requisite capital structuring and enhanced

oversight role, will remain a key area of focus.

APPRECIATION

On behalf of the Board and shareholders I would like to extend my

sincere appreciation to our valued clients, the Regulators (Insurance

and Pension Commission, Securities and Exchange Commission

of Zimbabwe, Zimbabwe Stock Exchange and the Reserve Bank

of Zimbabwe) who continue to provide support as needed to the

Group.

James Karidza

CHAIRMAN

13 March 2017

Chairman’s Statement(continued)

20


Managing Director’s Report

The performance highlights

US$’000 NDI UGI TSM GROUP

Revenue GPW 29,565 7,434 - 36,999 NPW 18,999 5,234 - 24,233 NEP 19,347 4,898 - 24,245

Expenses NCI 10,025 4,043 - 14,069 Net Comm 2,630 324 - 2,954 Mgt Exp 5,159 2,023 - 7,263

Profi ts UW Profi t/(Loss) 1,531 -1,492 - 185 Invest. Inc 1,017 338 105 1,785 PBT 2,548 -1,154 105 1,352 PAT 1,725 -739 101 960

21


PERFORMANCE OVERVIEW

In an environment characterized by a tough economic landscape

ranging from reduced economic growth to incessant liquidity

challenges, the NICOZDIAMOND Group has remained resilient in

2016.

Signaling the slowdown in economic activity in all the four markets

in which NDI has a presence, the Group’s revenue retreated by 5%

to $37 million in 2016. The revenue growth was negatively affected

by high infl ation and exchange rate depreciation in the regional

markets resulting in negative real contribution from regional units.

The Group’s profi tability came under signifi cant pressure from a

bad claims experience and increasing business acquisition costs

resulting in After Tax Profi t declining by 41% to $960k in 2016.

The Malawian subsidiary (UGI) contributed negatively to the

bottom-line of the group as it was negatively affected by high

infl ation and exchange rate depreciation which impacted on the

cost of claims. The unit also went through a deliberate portfolio

purifi cation exercise. Corrective actions are being taken to ensure

that the unit returns to profi tability.

Though negatively affected by depressed rentals, subdued

occupancy levels and impairments, the property company managed

to contribute positively to the bottom-line of the group in 2016.

Retention ratio

The Group recorded an overall retention ratio of 65%, which is a

slight decline from the 67% achieved in 2015. Management acquired

some mega risk portfolios and deliberately increased reinsurance

in order to safeguard shareholders’ capital against adverse claim

experience. Business retention however remains management’s

focal area to align it towards international benchmarks.

Claims ratio

The claims ratio increased to 58% for 2016 compared to 54%

recorded in 2015 as a result of an upsurge in motor claims and

other catastrophic claim events related to fl ooding. In as much as

the increase in claims ratio was of concern, it was however lower

than the international benchmark of 60%.

Expenses ratio

The expenses-to-net earned premium ratio improved signifi cantly

from 35% achieved in 2015 to 30% in 2016. Various cost

containment initiatives implemented by management saw

most of the expense components trending downwards in 2016.

Management continues to cautiously manage operational

expenditure.

TECHNICAL PERFORMANCE REVIEW

The graph below shows the key technical ratios of the Group for 2016 compared to 2015

Managing Director’s Report(continued)

22


BUSINESS CLASS PERFORMANCE

The motor class has remained dominant in 2016 after slightly

increasing to 45% from 43% registered in 2015. The fi re class

slightly declined to 25% in 2016 from 26% achieved in 2015.

Other classes of business mainly constituted by credit insurance,

engineering and farming registered notable growth in 2016 thereby

increasing their collective contribution to 17%.

INVESTMENT CLASS PERFORMANCE

Overall, there was an improvement in the performance of

Investments in 2016 compared to 2015. Notable improvements

were registered in quoted equities and property categories which

grew by 7085% and 191% respectively. Interest income however

reduced by 23% due to the softening rates coupled with a reduced

size of the fi xed income securities book.

KEY INVESTOR RATIOS

FY 2015 FY 2016

Basic EPS 0.24 Cents 0.25 Cents

Share Price 1.51Cents 2.75 Cents

NAVps 3.35 Cents 3.31 Cents

Exp/EP 35% 30%

NCI/EP 54% 58%

ROCE 9% 7%

Solvency Margin 73% 77%

Most key ratios refl ected on the reduced profi tability in 2016

compared to 2015. The NicozDiamond share price closed the year

at 2.75 cents which was an 82% growth from 1.51 cents achieved

in 2016.

OUTLOOK

Even though the challenging macroeconomic landscape is likely

going to continue into the foreseeable future, management is

optimistic of achieving decent results in 2017. The group shall be

focusing on profi table business growth driven by excellent service

delivery to customers. The company has upgraded its ICT system

and shall harness it as a crucial business enabler bringing effi cient

and convenient service delivery to customers. The Group will also

continue interrogating the performance of its investments and will

not hesitate to take corrective actions when needed.

APPRECIATION

On behalf of management and staff, I wish to thank the

shareholders, Directors, Regulator and all other stakeholders for the

support extended to the company in 2016.

Grace Muradzikwa

Managing Director

13 March 2017

Managing Director’s Report(continued)

23


Report of the Directors

The Directors present their report together with the audited fi nancial statements for the year ended 31 December 2016.

1. SHARE CAPITAL

Ordinary shares Number 2016 Number 2015

Total shares in Issue 566 764 773 566 764 773

Un-issued 33 235 227 33 235 227

Authorized 600 000 000 600 000 000

Opening Issued shares 566 764 773 555 764 773

Closing Issued Shares 566 764 773 566 764 773

As at 31 December 2016, 33 235 227 (2015-33 235 227) shares were under the control of the directors.

2. RESULTS FOR THE YEAR ENDED 31 DECEMBER 2016

The results for the year are as set out in the accompanying fi nancial statements, a summary of which is stated below;

Summary of Group Results (Continuing Operations)

2016 (US$) 2015(US$)

Gross Premium Written 36,999,970 38,770,104

Operating Profi t 1,072,998 1,907,023

Profi t before Taxation 1,351,818 1,647,092

Profi t After Tax 959,798 1,638,610

Summary of Group Results (Discontinued Operations)

2016 (US$) 2015(US$)

Loss After Tax (533,673) (595,696)

3. RESERVES The movements in the reserves of the Group and Company are shown in the Consolidated Statement of Comprehensive Income,

Group and Company Statements of Changes in Equity and in the notes to the Financial Statements.

4. PROPERTY AND EQUIPMENT Capital Expenditure for the year ended 31 December 2016 amounted to $597,691 (2015: $429,410).

5. INTANGIBLE ASSET The intangible asset with a carryning amount of $738,357 relates to the Company’s enterprise resource planning (ERP), underwriting

and fi nance software.

6. DIVIDEND The Directors have recommended a fi nal dividend of 0.074 cents per share for the year ended 31 December 2016. The dividend will

be paid to shareholders registered in the books of the company at close of business on 13 April 2017. The dividend will be payable

on or about 27 April 2017. Taxes will be deductible as applicable.

24


Report of the Directors(continued)

7. DIRECTORATE

In terms of Article 77 of the Company’s Articles of Association, Mrs T.C Mazingi retires by rotation and being eligible; offers herself for

re-election at the next Annual General Meeting of the Company. Mr Paul Brien resigned from the board with effect from 22 August

2016. Mrs N Mukwehwa and Mr K Naik joined the board effective 6 December 2016.

8. DIRECTORS’ INTERESTS

No Director had, during the year, any material interest in any contract of signifi cance in relation to the Group’s businesses. The

Benefi cial interests of the Directors in the shares of the Company (both direct and indirect holdings) as at 31 December 2016 are

shown in table below.

Name 2016 2015

Bruce Campbell 119 56,643,597

Grace Muradzikwa 37,755,019 37,755,019

Total 37,755,138 94,398,616

As at 13 March 2017, the position remained the same.

Total share options granted to Grace Muradzikwa amounted to 3,150,092 as at 31 December 2016 and are depicted in table below;

Issue date Number of shares Grant price

7 March 2013 1,200,000 1.1cents

4 March 2014 1,058,400 1.35 cents

10 March 2015 891,692 1.30 cents

Total 3,150,092

9. DIRECTORS FEES

Directors’ fees have been reviewed in line with market trends during the year and are pegged at an average of those paid to Directors

of similar sized companies. A resolution will be passed at the annual general meeting to approve Directors fees totaling $82,220 in

respect of the year 2016.

10. BOARD ATTENDANCE

The table below shows Board member attendance to Board and committee meetings in 2016

Name of Director MAIN BOARD ARMCO INVECO MANCO NOM EXEC REM

Number of meetings 4 4 4 4 3 3

Mr J Karidza 4/4 3/3 3/3

TC Mazingi 4/4 4/4 3/3 3/3

PR Brien ^ 3/3 3/3 3/3

B Campbell 4/4 2/2*

RP Kupara 4/4 4/4 1/1*

D Tomana 3/4 4/4 3/3 3/3

G Muradzikwa 4/4 4/4 4/4 4/4

25


Mrs. N Mukwehwa and Mr. K Naik did not attend any meetings in 2016 as they were appointed on 6 December 2016.

^ Resigned 22 August 2016

*Appointed to the committee during the year.

Key: ARMCO-Audit and Risk committee, INVECO-Investments committee, MANCO-Manpower committee, NOM-Nominations

committee and Executive Remuneration Committee

11. AUDITORS

Shareholders will be requested to approve the remuneration of the Auditors for the fi nancial year ended 31 December 2016 amounting

to $84,992.00 (inclusive of VAT) at the Annual General Meeting and to appoint Auditors for the year 2017.

12. DIRECTORS RESPONSIBILITY FOR FINANCIAL REPORTING

The Directors of the Company are responsible for the maintenance of adequate accounting records, and the preparation of fi nancial

statements for each fi nancial period that gives a true and fair view of the state of affairs of the Company and the Group at the end of

the fi nancial period and of the results and cash fl ows for the period.

They are also required to select appropriate accounting policies, to safeguard the assets of the Company and the Group and to make

reasonable and prudent judgments and estimates. Accounting policies, which follow International Financial Reporting Standards, have

been consistently applied.

The Directors are also responsible for the systems of internal control. These are designed to provide reasonable, but not absolute

assurance as to the reliability of the fi nancial statements, and to safeguard, verify and maintain accountability of assets, and to prevent

and detect material misstatements and losses. The systems are implemented and monitored by suitably trained personnel with an

appropriate segregation of authority and duties. Nothing has come to the attention of the directors to indicate that any material

breakdown in the functioning of these controls, procedures and systems has occurred during the period under review.

The fi nancial statements have been prepared on a going concern basis since the Directors have every reason to believe that the

Company and the Group have adequate resources to continue in operation for the foreseeable future. The fi nancial statements have

been prepared in full compliance with all Financial Reporting Standards and the Companies Act (Chapter 24:03).

The fi nancial statements have been audited by the group’s external auditors, Ernst &Young, who have been given unrestricted access

to all fi nancial records and related data, including minutes of all meetings of the Board of Directors and Committees of the Board. The

Directors confi rm that all representations made to the independent auditors during the audit were valid and appropriate.

The fi nancial statements were prepared by the NicozDiamond Insurance Limited Finance Department under the direction and

supervision of the General Manager Corporate Services, Mrs Gloria Zvaravanhu (PAAB Number 03311). The fi nancial statements for

the year ended 31 December 2016, were approved by the Board of Directors on 13 March 2017 and are signed on their behalf by:

………………………………. ………………………………

Mr J Karidza Mrs G Muradzikwa

BOARD CHAIRMAN MANAGING DIRECTOR

Report of the Directors(continued)

26


INDEPENDENT AUDITOR’S

REPORT

27

28

N I C O Z D I A M O N D I N S U R A N C E 2 0 1 6 A N N U A L R E P O R T29

30

N I C O Z D I A M O N D I N S U R A N C E 2 0 1 6 A N N U A L R E P O R T 31

32


FOR THE YEAR ENDED 31 DECEMBER 2016 Group Group Company Company

Note 2016 2015 2016 2015Continuing Operations $ $ $ $

Income Gross premium 36,999,970 38,770,104 29,565,055 28,943,354 Premium ceded (12,767,084) (12,904,373) (10,565,969) (10,565,793)Net premium written 24,232,886 25,865,731 18,999,086 18,377,561 Movement in the unearned premium provision 11,809 (1,159,389) 347,531 (662,867)Earned premium 24,244,695 24,706,342 19,346,617 17,714,694 Brokerage commission and fees 2,145,711 2,723,223 1,682,481 2,137,388 Investment income 8.1 1,082,155 1,061,480 568,953 470,053 Other income 8.2 32,020 513,652 109,478 120,522

Total income 27,504,581 29,004,697 21,707,529 20,442,657

Total expenses (26,431,583) (27,097,674) (19,497,708) (19,366,459)Net benefi ts and claims 8.3 (14,069,084) (13,449,841) (10,025,248) (9,422,878)Commission and acquisition expenses (5,099,835) (5,101,345) (4,313,039) (3,951,358)Operating and administrative expenses 8.4 (7,262,664) (8,546,488) (5,159,421) (5,992,223)

Operating profi t 1,072,998 1,907,023 2,209,821 1,076,198

Net other gains/(losses) 8.5 677,489 (51,894) 338,236 (1,002,825)

Finance costs (6,806) (23,454) - - Profi t before share of losses of associates 1,743,681 1,831,675 2,548,057 73,373

Share of associates losses 8.6 (391,863) (184,583) - -

Profi t before tax 1,351,818 1,647,092 2,548,057 73,373

Taxation (expense)/credit 8.7 (392,020) (8,482) (823,041) 45,751

Profi t for the year from continuing operations 959,798 1,638,610 1,725,016 119,124

Discontinued Operations Profi t/(loss) after tax for the year from discontinued operations 8.8 393,356 (595,696) - - Recycling of the cumulative losses arising from translation from Other Comprehensive Income to Profi t or loss 8.8 (352,499) - - - Loss on disposal of subsidiary 8.8 (574,530) - - - Loss for the year from discontinued operations (533,673) (595,696) - -

Profi t for the year from continuing and 426,125 1,042,914 1,725,016 119,124 discontinued operations

Profi t for the year for continuing operations attributable to: Equity holders of the parent 1,407,703 1,357,956 1,725,016 119,124 Non-controlling interests (447,905) 280,654 - - 959,798 1,638,610 1,725,016 119,124

Earnings per share (in cents) for continuing operations Basic earnings per share (cents) 6 0.25 0.24 0.30 0.02 Diluted earnings per share (cents) 6 0.24 0.23 0.29 0.02

Earnings per share (in cents) for discontinued operations Basic earnings per share (cents) 8.8 (0.09) (0.11) Diluted earnings per share (cents) 8.8 (0.09) (0.11)

Statements of Profi t or Loss

33


FOR THE YEAR ENDED 31 DECEMBER 2016 Group Group Company Company Note 2016 2015 2016 2015 $ $ $ $ Profi t for the year from continuing and discontinued operations 426,125 1,042,914 1,725,016 119,124 Other comprehensive income: Other comprehensive income to be reclassifi ed to profi t or loss in subsequent periods: Share of OCI attributable to associates (88,932) (8,450) - - Exchange difference on translation of foreign operations 8.9 (284,686) (1,377,367) - - Other comprehensive income for the year net of tax (373,618) (1,385,817) - - Total comprehensive income for the year 52,507 (342,903) 1,725,016 119,124 Total comprehensive income attributable to: Equity holders of the parent 479,565 353,754 1,725,016 119,124 Non-controlling interests (427,058) (696,657) - - 52,507 (342,903) 1,725,016 119,124

Statements of Comprehensive Income

34

NicozDiamondGolfers Plan


Statements of Financial PositionAS AT 31 DECEMBER 2016 Note Group Group Company Company

2016 2015 2016 2015ASSETS $ $ $ $

Non-current assets 21,207,684 14,207,202 13,565,208 5,970,128Property and equipment 9 1,575,589 1,458,202 906,319 770,732Intangible Asset 9.1 738,357 - 738,357 - Investment properties 10 14,325,706 9,762,841 6,973,000 1,870,000Investment in associates 8.6 622,030 1,015,138 544,242 469,468Investment in unquoted equities 11.1 17,493 228,881 17,493 17,493Investment held to maturity 11.3 2,708,182 430,000 2,708,182 430,000 Investment in subsidiaries 12.5 - - 1,524,962 1,994,075Other non-current assets 11.5 262,333 154,691 152,653 154,691 Deferred tax asset 13.1 957,994 1,032,225 - 263,669 Statutory deposit 14 - 125,224 - -

Current assets 19,996,931 27,121,353 14,031,578 18,963,882Insurance receivables 15 11,211,289 10,863,707 7,176,002 5,605,140Inventories 16 30,513 3,278,730 30,513 3,278,730Deferred acquisition costs 17 1,194,529 1,274,745 890,784 958,590Related party receivables 19.2 544,156 986,824 228,600 677,277 Other receivables and prepayments 15.1 567,851 530,248 487,736 306,780Short-term investments 11.2 1,594,793 1,699,291 1,250,613 744,582Cash and cash equivalents 20 4,853,800 8,487,808 3,967,330 7,392,783

Total assets 41,204,615 41,328,555 27,596,786 24,934,010

EQUITY AND LIABILITIES Equity attributable to owners of the parent 18,001,273 17,170,287 12,432,750 10,708,812 Share capital 21 2,833,525 2,833,525 2,833,525 2,833,525 Share premium 21 3,291,039 3,291,039 3,291,039 3,291,039 Retained earnings 12,514,434 11,456,638 6,186,738 4,461,722Foreign currency translation reserve (759,173) (892,290) - - Capital reserve - 30,394 - - Other reserves 121,448 450,981 121,448 122,526

Non-controlling interest 12.6 758,482 1,797,482 - -

Total equity 18,759,755 18,967,769 12,432,750 10,708,812

Non-current liabilities 431,964 349,286 143,509 41,479 Deferred tax liability 13.2 431,964 307,807 143,509 - Long term loans 22.1 - 41,479 - 41,479

Current liabilities 22,012,896 22,011,500 15,020,527 14,183,719 Insurance payables 23 3,715,811 2,870,013 3,403,246 2,458,304Short-term loans 22.2 - 53,429 - 53,429 Related party payables 19.2 248,436 972,475 62,652 447,488 Other payables and accruals 23 2,903,112 3,247,748 2,507,949 2,254,713Current tax payable 18 106,889 197,940 254,953 209,833 Insurance provisions 24 15,038,648 14,669,895 8,791,727 8,759,952

Total Liabilities 22,444,860 22,360,786 15,164,036 14,225,198

TOTAL EQUITY AND LIABILITIES 41,204,615 41,328,555 27,596,786 24,934,010

The fi nancial statements were approved and authorised for publication by the Board of Directors on 13 March 2017 and signed on its behalf by:

Chairman:

Director:

Date : 13 March 2017

35


Statements of Cash FlowsFOR THE YEAR ENDED 31 DECEMBER 2016 Note Group Group Company Company 2016 2015 2016 2015 $ $ $ $

Cash fl ows from operating activities

Cash receipts from customers 25 38,859,426 38,119,809 30,040,475 31,420,366

Cash paid to suppliers and employees 26 (37,433,314) (31,935,959) (28,969,012) (26,514,991)

Cash generated from operations 1,426,112 6,183,850 1,071,463 4,905,375

Finance costs (6,806) (23,454) - -

Income tax paid 18 (516,100) (557,630) (370,743) (241,501)

Net cash generated from operating activities 903,206 5,602,766 700,720 4,663,874

Cash fl ows from investing activities

Purchase of property and equipment (597,691) (429,410) (392,959) (321,700)

Purchase of intangible asset (667,952) - (667,952) -

Purchase of investments (9,802,592) (5,592,832) (9,057,837) (6,120,411)

Acquisition and development of investment properties 10 (1,670,681) (80,138) (1,670,681) (45,369)

Investment income 484,547 463,112 271,414 463,112

Disposal of investments 8,543,050 4,974,222 7,878,887 4,050,292

Proceeds from disposal of investment property - 152,894 - 152,894

Proceeds from disposal of property and equipment 5,363 22,020 5,363 22,020

Disposal of subsidiary 8.8 49,988 - 49,988 -

Acquisition of subsidiary, net of cash acquired 12.2 (447,488) (827,474) (447,488) -

Net cash utilised in investing activities (4,103,456) (1,317,606) (4,031,265) (1,799,162)

Cash fl ows from fi nancing activities

Dividend paid (57,434) (391,538) - (289,905)

Issue of shares - First Insurance Company of Uganda - 16,237 - -

Repayment of loan 22.3 (94,908) (53,891) (94,908) (53,891)

Net cash utilised in fi nancing activities (152,342) (429,192) (94,908) (343,796)

Net (decrease)/increase in cash and cash equivalents (3,352,592) 3,855,968 (3,425,453) 2,520,916

Cash and cash equivalents at beginning of year 8,487,808 4,940,056 7,392,783 4,871,867

Discontinued operations (182,280) - - -

Effects of exchange rate changes on cash and cash equivalents (99,136) (308,216) - -

Cash and cash equivalents as at 31 December 2016 20 4,853,800 8,487,808 3,967,330 7,392,783

36


FOR THE YEAR ENDED 31 DECEMBER 2016 Foreign

currency Non- Share Share Retained Capital translation Other controlling Total Notes capital premium earnings reserves reserves reserves Total interests equity

Group US$ US$ US$ US$ US$ US$ US$ US$ US$

Balance at 1 January 2015 2,833,525 3,291,039 10,745,548 30,394 (218,639) 388,258 17,070,125 799,247 17,869,372

Total comprehensive income for the year - - 1,027,405 - (673,651) - 353,754 (696,657) (342,903)

Profi t after tax for the year - - 1,027,405 - - - 1,027,405 15,509 1,042,914

Other comprehensive income net of taxes - - - - (673,651) - (673,651) (712,166) (1,385,817)

Issue of shares by subsidiary - - - - - - - 16,237 16,237

Dividend - - (285,990) - - - (285,990) (150,615) (436,605)

Acquisition of subsidiary - - - - - - - 1,808,493 1,808,493

Reduction of interest in subsidiary - - (113,208) - - - (113,208) 113,208 -

Increase of interest in subsidiary - - 92,431 - - - 92,431 (92,431) -

Share options - - - - - 53,175 53,175 - 53,175

Transfer to other reserves - - (9,548) - - 9,548 - - -

Balance at 31 December 2015 2,833,525 3,291,039 11,456,638 30,394 (892,290) 450,981 17,170,287 1,797,482 18,967,769

Profi t after tax for the year - - 698,947 - (219,382) - 479,565 (427,058) 52,507

Profi t after tax for the year - - 698,947 - - - 698,947 (272,822) 426,125

Other comprehensive income net of taxes - - - - (219,382) - (219,382) (154,236) (373,618)

Disposal of subsidiary - - 358,849 (30,394) 352,499 (328,455) 352,499 (523,727) (171,228)

Share options 21.2 - - - - - (1,078) (1,078) - (1,078)

Dividend paid - - - - - - - (88,215) (88,215)

Balance at 31 December 2016 2,833,525 3,291,039 12,514,434 - (759,173) 121,448 18,001,273 758,482 18,759,755

Statements of Changes in Equity

37


FOR THE YEAR ENDED 31 DECEMBER 2016 Foreign

currency Non- Share Share Retained Capital translation Other controlling Total

Notes capital premium earnings reserves reserves reserves Total interests equityCOMPANY US$ US$ US$ US$ US$ US$ US$ US$ US$

Balance at 1 January 2015 2,833,525 3,291,039 4,628,588 - - 69,351 10,822,503 - 10,822,503

Total comprehensive income for the year - - 119,124 - - - 119,124 - 119,124

Profi t after tax for the year - - 119,124 - - - 119,124 - 119,124

Share options - - - - - 53,175 53,175 - 53,175

Cash dividend - - (285,990) - - - (285,990) - (285,990)

Balance at 31 December 2015 2,833,525 3,291,039 4,461,722 - - 122,526 10,708,812 - 10,708,812

Total comprehensive income for the year - - 1,725,016 - - - 1,725,016 - 1,725,016

Profi t after tax for the year - - 1,725,016 - - - 1,725,016 - 1,725,016

Share options 21.2 - - - - - (1,078) (1,078) - (1,078)

Balance at 31 December 2016 2,833,525 3,291,039 6,186,738 - - 121,448 12,432,750 - 12,432,750

Notes

Transfer to retained earnings

Capital reserve and contingency reserves were transferred to retained earnings on the disposal of FICO.

Other Reserves

Other reserves pertain to the share option reserves of $121,448 ($122,526 - 2015). This relates to the NicozDiamond Insurance staff share option scheme and is a provision for

the share option costs to the company as they become available for exercising. Portion of other reserves pertaining to FICO was transferred to retained earnings on disposal.

Details of the share option scheme are shown under note 21.2.

Foreign currency translation reserve

This arose from translation of assets and liabilities of foreign operations (UGI, DGI and DS) into US dollars at the rate of exchange prevailing at the reporting date and their

statement of profi t or loss at exchange rates prevailing at the date of the transactions. Refer to note 8.8 for details of exchange rates applied.

Statements of Changes in Equity

38



1 CORPORATE INFORMATION

NicozDiamond Insurance Limited (the company) is a limited company

incorporated in Zimbabwe whose shares are publicly traded on the

Zimbabwe Stock Exchange. The principal activities of the company

and that of its subsidiaries is the provision of short term insurance

solutions and property investments.

The registered offi ce of the Company is: Insurance Centre, 2nd Floor

30 Samora Machel Avenue, Harare. The consolidated fi nancial

statements of NicozDiamond Insurance Limited for the period ended

31 December 2016 were authorised for issue in accordance with a

resolution passed by the Directors on 13 March 2017.

2 REPORTING CURRENCY

The consolidated fi nancial statements are presented in United

States Dollars (USD or US$) which is the company’s functional and

presentation currency and values are rounded to the nearest dollar.

3 BASIS OF PREPARATION

3.1 Statement of Compliance

The consolidated fi nancial statements have been prepared in

accordance with International Financial Reporting Standards, (IFRS),

as issued by the International Accounting Standards Board (IASB). The

consolidated fi nancial statements have been prepared on a historical

cost basis, except for investment properties, quoted equities and

quoted investments which have been measured at fair value.

The consolidated fi nancial statements provide comparative

information in respect of the previous period.

3.2 Going Concern

The fi nancial position of the company, its cash fl ow, liquidity position

and borrowing facilities are described on pages 33 to 89 In addition

notes 27 to 29 to the fi nancial statements include the company’s

objectives, policies and processes for managing its capital: its fi nancial

risk management objectives and its exposures to credit risk and

liquidity risk.

The company has considerable fi nancial resources together with

a diverse insurance book across different sectors and geographic

areas. As a consequence, the directors believe that the company

is well placed to manage its business risks successfully despite the

challenging economic outlook.

The directors have a reasonable expectation that the company has

adequate resources to continue in operational existence for the

foreseeable future. Thus they continue to adopt the going concern

basis of accounting in preparing the annual fi nancial statements.

3.3 Basis of Consolidation

The consolidated fi nancial statements comprise the fi nancial

statements of the Group and its subsidiaries as at 31 December 2016.

Control is achieved when the Group is exposed or has rights, to

variable returns from its involvement with the investee and has the

ability to affect those returns through its power over the investee.

Specifi cally, the Group controls an investee if, and only if, the Group

has:

• Power over the investee (i.e., existing rights that give it the current

ability to direct the relevant activities of the investee)

• Exposure, or rights, to variable returns from its involvement with

the investee

• The ability to use its power over the investee to affect its returns

Generally, there is a presumption that a majority of voting rights

result in control. To support this presumption and when the Group

has less than a majority of the voting or similar rights of an investee,

the Group considers all relevant facts and circumstances in assessing

whether it has power over an investee, including:

• The contractual arrangement with the other vote holders of the

investee

• Rights arising from other contractual arrangements

• The Group’s voting rights and potential voting rights

The Group reassesses whether or not it controls an investee if facts

and circumstances indicate that there are changes to one or more of

the three elements of control. Consolidation of a subsidiary begins

Notes to the Financial Statements

39


when the Group obtains control over the subsidiary and ceases when

the Group loses control of the subsidiary. Assets, liabilities, income

and expenses of a subsidiary acquired or disposed of during the year

are included in the consolidated fi nancial statements from the date

the Group gains control until the date when the Group ceases to

control the subsidiary.

Profi t or loss and each component of OCI are attributed to the owners

of the Group and to the non-controlling interests, even if this results in

the non-controlling interests having a defi cit balance. When necessary,

adjustments are made to the fi nancial statements of subsidiaries to

bring their accounting policies into line with the Group’s accounting

policies. All intra-group assets and liabilities, equity, income, expenses

and cash fl ows relating to transactions between members of the

Group are eliminated in full on consolidation.

A change in the ownership interest of a subsidiary, without a loss of

control, is accounted for as an equity transaction.

If the Group loses control over a subsidiary, it derecognises the

related assets (including goodwill), liabilities, non-controlling interest

and other components of equity, while any resultant gain or loss is

recognised in profi t or loss. Any investment retained is recognised at

fair value

3.4 Statement of changes in accounting policies and disclosures

The accounting policies adopted are consistent with those of the

previous fi nancial year. Amendments and improvements to existing

standards that became effective in the current year did not have a

material effect on the Group’s fi nancial statements.

Amendments to IAS 1: Disclosure Initiative

The amendments to IAS 1 Presentation of Financial Statements clarify,

rather than signifi cantly change, existing IAS 1 requirements.

The amendments clarify

_The materiality requirements

* That specifi c line items in the statements of profi t or loss and OCI

and the statement of fi nancial position may be disaggregated.

*That entities have fl exibility as to the order in which they present the

notes to the fi nancial statements

*That the share of OCI of associates and joint ventures accounted

for using equity method must be presented in aggregate as a

single line item, and classifi ed between those items that will or will

not be subsequently reclassifi ed to profi t or loss. Furthermore the

amendments clarify the requirements that apply when additional

subtotals are presented in the statement of fi nancial position and the

statement(s) of profi t or loss and other comprehensive income.

Amendments to IAS 27: Equity Method in Separate Financial

Statements

The amendments will allow an entity to use the equity method as

described in IAS 28 to account for its investments in subsidiaries, joint

ventures and associates in its separate fi nancial statements.

Therefore, an entity must account for these investments either:

• At Cost or,

• In accordance with IAS 39 or,

• Using the equity method.

The entity must apply the same accounting for each category of

investments.

The amendments must be applied retrospectively and are effective

for years beginning on or after 1 January 2016. The parent entity will

consider the amendment when it becomes effective.

Amendments to IAS 1: Disclosure Initiative

The amendments to IAS 1 Presentation of Financial Statements clarify,

rather than signifi cantly change, existing IAS 1 requirements.

The amendments clarify

_The materiality requirements

* That specifi c line items in the statements of profi t or loss and OCI

and the statement of fi nancial position may be disaggregated.

*That entities have fl exibility as to the order in which they present the

notes to the fi nancial statements

*That the share of OCI of associates and joint ventures accounted

for using equity method must be presented in aggregate as a

single line item, and classifi ed between those items that will or will

not be subsequently reclassifi ed to profi t or loss. Furthermore the

amendments clarify the requirements that apply when additional

subtotals are presented in the statement of fi nancial position and the

statement(s) of profi t or loss and other comprehensive income.

4 Summary of signifi cant accounting policies

The following is a summary of the Group’ accounting policies which

are consistent with those of the previous fi nancial year except where

stated.

Notes to the Financial Statements(continued)

40


4.1 Business Combinations

Business Combinations are accounted for using the acquisition

method. The cost of an acquisition is measured as the aggregate of

the consideration transferred, measured at acquisition date fair value

and the amount of any non-controlling interest in the acquiree. For

each business combination, the Group has an option to measure

any non-controlling interests in the acquiree either at fair value or

at the non-controlling interest’s proportionate share of the acquiree’s

identifi able net assets. Acquisition related costs are expensed as

incurred and included in administrative expenses.

When the Group acquires a business, it assesses the fi nancial assets

and liabilities assumed for appropriate classifi cation and designation

in accordance with the contractual terms, economic circumstances

and pertinent conditions at acquisition date. This includes the

separation of embedded derivatives in host contracts by the acquiree.

No reclassifi cation of insurance contracts is required for business

combination. Thus, insurance contracts are classifi ed on the basis

of the contractual terms and other factors at the inception of the

contract or modifi cation date.

If the business combination is achieved in stages, any previously held

equity interest is remeasured at its acquisition date fair value and any

resulting gain or loss is recognised in profi t or loss Any contingent

consideration is recognised at fair value at the acquisition date.

Subsequent measurement takes place at fair value with changes in

fair value recognised in profi t or loss.

Goodwill is initially measured at cost (being the excess of the aggregate

of the consideration transferred and the amount recognised for

non-controlling interests and any previous interest held over the net

identifi able assets acquired and liabilities assumed). If the fair value

of the net assets acquired is in excess of the aggregate consideration

transferred, the Group re-assesses whether it has correctly identifi ed

all of the assets acquired and all of the liabilities assumed and reviews

the procedures used to measure the amounts to be recognised at

the acquisition date. If the reassessment still results in an excess of

the fair value of net assets acquired over the aggregate consideration

transferred, then the gain is recognised in profi t or loss.

After initial recognition, goodwill is measured at cost less any

accumulated impairment losses. For the purposes of impairment

testing, goodwill acquired in a business combination is allocated

to an appropriate cash-generating unit (CGU) that is expected to

benefi t from the combination, irrespective of whether other assets or

liabilities of the acquiree are assigned to those units.

Where goodwill has been allocated to a cash-generating unit (CGU)

and part of the operation within that unit is disposed of, the goodwill

associated with the disposed operation is included in the carrying

amount of the operation when determining the gain or loss on

disposal. Goodwill disposed of in these circumstances is measured

based on the relative values of the disposed operation and the portion

of the cash-generating unit retained.

4.2 Impairment of non-fi nancial assets

The Group assesses at each reporting date whether there is an

indication that an asset may be impaired. If any such indication

exists, the Group estimates the asset’s recoverable amount. An

asset’s recoverable amount is the higher of it’s fair value less cost of

disposal and its value in use. When the carrying amount of an asset

exceeds its recoverable amount, the asset is considered impaired and

is written down to its recoverable amount.

In assessing value in use, the estimated future cash fl ows are

discounted to their present value using a pre-tax discount rate that

refl ects current market assessments of the time value of money and

the risks specifi c to the asset. In determining fair value less costs to

sell, recent market transactions are taken into account, if available.

If no such transactions can be identifi ed, an appropriate valuation

model is used. These calculations are corroborated by valuation

multiples, quoted share prices for publicly traded companies or other

available fair value indicators.

An impairment loss is recognised as an expense immediately.

Where an impairment loss subsequently reverses, the carrying

amount of the asset (cash generating unit) is increased to the revised

estimate of its recoverable amount, but so that the increased carrying

amount does not exceed the carrying amount that would have been

determined had no impairment loss been recognised for the asset

(cash- generating unit) in prior years. A reversal of an impairment loss

is recognised as income immediately.

4.3 Investment in Associates

An associate is an entity over which the Group has signifi cant

infl uence. Signifi cant infl uence is the power to participate in the


41


fi nancial and operating policy decisions of the investee, but is not

control or joint control over “those policies. The considerations made

in determining signifi cant infl uence are similar to those necessary to“

determine control over subsidiaries.

The Group’s investments in its associates are accounted for using the

equity method.

Under the equity method the investment in the associate is carried

in the statement of fi nancial position at cost plus post-acquisition

changes in the Group’s share of net assets of the associate. Any

changes in the Group’s share of profi ts are recorded in profi t and loss.

Goodwill relating to an associate is included in the carrying amount

of the investment and is neither amortised nor individually tested for

impairment.

The statement of profi t or loss refl ects the share of the results of

operations of the associates. This is profi t attributable to equity holders

of the associates and therefore is profi t after tax. Any change in OCI

of the associate is presented as part of the Group’s OCI. Where there

has been a change recognised directly in the equity of the associate,

the Group recognises its share of any changes, when applicable,

in the statement of changes in equity. Unrealised gains and losses

resulting from transactions between the Group and the associates are

eliminated to the extent of the interest in the associates.

The aggregate of the Group’s share of profi t or loss of an associate is

shown on the face of the statement of profi t or loss outside operating

profi t and represents profi t or loss after tax and non-controlling

interests in the subsidiaries of the associate.“The fi nancial statements

of the associates are prepared for the same reporting period as

the Group. Where necessary” adjustments are made to bring its

accounting policies in line with the Group’s.

Investments in associates at Company level are carried at cost.

After application of the equity method, the Group determines

whether it is necessary to recognise an additional impairment loss

on the Group’s investment in associates. The Group determines at

each reporting date, whether there is any objective evidence that the

investment in the associate is impaired. If this is the case, the Group

calculates the amount of impairment as the difference between

the recoverable amount of the associate and its carrying value and

recognises the amount in the ‘share of profi t of an associate’ in profi t

or loss.

Upon loss of signifi cant infl uence over the associate, the Group

measures and recognises any remaining investment at its fair value.

Any difference between the carrying amount of the associate upon

loss of signifi cant infl uence and the fair value of the remaining

investment and proceeds from disposal is recognised in profi t or loss.

4.4 Fair Value Measurement

The Group measures fi nancial instruments, such as investment in

equities and non fi nancial assets such as investment properties at fair

value at each reporting date.

The carrying amounts of the fi nancial assets and liabilities approximate

the fair values. Fair value is the price that would be received to

sell an asset or paid to transfer a liability in an orderly transaction

between market participants at the measurement date. The fair value

measurement is based on the presumption that the transaction to sell

the asset or transfer the liability takes place either:

In the principal market for the asset or liability, or

In the absence of a principal market, in the most advantageous

market for the asset or liability

The principal or the most advantageous market must be accessible to

by the Group.The fair value of an asset or a liability is measured using

the assumptions that market participants would use when pricing

the asset or liability assuming that market participants act in their

economic best interest.

A fair value measurement of non-fi nancial asset takes into account

a market participant’s ability to generate economic benefi ts by using

the asset in its highest and best use or by selling it to another market

participant that would use the asset in its highest and best use.

The Group uses valuation techniques that are appropriate in the

circumstances and for which suffi cient data are available to measure

fair value, maximising the use of relevant observable inputs and

minimising the use of unobservable units. The Investments

Committees, in conjunction with the external valuers, also compares

the change in the fair value of each asset and liability with relevant

external sources to determine whether the change is reasonable.

On an interim basis, the Investments Committees and the external

valuers present the valuation results to the Audit Committees and the

Group’s independent auditors. This includes a discussion of the major

assumptions used in the valuations.


42


For the purpose of fair value disclosures, the Group has determined

classes of assets and liabilities on the basis of the nature, characteristics

and risks of the asset or liability and the level of the fair value hierarchy,

as explained above.

4.5 Current versus non-current classifi cation

The Group presents assets and liabilities in the statement of fi nancial

position based on current/non-current classifi cation. An asset is

current when it is:

• Expected to be realised or intended to be sold or consumed in a

normal operating cycle

• Held primarily for the purpose of trading

• Expected to be realised within twelve months after the reporting

period, or

• Cash or cash equivalent unless restricted from being exchanged

or used to settle a liability for at least twelve months after the

reporting period.

All other assets are classifi ed as non-current. A liability is current

when:

• It is expected to be settled in normal operating cycle

• It is held primarily for the purpose of trading

• It is due to be settled within twelve months after the reporting

period, or

• There is no unconditional right to defer the settlement of the

liability for at least twelve months after the reporting period.

The Group classifi es all other liabilities as non-current.

Deferred tax assets and liabilities are classifi ed as non-current assets

and liabilities.

4.6 Financial assets

Initial recognition and measurement

Financial assets within the scope of IAS 39 are classifi ed as fi nancial

assets at fair value through profi t or loss and loans and receivables.

All fi nancial assets are recognised initially at fair value plus transaction

costs, except in the case of fi nancial assets recorded at fair value

through profi t or loss.

The Group’s fi nancial assets include available for sale fi nancial assets,

investments in unquoted equities, investments held to maturity,

statutory deposits, short term investments and cash and cash

equivalents.

Subsequent Measurement

For purposes of subsequent measurement, fi nancial assets are

classifi ed in four categories:

• Financial assets at fair value through profi t or loss

• Loans and receivables

• Held-to-maturity investments

• Available-for-sale (AFS) fi nancial assets

Financial assets at fair value through profi t and loss

Financial assets at fair value through profi t and loss are those fi nancial

assets held for trading or fi nancial assets designated as such upon

initial recognition.

Financial assets are classifi ed as held for trading if they are acquired

for the purpose of selling in the near term.


43


These fi nancial assets are initially recorded at fair value. Subsequent

to initial recognition , these fi nancial assets are measured at fair value.

Fair value adjustments and realised gains and losses are recognised in

profi t or loss. Derivatives embedded in host contracts are accounted

for as separate derivatives and recorded at fair value if their economic

characteristics and risks are not closely related to those of the host

contracts and the host contracts are not held for trading or designated

at fair value through profi t or loss. These embedded derivatives are

measured at fair value with changes in fair value recognised in profi t

or loss. Reassessment only occurs if there is either a change in the

terms of the contract that signifi cantly modifi es the cash fl ows that

would otherwise be required or a reclassifi cation of a fi nancial asset

out of the fair value through profi t or loss category.

Loans and other receivables

These are non-derivative fi nancial assets with fi xed or determinable

payments that are not quoted in an active market. These investments

are initially recognised at cost, being the fair value of the consideration

paid for the acquisition of the investment. All transaction costs

directly attributable to the acquisition are also included in the cost of

the investment. After initial measurement, loans and receivables are

measured at amortised cost using the effective interest rate method

(EIR) less impairment.

Gains and losses are recognised in profi t or loss when investments are

derecognised or impaired as well as through the amortisation process.

AFS fi nancial assets

AFS fi nancial assets include equity investments and debt securities.

Equity investments classifi ed as AFS are those that are neither classifi ed

as held for trading nor designated at fair value through profi t or loss.

Debt securities in this category are those that are intended to be held

for an indefi nite period of time and that may be sold in response to

needs for liquidity or in response to changes in market conditions.

After initial measurement, AFS fi nancial assets are subsequently

measured at fair value with unrealised gains or losses recognised in OCI

and credited to the AFS reserve until the investment is derecognised,

at which time, the cumulative gain or loss is recognised in other

operating income, or the investment is determined to be impaired,

when the cumulative loss is reclassifi ed from the AFS reserve to the

statement of profi t or loss in fi nance costs. Interest earned whilst

holding AFS fi nancial assets is reported as interest income using the

EIR method.

The Group evaluates whether the ability and intention to sell its AFS

fi nancial assets in the near term is still appropriate. When, in rare

circumstances, the Group is unable to trade these fi nancial assets due

to inactive markets, the Group may elect to reclassify these fi nancial

assets if management has the ability and intention to hold the assets

for the foreseeable future or until maturity

For a fi nancial asset reclassifi ed from the AFS category, the fair value

at the date of reclassifi cation becomes its new amortised cost and

any previous gain or loss on the asset that has been recognised in

equity is amortised to profi t or loss over the remaining life of the

investment using the EIR. Any difference between the new amortised

cost and the maturity amount is also amortised over the remaining life

of the asset using the EIR. If the asset is ubsequently determined to

be impaired, then the amount recorded in equity is reclassifi ed to the

statement of profi t or loss.

Revenue is recognised when the Group’s right to receive the payment

is established, which is generally when shareholders approve the

dividend.

Held-to-maturity investments

Non-derivative fi nancial assets with fi xed or determinable payments

and fi xed maturities are classifi ed as held to maturity when the Group

has the positive intention and ability to hold them to maturity. After

initial measurement, held to maturity investments are measured at

amortised cost using the EIR, less impairment.

Amortised cost is calculated by taking into account any discount or

premium on acquisition and fees or costs that are an integral part

of the EIR. The EIR amortisation is included as fi nance income in the

statement of profi t or loss. The losses arising from impairment are

recognised in profi t or loss as fi nance costs. The held to maturity

investments are refl ected under note 11.3.


44


Derecognition of fi nancial assets

A fi nancial asset is derecognised when:

- The right to receive cash fl ows from the asset has expired or

- The Group has transferred substantially all the risks and rewards

of the asset or the Group has transferred control of the asset.

When the Group has transferred its rights to receive cash fl ows

from an asset or has entered into a pass-through arrangement, it

evaluates if and to what extent it has retained the risks and rewards of

ownership. When it has neither transferred nor retained substantially

all of the risks and rewards of the asset , nor transferred control of the

asset, the Group continues to recognise the transferred asset to the

extent of the Group’s continuing involvement. In that case the Group

also recognises an associated liability. The transferred asset and the

associated liability are measured on a basis that refl ects the rights and

obligation that the Group has retained.

Impairment of fi nancial assetsThe Group assesses at each reporting

date whether there is any objective evidence that a fi nancial asset

or group of fi nancial assets is impaired. A fi nancial asset or group

of fi nancial assets is deemed to be impaired if, and only if, there is

objective evidence of impairment as a result of one or more events

that has occurred after the initial recognition of the asset and that

loss event has an impact on the estimated future cash fl ows of the

fi nancial asset or the group of fi nancial assets that can be reliably

estimated.

Evidence of impairment may include indications that the debtors or a

group of debtors is experiencing signifi cant fi nancial diffi culty, default

or delinquency in interest or principal payments, the probability that

they will enter bankruptcy or other fi nancial reorganisation.

For fi nancial assets carried at amortised cost, if there is objective

evidence that an impairment loss has been incurred, the amount of

the loss is measured as the difference between the asset’s carrying

amount and the present value of estimated future cash fl ows

(excluding future expected credit losses that have not yet been

incurred). The present value of the estimated future cash fl ows is

discounted at the fi nancial asset’s original effective interest rate. If a

loan has a variable interest rate, the discount rate for measuring any

impairment loss is the current EIR.

The carrying amount of the asset is reduced and the loss is recognised

in the statement of profi t and loss. Interest income (recorded as

fi nance income in the statement of profi t or loss) continues to be

accrued on the reduced carrying amount and is accrued using the rate

of interest used to discount the future cash fl ows for the purpose of

measuring the impairment loss. Loans together with the associated

allowance are written off when there is no realistic prospect of future

recovery and all collateral has been realised or has been transferred

to the Group. If, in a subsequent year, the amount of the estimated

impairment loss increases or decreases because of an event occurring

after the impairment was recognised, the previously recognised

impairment loss is increased or reduced by adjusting the allowance

account. If a write-off is later recovered, the recovery is credited to

fi nance costs in the statement of profi t or loss.

4.7 Financial Liabilities

Initial recognition and measurement

All fi nancial liabilities are recognised initially at fair value and, in the

case of loans and borrowings, minus directly attributable transaction

costs. Financial liabilities include other payables and accruals, short

and long term loans and related party payables, which are classifi ed

as loans and borrowings.

Subsequent Measurement

The measurement of fi nancial liabilities depends on their classifi cation

as follows:

Financial liabilities at fair value through profi t or loss.

Financial liabilities at fair value through profi t or loss include fi nancial

liabilities held for trading and fi nancial liabilities designated upon

initial recognition as at fair value through profi t or loss. Financial

liabilities are classifi ed as held for trading if they are incurred for the

purpose of repurchasing in the near term. This category also includes

derivative fi nancial instruments entered into by the Group that are

not designated as hedging instruments in hedge relationships as

defi ned by IAS 39. Separated embedded derivatives are also classifi ed

as held for trading unless they are designated as effective hedging

instruments.

Gains or losses on liabilities held for trading are recognised in the

statement of profi t or loss. Financial liabilities designated upon initial

recognition at fair value through profi t or loss are designated at


45


the initial date of recognition, and only if the criteria in IAS 39 are

satisfi ed. The Group has not designated any fi nancial liability as at fair

value through profi t or loss.

Loans and borrowings

After initial recognition, interest bearing loans and borrowings are

subsequently measured at amortised cost using the effective interest

rate method. Gains and losses are recognised in the profi t or loss

when the liabilities are derecognised, as well as through the effective

interest rate amortisation process. Amortisation cost is calculated by

taking into account any discount or premium on acquisition and fees

or costs that are an integral part of the effective interest rate.

Derecognition of fi nancial liabilities

A fi nancial liability is derecognised when the obligations under

the liability is discharged or cancelled or expires. When an existing

fi nancial liability is replaced by another from the same lender or

substantially modifi ed, such an exchange or modifi cation is treated

as derecognition of the original liability and the recognition of a new

liability. The differences in terms of carrying amounts is recognised in

profi t or loss.

Offsetting of fi nancial instruments

Financial assets and fi nancial liabilities are off set and the net amount

is reported in the consolidated statement of fi nancial position if there

is a currently enforceable legal right to offset the recognised amounts

and there is an intention to settle on a net basis or to realise the

assets and settle the liabilities simultaneously.

4.8 Reinsurance ceded to reinsurance counterparties

The Group cedes insurance risk in the normal course of business

for all of its businesses. Reinsurance assets represent balances due

from reinsurance companies. Amounts recoverable from reinsurers

are estimated in a manner consistent with the outstanding claims

provisions, settled claims associated with the reinsurer policies and

in accordance with the related reinsurance contract. The reinsurance

receivables/payables are measured at fair value received/paid or

receivable/payable.

Reinsurance assets are reviewed for impairment at each reporting

date or more frequently when an indication of impairment arises

during the reporting year. Impairment occurs when there is objective

evidence as a result of an event that occurred after initial recognition

of the reinsurance asset that the Group may not receive all outstanding

amounts due under the terms of the contract and the event has a

reliably measurable impact on the amounts that the Group will receive

from the reinsurer. The impairment loss is recorded in profi t or loss.

The Group also assumes reinsurance risk in the normal course of

business for non life insurance contracts where applicable. Premiums

and claims are recognised as revenue or expenses in the same manner

as they would be if the reinsurance were considered direct business,

taking into account the product classifi cation of the reinsured

business. Reinsurance liabilities represent balances due to reinsurance

companies. Amounts payable are estimated in a manner consistent

with the related reinsurance contract.Premiums and claims are

presented on a gross basis for both ceded and assumed reinsurance.

Reinsurance assets or liabilities are derecognised when the contractual

rights are extinguished or expire or when the contract is transferred

to another party.

Ceded reinsurance arrangements do not relieve the Group from its

obligation to policyholders.

Gains and losses on buying reinsurance are recognised in profi t or loss

immediately on the date of purchase and are not amortised.

4.9 Reinsurance assumed

The Group also assumes reinsurance risk in the normal course of

business applicable.Premiums and claims on assumed reinsurance

are recognised as revenue or expenses in the same manner as they

would be if the reinsurance were considered direct business, taking

into account the product classifi cation of the reinsured business.

Reinsurance liabilities represent balances due to insurance companies.

Amounts payable are estimated in a manner consistent with the

related reinsurance contract.Premiums and claims are presented on

a gross basis for both ceded and assumed reinsurance. Reinsurance

assets or liabilities are derecognised when the contractual rights are

extinguished or expire or when the contract is transferred to another

party.

Reinsurance contracts that do not transfer signifi cant insurance risk

are accounted for directly through the statement of fi nancial position.

These are deposit assets or fi nancial liabilities that are recognised

based on the consideration paid or received less any explicit identifi ed

premiums or fees to be retained by the reinsured. Investment income

on these contracts is accounted for using the EIR method when

accrued.


46


4.10 Insurance Receivables

Insurance receivables are recognised when due and measured on

initial recognition at the fair value of the consideration received or

receivable.

The carrying value of insurance receivables is reviewed for impairment

whenever events or circumstances indicate that the carrying amount

may not be recoverable, with the impairment loss recorded in profi t

or loss.

Insurance receivables are derecognised when the derecognition

criteria for fi nancial assets as described in note 4.6 has been met.

4.11 Cash and cash equivalents

Cash and short-term deposits in the statement of fi nancial position

comprise cash at banks and on hand and short-term deposits with a

maturity of three months or less.

The short-term investments, with a maturity of three months or less

are readily convertible to a known amount of cash with insignifi cant

risk of change in value.

For the purposes of the consolidated statement of cash fl ows, cash

and cash equivalents consists of cash and short-term deposits as

defi ned above, net of outstanding bank overdrafts.

4.12 Taxes

Current income tax

Current income tax assets and liabilities for the current period are

measured at the amount expected to be recovered from or paid to

the taxation authorities. The tax rates and tax laws used to compute

the amount are those that are enacted or substantively enacted by

the reporting date in the countries where the Group operates and

generates taxable income. Current income tax assets and liabilities

also include adjustments for tax expected to be payable or recoverable

in respect of previous periods.

Current income tax relating to items recognised directly in equity

or other comprehensive income is recognised in equity or other

comprehensive income and not in profi t or loss.

Withholding tax on dividend is taxed at source.

Management periodically evaluates positions taken in the tax returns

with respect to situations in which applicable tax regulations are

subject to interpretation and establishes provisions where appropriate.

Deferred tax

Deferred tax is provided using the liability method on temporary

differences at the reporting date between the tax bases of assets and

liabilities and their carrying amounts for fi nancial reporting purposes

at the reporting date.

Deferred tax liabilities are recognised for all taxable temporary

differences, except:

• When the deferred tax liability arises from the initial recognition of

goodwill or an asset or liability in a transaction that is not a business

combination and, at the time of the transaction, affects neither the

accounting profi t nor taxable profi t or loss

• In respect of taxable temporary differences associated with

investments in subsidiaries, associates and interests in joint

arrangements, when the timing of the reversal of the temporary

differences can be controlled and it is probable that the temporary

differences will not reverse in the foreseeable future Deferred tax

assets are recognised for all deductible temporary differences,

the carry forward of unused tax credits and any unused tax losses.

Deferred tax assets are recognised to the extent that it is probable

that taxable profi t will be available against which the deductible

temporary differences, and the carry forward of unused tax credits

and unused tax losses can be utilised, except:

• When the deferred tax asset relating to the deductible temporary

difference arises from the initial recognition of an asset or liability in a


47


transaction that is not a business combination and, at the time of the

transaction, affects neither the accounting profi t nor taxable profi t or

loss

• In respect of deductible temporary differences associated

with investments in subsidiaries, associates and interests in joint

arrangements, deferred tax assets are recognised only to the extent

that it is probable that the temporary differences will reverse in the

foreseeable future and taxable profi t will be available against which

the temporary differences can be utilised

The carrying amount of deferred tax assets is reviewed at each

reporting date and reduced to the extent that it is no longer probable

that suffi cient taxable profi t will be available to allow all or part of the

deferred tax asset to be utilised. Unrecognised deferred tax assets are

re-assessed at each reporting date and are recognised to the extent

that it has become probable that future taxable profi ts will allow the

deferred tax asset to be recovered. Deferred tax assets and liabilities

are measured at the tax rates that are expected to apply in the year

when the asset is realised or the liability is settled, based on tax rates

(and tax laws) that have been enacted or substantively enacted at the

reporting date.

Deferred tax relating to items recognised outside profi t or loss is

recognised outside profi t or loss. Deferred tax items are recognised

in correlation to the underlying transaction either in OCI or directly in

equity.

Deferred tax assets and deferred tax liabilities are offset if a legally

enforceable right exists to set off currenttax assets against current tax

liabilities and the deferred taxes relate to the same taxable entity and

the same taxation authority.

Tax benefi ts acquired as part of a business combination, but not

satisfying the criteria for separate recognition at that date, are

recognised subsequently if new information about facts and

circumstances change. The adjustment is either treated as a reduction

in goodwill (as long as it does not exceed goodwill) if it was incurred

during the measurement period or recognised in profi t or loss.

4.13 Leases

The determination of whether an arrangement is a lease or contains

a lease is based on the substance of the arrangement at the inception

date, and requires an assessment of whether the fulfi llment of

arrangement is dependent on the use of a specifi c asset or assets, and

the arrangement conveys a right to use the asset even if that right is

not explicitly specifi ed in an arrangement.

Group as a lessee

Finance leases, which transfer to the Group substantially all the risks

and benefi ts incidental to ownership of the leased item, are capitalised

at the inception of the lease at the fair value of the leased property

or, if lower, at the present value of the minimum lease payments.

Lease payments are apportioned between the fi nance charges and

reduction of the lease liability so as to achieve a constant rate of

interest on the remaining balance of the liability. Finance charges are

refl ected in profi t or loss.

Capitalised leased assets are depreciated over the shorter of the

estimated useful life of the asset and the lease term, if there is no

reasonable certainty that the Group will obtain ownership by the end

of the lease term. Operating lease payments are recognised as an

expense in profi t or loss on a straight line basis over the lease term.

Group as a lessor

Leases where the group does not transfer substantially all the risks

and benefi ts of ownership of the asset are classifi ed as operating

leases.

Initial direct costs incurred in negotiating an operating lease are added

to the carrying amount of the leased asset and recognised over the

lease term on the same basis as rental income. Contingent rents are

recognised as revenue in the period in which they are earned.

4.14 Foreign Currency translation

The Group’s consolidated fi nancial statements are presented in

USD which is also the parent company’s functional currency. Each

company in the Group determines its own functional currency and

items included in the fi nancial statements of each entity are measured

using that functional currency.

(i) Transactions and balances

Transactions in foreign currencies are initially recorded by the Group

entities at their respective functional currency spot rates at the date

the transaction fi rst qualifi es for recognition.


48


Monetary assets and liabilities denominated in foreign currencies are

translated at the functional currency spot rate of exchange ruling at

the reporting date.

Non-monetary items that are measured in terms of historical cost

in foreign currency are translated using the exchange rate as at the

date of initial transaction and are not subsequently restated. Non-

monetary items measured at their fair value in a foreign currency are

translated using the exchange rates at the date when their fair value

was determined.

(ii) Group Companies

On consolidation, the assets and liabilities of foreign operations are

translated into USD at the rate of exchange prevailing at the reporting

date and their statements of comprehensive income are translated at

exchange rates prevailing at the date of the transaction. The exchange

differences arising on translation for consolidation are recognised in

other comprehensive income. On disposal of a foreign operation, the

component of other comprehensive income relating to that particular

foreign operation is recognised in profi t or loss.

Any goodwill arising on the acquisition of a foreign operation and any

fair value adjustments to the carrying amounts of assets and liabilities

arising on the acquisition are treated as assets and liabilities of the

foreign operation and translated at the spot rate of exchange at the

reporting date.

4.15 Insurance contract liabilities

Insurance contract liabilities are recognised when contracts are

entered into and premiums are charged. These liabilities are known

as outstanding claim provision, which are based on the estimated

ultimate cost of claims incurred but not settled at the reporting date,

whether reported or not together with related claims handling costs

and reduction for the expected value of salvage and other recoveries.

Delays can be experienced in the notifi cation and settlement of

certain types of claims, therefore the ultimate cost of which cannot

be known with certainty at the fi nancial reporting date. Claims

incurred but not reported are claims arising out of events which have

occurred by the reporting date but have not been reported. These are

estimated at 5% of net written premium.

The liability is not discounted for the time value of money and

include provision of earned premiums, unexpired risk and inadequate

premium levels. The liability is derecognised when the contract

expires, is discharged or cancelled. No provision for equalisation

or catastrophe reserves is recognised. The provision for unearned

premiums represents that portion of premiums received or receivable

that relates to risks that have not yet expired at the reporting

date. The provision is recognised when contracts are entered into

and premiums are charged, and is brought to account as premium

income over the term of the contract in accordance with the pattern

of insurance service provided under the contract.

Liability Adequacy Test

At each reporting date, the Group reviews its unexpired risk and a

liability adequacy test is performed. In performing these tests, current

best estimates of future contractual cash fl ows and claims handling

administration costs are used. Any defi ciency is immediately charged

to the profi t or loss initially by writing off deferred acquisition cost

(DAC) and by subsequently establishing a provision for losses arising

from liability adequacy tests (the unexpired risk provision). Any DAC

written off as a result of this test is not reinstated.


49



Insurance payables

Insurance payables are recognised when due and measured on initial

recognition at the fair value of the consideration received less directly

attributable transaction costs. Subsequent to initial recognition, they

are measured at amortised costs using the effective interest rate

method.

Derecognition insurance payables

Insurance payables are derecognised when the obligation under the

liability is settled, cancelled or expired.

4.16 Pensions and other post employment benefi ts

The Group operates a defi ned contributions pension plan administered

by Fidelity Life Assurance. The Group and employees contribute

7.5% and 16.5% of the pensionable salaries respectively. The assets

of the fund are held in separate trustee administered fund.

In addition the National Social Security Scheme was introduced on 1

October 1994 and with effect from that date all employees became

members of the scheme to which both employees and the company

contribute. The company’s obligations under the scheme are limited

to specifi c contributions as legislated from time to time and are

presently 6% of pensionable emoluments. Refer to note 8.4 for the

fi gures.

4.17 Provisions

Provisions are recognised when the Group has a present obligation

(legal or constructive) as a result of a past event, and it is probable

that an outfl ow of resources embodying economic benefi ts will be

required to settle the obligation and a reliable estimate can be made

of the amount of the obligation. Where the Group expects some or

all of a provision to be reimbursed, the reimbursement is recognised

as a separate asset, but only when the reimbursement is virtually

certain. The expense relating to any provision is presented in the

profi t or loss net of any reimbursement.

If the effect of the time value of money is material, provisions are

discounted using a current pre-tax rate that refl ects, when appropriate,

the risks specifi c to the liability. When discounting is used, the increase

in the provision due to the passage of time is recognised as a fi nance

cost.

Onerous Contracts

A provision is recognised for onerous contracts in which the

unavoidable costs of meeting the obligations under the contract

exceed the expected economic benefi ts expected to be received

under it. The unavoidable costs refl ects the least net cost of exiting

the contract, which is the lower of the cost of fulfi lling it and any

compensation or penalties arising from failure to fulfi ll it.

4.18 Share-based transactions

Share Options

Employees (including senior executives) of the company receive

remuneration in the form of share options, whereby employees are

granted share options on an annual basis depending on their years

of service and prior year individual performance. The share options

are exercisable over a period of time as specifi ed in the share option

rules and are exercised at the grant price. Options are cancelled on

expiration and the company will be absolved of all obligations relating

to the expired share options.Shares from the share options are issued

as and when they are exercised.

Equity-settled transactions

The cost of equity-settled transaction with employees is measured by

reference to the fair value at the date on which they are granted. The

fair value is determined as the market value of the equities.

The cost of equity-settled transactions is recognised, together with

a corresponding increase in equity, over the period in which the

performance and/or service conditions are fulfi lled, ending on the

date on which the relevant employees become fully entitled to the

award (“the vesting date”)

Service and non-market performance conditions are not taken into

account when determining the grant date fair value of awards, but

the likelihood of the conditions being met is assessed as part of the

Group’s best estimate of the number of equity instruments that will

ultimately vest. Market performance conditions are refl ected within

the grant date fair value. Any other conditions attached to an award,

but without an associated service requirement, are considered to be

non-vesting conditions. Non-vesting conditions are refl ected in the

fair value of an award and lead to an immediate expensing of an

award unless there are also service and/or performance conditions.


50


The cumulative expense recognised for equity-settled transactions

at each reporting date until the vesting period refl ects the extent to

which the vesting period has expired and the Group’s best estimate

of the number of equity instruments that will ultimately vest. The

profi t or loss charge or credit for a period represents the movement

in cumulative expense recognised as at the beginning and end of the

period.

No expense is recognised for awards that do not ultimately vest,

except for awards where vesting is conditional upon a market

condition, which are treated as vesting irrespective of whether or not

market condition is satisfi ed, provided that all other performance and/

or service conditions are satisfi ed.

When the terms of an equity-settled award are modifi ed, the

minimum expense recognised is the expense as if the terms had not

yet been modifi ed. An additional expense is recognised immediately.

However, if a new award is substituted for the cancelled award, and

designated as a replacement award on the date that it is granted, the

cancelled and new awards are treated as if they were a modifi cation

of the original award, as described in the previous paragraph. The

dilutive effect of outstanding options is refl ected as additional share

dilution in the computation of diluted earnings per share, see note

number 6.

4.19 Equity movements

Ordinary share capital

The Group has issued ordinary shares that are classifi ed as equity

instruments. Incremental external costs that are directly attributable

to the issue of these shares are recognised in equity net of tax.

Dividend on ordinary share capital

Dividend on ordinary shares are recognised as a liability and deducted

from equity when they are approved by the Group’s shareholders.

Dividend for the year that are approved after the reporting date are

dealt with as an non-adjusting event after the reporting date.

4.20 Revenue Recognition

Revenue is recognised to the extent that it is probable that the

economic benefi ts will fl ow to the Group and the revenue can be

reliably measured, regardless of when the payment is being made.

4.20.1 Gross premiums

Gross premium written for general insurance comprise the total

premiums receivable for the whole period of cover provided by

contracts entered into during the accounting year. They are recognised

on the date on which the policy commences. Premiums include any

adjustments arising in the accounting period for premiums receivable

in respect of business written in prior accounting periods. Premiums

collected by intermediaries, but not yet received, are assessed based

on estimates from underwriting or past experience and are included

in premiums written.

Unearned premiums are those proportions of premiums written in a

year that relate to periods of risk after the reporting date. Unearned

premiums are calculated on a daily pro-rata basis. The proportion

attributable to subsequent periods is deferred as a provision for

unearned premiums.

4.20.2 Investment Income

(a) Interest Income

Revenue is recognised as interest accrued (using effective interest

rate), that is the rate that exactly discounts estimated future cash

receipts through the expected life of the fi nancial instrument to the

net carrying amount of the fi nancial asset.

(b) Dividend

Investment income also includes dividends when the right to receive

payment is established. For listed securities, this is the date the

security is listed as ex-dividend.

(c) Realised gains and losses

Realised gains and losses recorded in profi t or loss on investments

include gains and losses on fi nancial assets and investment properties.

Gains and losses on the sale of investments are calculated as the

difference between net sales proceeds and the original or amortised

cost and are recorded on occurrence of the sale transaction.

(d) Rental Income

Rental income arising from operating leases on investment properties

is accounted for on a straight line basis over the lease terms.

4.20.3 Fees and Commission

Commission income is only from ceded Reinsurance. The fees are

recognised as revenue per policy over the period of the policy.


51


4.21 Benefi ts, claims and expenses recognition

4.21.1 Gross benefi ts and claims

General insurance include all claims occurring during the year, whether

reported or not, related internal and external claims handling costs

that are directly related to the processing and settlement of claims,

a reduction for the value of salvage and other recoveries and any

adjustments to claims outstanding from previous years.

4.21.2 Finance cost

Interest paid is recognised in profi t or loss as it accrues and is

calculated by using the effective interest rate method. Accrued

interest is included within the carrying value of the interest bearing

fi nancial liability.

4.21.3 Acquisition costs

Acquisition costs, which represent commissions and other related

expenses, are deferred over the period in which the related premiums

are earned and are recognised in full through profi t or loss for the

period they relate to. An impairment review is performed at each

reporting date or more frequently when an indication of impairment

arises. When the recoverable amount is less than the carrying value

an impairments loss is recognised in profi t or loss. The recoverable

amount would be assessed on applicable premium deferred. Deferred

acquisition costs are also considered in the liability adequacy test for

each reporting period.

4.21.4 Reinsurance Claims

Amounts recoverable from reinsurers on claims incurred or

outstanding claims are shown as a deduction to the gross benefi ts.

4.22 Property and Equipment

Property including owner occupied properties is stated at cost,

excluding the cost of day to day servicing, less accumulated

depreciation and and accumulated impairment losses. Replacement

or major inspection costs are capitalised when incurred and if it is

probable that future economic benefi ts associated with the item will

fl ow to the entity and the cost of the item can be reliably measured.

Equipment is also stated at cost less accumulated depreciation and

impairment. Depreciation is calculated on a straight line method to

write off the depreciable amounts (costs less residual value) of each

asset over its estimated useful life as follows:

Land and Buildings N/A

Computers and equipment 5 years

Offi ce equipment 10 years

Motor Vehicles 5 years

Furniture and fi ttings 10 years

The assets’ residual values, useful lives and method of depreciation are

reviewed and prospectively adjusted if appropriate at each reporting

date.

An item of property and equipment is derecognised upon disposal or

when no further future economic benefi ts are expected from its use

or disposal. Any gain or loss arising on derecognition of the asset is

included in profi t or loss in the year the asset is derecognised.

4.23 Intangible Assets

Intangible assets acquired separately are measured on initial

recognition at cost. The cost of intangible assets acquired in a

business combination is their fair value at the date of acquisition.

Following initial recognition, intangible assets are carried at cost less

any accumulated amortisation and accumulated impairment losses.

Internally generated intangibles, excluding capitalised development

costs, are not capitalised and the related expenditure is refl ected

in profi t or loss in the period in which the expenditure is incurred.

The useful lives of intangible assets are assessed as either fi nite or

indefi nite.

Intangible assets with fi nite lives are amortised over the useful

economic life and assessed for impairment whenever there is an

indication that the intangible asset may be impaired. The amortisation

period and the amortisation method for an intangible asset with a

fi nite useful life are reviewed at least at the end of each reporting

period. Changes in the expected useful life or the expected pattern

of consumption of future economic benefi ts embodied in the asset

are considered to modify the amortisation period or method, as

appropriate, and are treated as changes in accounting estimates.

The amortisation expense on intangible assets with fi nite lives is

recognised in the statement of profi t or loss in the expense category

that is consistent with the function of the intangible assets.

Intangible assets with indefi nite useful lives are not amortised, but

are tested for impairment annually, either individually or at the cash-


52


generating unit level. The assessment of indefi nite life is reviewed

annually to determine whether the indefi nite life continues to be

supportable. If not, the change in useful life from indefi nite to fi nite is

made on a prospective basis.

Gains or losses arising from derecognition of an intangible asset are

measured as the difference between the net disposal proceeds and

the carrying amount of the asset and are recognised in the statement

of profi t or loss when the asset is derecognised.

Intangible assets with a defi nite useful live are amortised on a straight

line basis over the estimated useful life of seven years.

4.24 Investment Properties

Property held for long term rental yields that is not occupied by the

Group companies is classifi ed as investment property. Investment

property comprises freehold land and buildings.

Property located on land that is held under operating lease is classifi ed

as investment property as long as its held for long term rental yields

and is not occupied by the Group companies. The land is initially

recognised at cost. The property is carried at fair value after initial

recognition.

Investment properties are initially measured at cost, including

transaction costs. The carrying amount includes the cost of replacing

part of an existing investment property at the time that cost is

incurred if the recognition criteria are met; and excludes the costs of

day-to-day servicing of an investment property. Subsequent to initial

recognition, investment properties are measured at fair value, which

refl ects market conditions at the reporting date. Gains or losses

arising from changes in the fair values of investment properties are

included in profi t or loss in the year in which they arise. Fair value is

determined annually by an accredited external independent valuer.

Investment property that is being redeveloped for continuing use as

investment property, or for which the market has become less active,

continues to be measured at fair value. Changes in fair values are

recorded in profi t or loss. Fair value is based on an active market,

adjusted, if necessary, for any difference in the nature, location or

condition of the specifi c asset.

Transfers are made to or from investment property only when there

is a change in use. For a transfer from investment property to owner

occupied property, the deemed cost for subsequent accounting

is the fair value at the date of change in use. If owner occupied

property becomes an investment property, the Group accounts for

such property in accordance with the policy stated under property

and equipment up to the date of change in use.

For a transfer from inventory to investment property, the deemed cost

for subsequent accounting is the fair value at the date of change in

use.

If owner occupied property becomes an investment property, the

Group accounts for such property in accordance with the policy

stated under property and equipment up to the date of change in

use.

Investment properties are derecognised when either they have been

disposed of or when the investment is permanently withdrawn from

use and no future economic benefi t is expected from its disposal.

Any gains or losses on the retirement or disposal of an investment

property are recognised in profi t or loss in the year of retirement or

disposal.

4.25 Inventories

The inventories are made up of:

a) stationery, other offi ce consumables and are valued at the lower of

cost and net realisable value.

b) costs in relation to an investment property development.

Inventories are valued at the lower of cost (using the First-In-First-Out

method) and net realisable value. Net realisable value is the estimated

selling price in the ordinary course of business, less estimated costs of

completion and the estimated costs necessary to make the sale.

5 KEY JUDGEMENTS AND SOURCES OF ESTIMATION

UNCERTAINITY

The preparation of the consolidated fi nancial statements requires

management to make judgments, estimates and assumptions that

affect the reported amounts of revenues, expenses, assets and

liabilities, and the disclosure of contingent liabilities, at the reporting

date. However, uncertainty about these assumptions and estimates

could result in outcomes that could require a material adjustment

to the carrying amount of the asset or liability affected in the future

periods.


53


Judgments

In the process of applying the Group’s accounting policies,

management has made the following judgements, which have the

most signifi cant effect on the amounts recognised in the consolidated

fi nancial statements:

(a) Operating lease commitments – Group as lessor

The Group has entered into commercial property leases on its

investment property portfolio. The Group has determined, based on

an evaluation of the terms and conditions of the arrangements, such

as the lease

term not constituting a substantial portion of the economic life of

the commercial property, that it retains all the signifi cant risks and

rewards of ownership of these properties and accounts for the

contracts as operating leases.

Estimates and assumptions

The group based its assumptions and estimates on parameters

available when the consolidated fi nancial statements were prepared.

Existing circumstances and assumptions about future developments,

however may change due to market changes or circumstances that

are beyond the control of the Group. Such changes are refl ected in

the assumptions when they occur.

(a) Valuation of fi nancial assets using valuation techniques

The determination of fair values is based on the discounted cash

fl ows. Signifi cant estimates were used in coming up with discounted

cashfl ows include long term growth rate , weighted average cost of

capital and estimation of future cash fl ows. (Refer to Note 11.4 for

more detail)

(b) Technical Reserves

The Company engaged African Actuarial Consultants to determine

the values of technical reserves as per the new requirement by the

Insurance and Pensions Commission in Zimbabwe. All technical

reserves which are UPR, Outstanding claims, IBNR were actuarially

determined in 2016.

A new provision called Incurred But Not Enough Reported Claim

(IBNER) was introduced in 2015 and its necessity is assessed annually

by the actuaries. In 2016 this provision was considered not applicable.

(c) Unearned premium reserves (UPR)

Unearned premiums represent the proportion of premiums, written

in the year that relate to unexpired terms of policies in force at the

reporting date generally calculated on the 365th basis after providing

20% for deferred acquisition costs (DAC).

(The DAC percentage is split between commissions (15%) and

administrative expenses (5%)). As 31 December 2016 UPR was

$6,352,329 (2015 - $6,826,951). The movement on the unearned

premium reserve are shown through profi t or loss.

As at 31 December 2016 DAC was $1,194,529 (2014 - $1,274,745).

The UPR for the Company was actuarially reviewed by African

Actuarial Consultants.

Insurance Contract Liabilities

(d) Outstanding claims

Outstanding claims represent the ultimate cost (net of salvage

recoveries) of setting all claims arising from events that have occurred

up to the reporting date. Accrual is made for the estimated costs of

claims net of anticipated recoveries under reinsurance arrangements

notifi ed but not settled at year end. Refer to note 24 for the carrying

amount of the outstanding claims.

Outstanding claims for the Company were primarily based on case

estimate schedules by the Actuary.

(‘e) Incurred but not reported claims provision (IBNR)

Claims incurred but not reported (IBNR) claims provision, is a provision

for claims arising out of events which have occurred by the reporting

date but have not yet been reported at that date. This was actuarially

determined based on a 5-year historical average method.

The method has been used due its stability and ability to respond to

the Company’s increasing business volumes.

Refer to note 24 for the carrying amount of the IBNR (2016:$1,997,849,

2015:$1,661,078).

(f) Deferred tax assets and liabilities

Deferred tax assets are recognised for unused tax losses to the extent

that it is probable that taxable profi t will be available against which

the losses can be utilised. Signifi cant management judgement is


54


required to determine the amount of deferred tax asset that can

be recognised, based upon the likely timing and the level of future

taxable profi ts together with future tax planning strategies. Further

details on taxes are disclosed on note number 13.

(g) Fair value on investment properties

The Group carries its investment properties at fair value, with changes

on fair value being recognised in the profi t or loss account The

Group engaged an independent valuer to assess fair value as at 31

December 2016. A valuation methodology based on a discounted

cashfl ow model was used together with reference to market based

evidence using comparable prices adjusted for specifi c market factors

such as nature, location and condition of the property.

The determined fair value of the investment properties is most

sensitive to the estimated yield as well as the long term vacancy

rate. The key assumption used to determine the fair value of the

investment properties are further explained in note 10.

(h) Disposal of subsidiary

On 30 September First Insurance Company Of Uganda (FICO) was

disposed of for a consideration of $100,000. Judgement was required

in determining the signifi cance of the subsidiary to the Group. FICO

represented a major geographical area of operation based on its

contribution to the Group Gross Premium Written (GPW), net assets

and profi t before tax.

6 EARNINGS PER SHARE Basic earnings per share is calculated by dividing the net profi t for the year attributable to ordinary shareholders of the parent by

the weighted average number of ordinary shares outstanding at the reporting date.

Diluted earnings per share is calculated by dividing the net profi t attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.

The following refl ects the income and share data used in the basic and diluted earnings per share computations:

Group Group Company Company 2016 2015 2016 2015

Profi t for the year attributed to equity holders of the parent (US$) 1,407,703 1,357,956 1,725,016 119,124 Weighted number of shares for basic EPS 566,764,773 566,764,773 566,764,773 566,764,773 Effect of share options 26,325,511 33,512,655 26,325,511 33,512,655 Weighted number of shares for diluted EPS 593,090,284 600,277,428 593,090,284 600,277,428 Basic earnings per share (US cents) 0.25 0.24 0.30 0.02 Diluted earnings per share (US cents) 0.24 0.23 0.29 0.02


55


7 SEGMENT INFORMATION For management purposes, the Group is organised into business units based on their geographical location and has two

reportable segments as follows: 1) Zimbabwe Management monitors operating results of its business units separately for the purpose of making decisions about

resource 2) Malawi Segment performance is evaluated based on operating profi t or loss and is measured consistently with operating

profi t or loss in the consolidated fi nancial statements.

Zimbabwe Malawi Total US$ US$ US$ SEGMENT REPORT - 2016 Group 2016 Analysis by geographical areas Revenue from external customers 28,244,005 7,434,915 35,678,920 Revenue from related parties 1,321,050 - 1,321,050 Total gross premium written 29,565,055 7,434,915 36,999,970 Investment & other Income 1,453,636 338,028 1,791,664 Brokerage commission and fees 1,682,481 463,230 2,145,711 Net benefi ts and claims (10,025,248) (4,043,836) (14,069,084) Commission and acquisition expenses (4,313,039) (786,796) (5,099,835) Reinsurance (10,565,969) (2,201,115) (12,767,084) Unearned Premium Reserve 347,531 (335,722) 11,809 Finance costs (6,806) - (6,806) Other operating and administrative expenses (5,239,969) (2,022,695) (7,262,664) Total benefi ts, claims and other expenses (29,803,500) (9,390,164) (39,193,664)

Operating Profi t before Share of Associate 2,897,672 (1,153,991) 1,743,681 Share of profi t/(loss) of associates (409,563) 17,700 (391,863) Tax expense (806,949) 414,929 (392,020) Segment Result 1,681,160 (721,362) 959,798 Statement of fi nancial position items Total Assets 32,614,756 8,589,859 41,204,615 Total Liabilities (15,391,940) (7,052,920) (22,444,860) Investment in associates included in non-current assets 544,242 77,788 622,030


56


Analysis by products and services Group 2016 Short term

Insurance Property Total

Revenue from external customers 35,678,920 - 35,678,920 Revenue from related parties 1,321,050 - 1,321,050 Total gross premium written 36,999,970 - 36,999,970

Investment & other Income 1,596,744 194,920 1,791,664 Brokerage commission and fees 2,145,711 - 2,145,711

Net benefi ts and claims (14,069,084) - (14,069,084) Commission and acquisition expenses (5,099,835) - (5,099,835) Reinsurance (12,767,084) - (12,767,084) Unearned Premium Reserve 11,809 - 11,809 Finance costs - (6,806) (6,806) Other operating and administrative expenses (7,035,990) (226,674) (7,262,664) Total benefi ts, claims and other expenses (38,960,184) (233,480) (39,193,664)

Operating Profi t before Share of Associate 1,782,241 (38,560) 1,743,681

Share of profi t/(loss) of associates (391,863) - (391,863)

Tax expense (408,112) 16,092 (392,020) Segment Result 982,266 (22,468) 959,798

Statement of fi nancial position items

Total Assets 34,438,226 6,766,389 41,204,615 Total Liabilities (22,216,951) (227,909) (22,444,860) Investment in associates included in non-current assets 622,030 - 622,030


57


SEGMENT REPORT - 2015 Group 2015

Analysis by geographical areas Zimbabwe Malawi Total US$ US$ US$

Revenue from external customers 25,489,714 9,826,750 35,316,464 Revenue from related parties 3,453,640 - 3,453,640 Total gross premium written 28,943,354 9,826,750 38,770,104 Investment Income & other revenue 1,099,833 423,405 1,523,238 Brokerage commission and fees 2,137,388 585,835 2,723,223 Net benefi ts and claims (9,422,878) (4,026,963) (13,449,841) Commission and acquisition expenses (3,951,358) (1,149,987) (5,101,345) Reinsurance (10,565,793) (2,338,580) (12,904,373) Unearned Premium Reserve (662,867) (496,522) (1,159,389) Finance costs (23,454) - (23,454) Other operating and administrative expenses (6,361,659) (2,184,829) (8,546,488) Total benefi ts, claims and other expenses (30,988,009) (10,196,881) (41,184,890) Operating Profi t before Share of Associate 1,192,566 639,109 1,831,675

Share of profi t/(loss) of associates (199,573) 14,990 (184,583) Tax expense 102,586 (111,068) (8,482) Segment Result 1,095,579 543,031 1,638,610 Statement of fi nancial position items Total Assets 32,795,607 8,532,948 41,328,555 Total Liabilities (16,616,128) (5,744,658) (22,360,786) Investment in associates included in non-current assets 627,753 387,385 1,015,138


58


Analysis by products and services

Group 2015 Short term Insurance Property Total US$ US$ US$

Revenue from external customers 35,316,464 - 35,316,464 Revenue from related parties 3,453,640 - 3,453,640 Total gross premium written 38,770,104 - 38,770,104

Investment Income & other revenue 1,226,814 296,424 1,523,238 Brokerage commission and fees 2,723,223 - 2,723,223

Net benefi ts and claims (13,449,841) - (13,449,841) Commission and acquisition expenses (5,101,345) - (5,101,345) Reinsurance (12,904,373) - (12,904,373) Unearned Premium Reserve (1,159,389) - (1,159,389) Finance costs - (23,454) (23,454) Other operating and administrative expenses (8,073,051) (473,437) (8,546,488) Total benefi ts, claims and other expenses (40,687,999) (496,891) (41,184,890)

Operating Profi t before Share of Associate 2,032,142 (200,467) 1,831,675

Share of profi t/(loss) of associates (184,583) - (184,583)

Tax expense (65,317) 56,835 (8,482)

Segment Result 1,782,242 (143,632) 1,638,610

Statement of fi nancial position items Total Assets 34,561,757 6,766,798 41,328,555 Total Liabilities (22,092,329) (268,457) (22,360,786) Investment in associates included in non-current assets 1,015,138 - 1,015,138


59




8.1 Investment income

Rental income from investment properties 292,173 192,671 66,287 52,662 Dividend income from fi nancial assets at fair value through profi t and loss 47,990 34,221 94,293 34,221 Interest income from fi nancial assets at fair value through profi t and loss 484,547 620,762 271,414 318,055

Other investment income 257,445 213,826 136,959 65,115 1,082,155 1,061,480 568,953 470,053 Other investment income consists of interest earned on staff loans and fees on collection agency services.

8.2 Other income Management fees charged 26,000 37,044 109,478 120,522 Gain on bargain purchase (Note 12.2) - 462,609 - - Income from the lodge 6,020 13,999 - - 32,020 513,652 109,478 120,522

8.3 NET BENEFITS AND CLAIMS Gross benefi ts and claims paid 18,827,744 15,615,470 13,536,262 10,554,640

Claims recovered from reinsurers (6,535,292) (3,593,363) (3,974,738) (2,039,605)

Gross change in contract liabilities Change in outstanding losses provision 1,115,482 1,070,427 223,946 637,184 Change in IBNR claims provision 661,150 357,307 239,778 270,659 Total gross change in contract liabilities 1,776,632 1,427,734 463,724 907,843 14,069,084 13,449,841 10,025,248 9,422,878

8.4 Operating and administrative expenses

Other operating expenses include the following: Auditors’ remuneration for audit 147,096 143,276 97,472 95,517 Directors’ fees and emoluments 150,741 79,645 82,220 89,260

Wages and salaries (excluding executive management) 2,745,288 3,226,064 1,882,474 2,329,820 Wages and Salaries (Executive management) (Note 19.3) 777,746 847,843 773,130 747,896 Pension costs 232,635 327,088 157,002 244,843 Social security costs 20,852 21,025 20,852 21,025

Depreciation (Note 9) 386,334 367,120 255,885 258,732 Share option costs (Note 21.2.1) (1,078) 53,175 (1,078) 53,175 Legal fees 13,337 14,019 13,337 14,019 Rent, premises costs and utilities 294,845 469,537 360,813 428,810 Travel and representation 429,228 486,270 276,047 300,376

Marketing, advertising & promotion 451,891 554,144 374,420 419,496 Investment property expenses (less depreciation) 202,639 526,386 - - Retrenchment - 258,924 - 258,924 Allowances for credit losses (Note 15.2) 284,448 128,724 - - Other operating and administration costs 1,126,662 1,043,248 866,847 730,330 7,262,664 8,546,488 5,159,421 5,992,223


60



8.5 OTHER GAINS/(LOSSES) Profi t/(loss) on disposal of property and equipment (1,248) 11,161 3,876 21,998

Gains on disposal of fi nancial assets through profi t and loss 38,791 18,532 38,791 18,532 Loss on disposal of investment property at fair value - (19,279) - (19,279) Receipts from debtor recoveries 10,124 - - - 47,667 10,414 42,667 21,251 Unrealized gain/(loss) Fair value gains/(losses) on investment properties (Note 10) 161,953 (17,428) 205,599 (77,565) Fair value gains/(losses) on quoted equities (Note 11.2.1) 426,467 (24,827) 434,356 (83,765) Impairment of investments - - (382,026) (836,530) Unrealized exchange gains/(losses) on monetary assets and liabilities 41,402 (20,053) 37,640 (26,216) 629,822 (62,308) 295,569 (1,024,076)

Net other gains/(losses) 677,489 (51,894) 338,236 (1,002,825) Impairment of Investments During the year the Company impaired investments as follows: Fidelity Funeral Services - - (12,913) (50,000) First Insurance Company of Uganda (FICO) - - (369,113) (638,124) Diamond General Insurance (DGI) - - - (148,406) - - (382,026) (836,530) 8.6 Investment in associates Reconciliation of the carrying amount

Balance at beginning of the year 1,015,138 489,384 469,468 363,010 Transfer from unquoted equities on gaining signifi cant infl uence (Note 11.1) - 304,864 - 304,864 Addition through United General Insurance acquisition - 413,923 - - Additions 87,687 - 87,687 - Impairments - - (12,913) (198,406) Share of Other Comprehensive Income attributable to Associate (88,932) (8,450) - - Share of loss for the year (391,863) (184,583) - - Share of associates loss (379,483) (147,038) - - Dividend Paid - - - - Impairment of investment in associate (12,380) (37,545) - -

Balance at year end 622,030 1,015,138 544,242 469,468


61


The following tables illustrates the summarized fi nancial information of Associates:

Clover Leaf Panel Beaters 2016 2015Country of incorporation Zimbabwe ZimbabwePrincipal activities Motor Industry Motor IndustryPercentage holding 45% 45%Year end December DecemberAccounting method Equity Accounting Equity Accounting $ $Non-current assets 97,735 82,762Current assets 870,657 861,947Current liabilities (140,074) (167,865)Non current liabilities (11,654) (18,648)Equity 816,664 758,196Proportion of the Group’s ownership 45% 45%Share of Net Asset Value 367,499 341,188

Revenue 2,109,275 2,106,356Cost of sales (1,265,611) (1,247,933)Admin expenses (757,659) (870,734)Loss before tax 86,005 (12,311)Income tax expense (27,536) (18,547)Profi t/(loss) for the year 58,469 (30,858)Group’s share of profi t/(loss) for the year 26,311 (13,886)

Fidelity Funeral Services 2016 2015Country of incorporation Zimbabwe ZimbabwePrincipal activities Funeral Services Funeral ServicesPercentage holding 23.9% 23.9%Year end DecemberDecemberAccounting method Equity Accounting Equity Accounting

Non-current assets 319,889 373,699Current assets 82,952 109,801Current liabilities (517,603) (502,327)Non-current liabilities (35,516) (35,516)Equity (150,278) (54,343)Proportion of the Group’s ownership 23.9% 23.9%Share of Net Asset Value* (35,916) (12,988)

Revenue 322,813 278,434Admin expenses (374,612) (398,584)Loss before tax (51,799) (120,150)Income tax expense - (5,046)Loss for the year (51,799) (125,196)Group’s share of loss for the year (12,380) (29,922)


62


Diamond Seguros 2016 2015Country of incorporation Mozambique MozambiquePrincipal activities Non life Insurance Non life InsurancePercentage holding 28.00% 19.00%Year end December DecemberAccounting method Equity Accounting Equity Accounting

Non-current assets 28,816 46,209Current assets 2,254,123 1,890,869Current liabilities (2,201,847) (1,848,364)Non-current liabilities (7,395) -Equity 73,697 88,714Proportion of the Group’s ownershipt 28% 19%Share of Net Asset Value 20,635 16,856

Revenue 2,383,351 3,167,363Cost of sales (1,982,215) (2,502,722)Admin expenses (552,082) (817,863)Exchange loss -Loss before tax (150,946) (153,221)Income tax expense - -Loss for the year (150,946) (153,221)Group’s share of loss for the year (42,265) (29,112)

Diamond General Insurance 2016 2015Country of incorporation Zambia ZambiaPrincipal activities Non life Insurance Non life InsurancePercentage holding 24.88% 24.88%Year end December DecemberAccounting method Equity Accounting Equity Accounting

Non-current assets 1,342,954 973,142Current assets 3,917,395 3,420,340Current liabilities (2,300,686) (3,617,275)Non-current liabilities (2,425,680) (576,924)Equity 533,983 199,283Proportion of the Group’s ownership 24.88% 24.88%Share of Net Asset Value 132,855 49,582

Revenue 5,606,626 6,172,887Cost of sales (4,681,389) (4,301,743)Admin expenses (1,517,234) (2,331,799)Loss before tax (591,997) (460,655)Income tax expense - -Loss for the year (591,997) (460,655)Group’s share of loss for the year (147,289) (114,611)


63


VanGuard Life Assurance 2016 2015Country of incorporation Malawi MalawiPrincipal activities Life Assurance Life AssurancePercentage holding 9.66% 9.66%Year end December DecemberAccounting method Equity Accounting Equity Accounting

Non-current assets 2,044,095 2,375,079Current assets 3,209,843 3,636,637Current liabilities (426,385) (443,017)Non-current liabilities (3,781,582) (3,776,342)Equity 1,045,971 1,792,357Proportion of the Group’s ownership 9.66% 9.66%Share of Net Asset Value 101,041 173,142

Revenue 3,001,144 3,990,258Cost of sales (4,350,579) (2,155,238)Admin expenses (978,417) (1,250,588)Loss before tax (2,327,852) 584,432Income tax expense 89,338 (165,246)(Loss)/profi t for the year (2,238,514) 419,186Group’s share of (loss)/profi t for the year (216,240) 40,493

Analysis of Investments in associates 2016 2016 2016 2016 2016 Total a) Carrying Amount Clover Leaf Fidelity Funeral Diamond Diamond Vanguard Panel Beaters Services Seguros General Life $ $ $ $ $ $Share of net assets 367,499 - 20,635 132,855 101,041 622,030Carrying amount of investment 367,499 - 20,635 132,855 101,041 622,030

b) Share of profi ts/(losses & (impairement) 26,311 (12,380) (42,265) (147,289) (216,240) (391,863)

c) Share of OCI attributable to Associates - - (41,643) 11,826 (59,115) (88,932)

Analysis of Investments in associates 2015 2015 2015 2015 2015 Total Clover Leaf Fidelity Funeral Diamond Diamond Vanguard Panel Beaters Services Seguros General Life $ $ $ $ $ $Share of net assets 341,188 (12,988) 16,856 49,582 376,395 771,033Subsequent capitalization of associate - 62,913 - - - 62,913Impairment - (37,545) - - - (37,545)Goodwill on acquisition of associate - - - 218,737 - 218,737Carrying amount of investment 341,188 12,380 16,856 268,319 376,395 1,015,138

b) Share of profi ts/(losses & impairement) (13,886) (67,467) (29,112) (114,611) 40,493 (184,583)Share of profi ts/(losses) (13,886) (29,922) (29,112) (114,611) 40,493 (147,018)Share of ( impairement) - (37,545) - - - (37,545)

c) Share of OCI attributable to Associates - - (8,494) 44 - (8,450)


64


Impairment LossesThe 2016 impairment losses for $12,380 for the group represents the write down of investment in Fidelity Funeral Services to the recoverable amount. The recoverable amount was based on the value in use. The company has since exhausted its capital to negative levels. This prompted NDI to impair the full carrying cost of the investment which was valued at $12,913. The value in use for Fidelity Funeral Services was calculated as $12,380 and a discount rate of 16.12% was used.

The 2015 impairment losses of $198,406 for the company represents the write down of investments in Fidelity Funeral Services [FFS] ($50,000) and Diamond General insurance [DGI] (Zambia) ($148,406), to the recoverability amount. The recoverable amount was based on value in use. In determining value in use the cash fl ows were discounted at a rate of 16.12 % (FFA) and 25% (DGI) on a pre-tax basis. The impairment charge is recorded in other “losses” in the statement of Profi t or Loss.

The impairment loss of $37,545 in 2015 for the group represents the write down of investment in Fidelity Funeral Assurance, to the recoverable amount. The recoverable amount was based on value in use. In determining value in use the cash fl ows were discounted at a rate of 16.12%

8.7 Income TaxThe major components of income tax expense for the year ended 31 December 2016 and 2015 are:

Group Group Company Company2016 2015 2016 2015

Current income tax: $ $ $ $

Current income tax charge (425,168) (463,441) (415,863) (291,370)Current tax charge on continued operation 18 (425,168) (473,896) (415,863) (291,370)Current tax charge on discontinued operation - 10,455 - -CGT - (8,000) - (8,000)Deferred tax: Total deferred tax movement on temporary differences 33,148 462,959 (407,178) 345,121Relating to origination and reversal of temporary differences discontinued operations - (145,117) - -Relating to origination and reversal of temporary differences continuing operations 33,148 608,076 (407,178) 345,121

Income tax expense/(credit) reported in the statement of profi t or loss (392,020) (8,482) (823,041) 45,751

Tax rate reconciliationTax at normal rate (25.75%) (25.75%) (25.75%) (25.75%)Adjust for:

Effect of non-deductible expenses: impairments, non deductible reserves 15.8% (1.7%) 15.6% (56.5%)Effect of non-taxable income: fair value gain, dividend income, premium received in advance (20.9%) 19.4% (22.12%) 8.99%Tax on associates income & withholding tax 2.0% 22.0% 0.0% 10.9%

(28.9%) 14.0% (32.3%) (62.4%)


65


8.8 Discontinued OperationsThe Group effectively disposed FICO on 30 September 2016 for an amount of $100,000. The disposal was duly approved by the Board of Directors. With FICO being classifi ed as discontinued operations, the Ugandan Insurance segment is no longer presented in the segment note.

As at 31 December 2016 the Group had received $49,988 of the proceeds from FICO and the balance of $50,012 was received in January 2017.

The results of FICO for the period to disposal are presented below:

FICO FICO 2016 2015

Total income 619,414 946,710

Expenses (216,547) (1,677,069)

Profi t/(loss) before tax 402,867 (730,359)

Tax (expense)/credit (9,511) 134,663

Profi t/(loss) after tax 393,356 (595,696)

Loss on disposal (574,530) -

Recycling of the cumulative losses arising from translation (352,499) -

Loss after tax (533,673) (595,696)

The major classes of assets and liabilities of FICO classifi ed as held for sale as at 30 September 2016 were as follows:

Assets

Property and Equipment 36,324

Investment properties 433,810

Held to Maturity 526,201

Investment in unquoted equities 292,903

Deferred Tax Asset 96,380

Statutory Deposit 163,556

Trade Debtors 2,204,102

Deferred acquisition costs 61,495

Other receivables and prepayments 129,039

Due from related parties 28,131

Bank Balances and Cash 80,226

4,052,167

Liabilities

Trade Payables 268,409

Related party payables 92,903

Other payables 909,436

Taxation payable 208,037

Short term provisions 1,375,142

2,853,927


66


Net assets directly associated with disposed Company 1,198,240 Net Cashfl ows incurred by FICO are, as follows:

FICO FICO 2016 2015

Operating (365,372) (46,453)

Investing (228,620) (128,857)

Financing 590,000 308,785

Net cash (outfl ow)/infl ow (3,992) 133,475

Earnings per shareBasic, profi t/(loss) for the year from discontinued operations (0.09) (0.11)Diluted, profi t/(loss) for the year from discontinued operations (0.09) (0.11)

8.9 Components of other comprehensive income

Group Group Company Company 2016 2015 2016 2015 $ $ $ $

Exchange difference on translation of foreign operations (284,686) (1,377,367) - -

This arose from translation of principal information of foreign operations (subsidiary and Associates from their local reporting currencies to the Groups functional and reporting currency (US$) currency).

The table below shows the conversation rates:

Entity Year P/L $ SFP $

UGI 2016 711 726

UGI 2015 498 643

DS 2016 63 72

DS 2015 38 47

DGI 2016 10 10

DGI 2015 9 11


67


9. Property and Equipment

Group Freehold Land Motor Equipment & Furniture

& Buildings vehicles computers & fi ttings Total

US$ US$ US$ US$ US$

Balance as at 1 January 2015 80,000 1,109,175 621,534 488,615 2,299,324

Balances for UGI at Acquisition 137,535 391,813 122,427 67,650 719,425

Exchange rate movement on foreign operations (44,228) (37,182) (60,722) (38,874) (181,006)

Additions - 318,677 93,419 17,314 429,410

Disposals - (320,830) (5,009) - (325,839)

Balance at 31 December 2015 173,307 1,461,653 771,649 534,705 2,941,314

Exchange rate movement on foreign operations 5,313 52,775 42,476 2,734 103,298

Disposal of subsidiary - (27,046) (65,110) (58,892) (151,048)

Additions - 426,322 142,313 29,056 597,691

Disposals - (77,317) (5,135) (1,977) (84,429)


Accumulated Depreciation

Balance as at 1 January 2015 - (760,079) (446,432) (228,628) (1,435,139)

Charge for the year - (228,028) (88,851) (50,241) (367,120)

Eliminated on disposals - 280,182 4,394 - 284,576

Exchange rate movement on foreign operations - 2,427 39,909 (7,765) 34,571

Balance on 31 December 2015 - (705,498) (490,980) (286,634) (1,483,112)


Eliminated on disposals - 67,669 3,776 1,565 73,010

Impairment reversals recognised in P&L - 258 - - 258

Disposal of subsidiary - 20,923 42,839 50,327 114,089

Exchange rate movement on foreign operations - (88,383) (52,433) (8,333) (149,149)

Balance at 31 December 2016 - (939,515) (598,575) (293,147) (1,831,237)

Carrying amount at 31 December 2016 178,620 896,872 287,618 212,479 1,575,589

Carrying amount at 31 December 2015 173,307 756,155 280,669 248,071 1,458,202


68


Company Freehold Land Motor Equipment & Furniture

& Buildings vehicles computers & fi ttings Total

US$ US$ US$ US$ US$

Cost

Balance at 01 January 2015 80,000 1,055,480 429,236 332,177 1,896,893

Additions - 263,937 47,655 10,108 321,700

Disposals - (237,202) - - (237,202)


Additions - 286,386 81,723 24,849 392,958

Disposals - (57,746) (3,459) (1,977) (63,182)


Accumulated Depreciation

Balance on 01 January 2015 - (734,641) (303,072) (151,394) (1,189,107)


Eliminated on disposals - 237,180 - - 237,180

Balance on 31 December 2015 - (680,776) (344,959) (184,924) (1,210,659)


Eliminated on disposals - 57,746 2,385 1,565 61,696

Balance at 31 December 2016 - (791,486) (394,402) (218,960) (1,404,848)

Carrying amount at 31 December 2016 80,000 519,370 160,753 146,196 906,319

Carrying amount at 31 December 2015 80,000 401,439 131,932 157,361 770,732

The value of PPE approximates the fair value.


69



Group Group Company Company

2016 2015 2016 2015

$ $ $ $

9.1 Intangible Asset

Cost

Balance as at 1 Janaury 2015 - - - -

Additions 738,357 - 738,357 -

Balance as at 31 December 2016 738,357 - 738,357 -

The intangible asset relates to the Company’s enterprise resource planning (ERP), underwriting and fi nance software.


2016 2015 2016 2015

$ $ $ $

10 INVESTMENT PROPERTIES

1. Reconciliation of the carrying amount

Balance at 1 January 9,762,841 9,159,080 1,870,000 1,660,000

Additions 1,672,681 80,138 1,672,681 45,369

Transfer from prepayments - 395,090 - 395,090

Reclassifi ed from inventory 16.1.1 3,224,720 - 3,224,720 -

Acquisition of subsidiary - 608,690 - -

Exchange rate movement on foreign operations (62,679) (309,835) - -

Disposal of subsidiary (433,810) - - -

Disposal - (152,894) - (152,894)

Fair value adjustments (recognized as part of investment income) 8.5 161,953 (17,428) 205,599 (77,565)

Balance at 31 December 14,325,706 9,762,841 6,973,000 1,870,000

The Group’s investment properties consist of commercial and residential properties located in Zimbabwe and Malawi.

Investment properties are stated at fair value as at 31 December 2016 and 31 December 2015. Fair values were determined, with reference to

valuations performed by Integrated Properties, an accredited independent valuer.

The value of the commercial properties were determined by their capacity to generate income in the form of rentals. This was measured by a rental

yield. The average commercial properties rental yield was 7% in 2016 (2015: 6.79%). To obtain a risk weighted capitalisation rate, the rental yield

of 7% was further adjusted for liquidity risk(1.5%), Legal/tenant risk (1%) and Location risk (1%). These factors give an effective capitalisation rate

of 10.5%.

The value of the commercial properties was therefore calculated using the effective yield computation formulae as follows:

V = R/Y

where V = Value

R = Annual rental

Y = Annual yield

With regard to residential properties, the valuer was able to identify various residential properties sold or which were on sale and situated in

comparable areas. After adjustments for quality, location and size on the rates for our properties, these rates were then applied to the specifi c

residential properties.


70


Description of valuation techniques used and key inputs to valuation on commercial properties are as follows:

2016 Valuation technique Signifi cant unobservable Range

inputs

Commercial properties Rental yield Annual Yield $4.50 - $6.50 per square metre

Residential Properties Market Comparable Method Prices of comparable properties $300,000 - $410,000

2015 Valuation technique Signifi cant unobservable Range

inputs

Commercial properties Rental yield Annual Yield $4-$5 per square metre

Residential Properties Market Comparable Method Prices of comparable properties $380,000 to $420,000

Signifi cant increases (decreases) in annual yield in isolation would result in a signifi cantly higher or (lower) fair value of the properties.

Signifi cant increases (decreases) in prices of comparable properties in isolation would result in a signifi cantly higher or (lower) fair value of the

properties.

The rental income that arose during the year is included in investment income.

Investment properties are mainly kept for capital appreciation and to earn rentals. The Group entered into operating lease contracts with all tenants

for the investment property.

During the year the investment in Diamond Villas which was previously included under inventory was moved to investment property. The units are

being held for earning rentals and for capital appreciation.

2. Income and expenses related to investment property 2016 2015 2016 2015

Rental income from investment property recognized in profi t or loss. 292,173 192,671 66,287 52,662

Direct operating expenses (repairs, maintenance, etc.) for:

- Property that generated rentals during the year (excluding depreciation) 8.4 (202,639) (526,386) - -

Profi t/(Loss) arising from investment properties carried at fair value 89,534 (333,715) 66,287 52,662

The following table provides the fair value measurement hierarchy of the Group’s investment property:

Quoted prices Signifi cant Signifi cant

Group in active Market observable inputs Unobservable inputs

Date of Valuation Total Level 1 Level 2 Level 3

Commercial properties 31 December 2016 6,914,301 - - 6,914,301

Residential properties 31 December 2016 7,411,405 - - 7,411,405

14,325,706 - - 14,325,706

Commercial properties 31 December 2015 7,732,841 - - 7,732,841


9,762,841 - - 9,762,841


71



Company in active Market observable inputs Unobservable inputs

Date of Valuation Total Level 1 Level 2 Level 3

Commercial properties 31 December 2016 - - - -


6,973,000 - - 6,973,000

Commercial properties 31 December 2015 - - - -


1,870,000 - - 1,870,000

11 INVESTMENTS

11.1 INVESTMENT IN UNQUOTED EQUITIES AT FAIR VALUE THROUGH PROFIT OR LOSS


2016 2015 2016 2015

$ $ $ $

%age Holding

Special Automobile Underwriters of Zimbabwe 10.00% 17,493 17,493 17,493 17,493

Uganda Reinsurance 1.00% - 35,968 - -

Central Broadcasting Service (Uganda) 17.61% - 175,420 - -

17,493 228,881 17,493 17,493

11.1.1 MOVEMENTS IN UNQUOTED EQUITIES

Opening balance 228,881 567,736 17,493 312,353

Additions - 17,493 - 17,493

Disposal - (7,489) - (7,489)

Disposal of subsidiary (Note 8.6) (292,903) - - -

Reclassifi cation to associate - (304,864) - (304,864)

Exchange rate movement on foreign operations 81,515 (43,995) - -

Closing balance 17,493 228,881 17,493 17,493

The disposal of subsidiary refers to the discontinued operation of First Insurance Company of Uganda (FICO) effective 30 September 2016.

In 2015 the investment in Diamond General Insurance (DGI) was transferred to Associates after the acquisition of additional shareholding translating

to 17.7%. The effective shareholding in DGI was 24.87% and the collective Group shareholding was 33.3% for 2015.

11.2 SHORT TERM INVESTMENTS


2016 2015 2016 2015

$ $ $ $

Government, Municipal stocks and bonds - 726,577 - 380,000

Money market deposits - 165,430 - -

Quoted equities 1,594,793 807,284 1,250,613 364,582

Grand Total 1,594,793 1,699,291 1,250,613 744,582

The Group holds investments in quoted equities.

In 2015 the Group had investments in money market, Government, Municipal stocks and bonds with fi nancial institutions with interest rates

ranging from 3% to 10% per annum and were maturing in 3 to 9 months.


72


11.2.1 MOVEMENT IN QUOTED EQUITIES


2016 2015 2016 2015

$ $ $ $

Opening balance 807,284 547,375 364,582 547,374

Additions 717,552 - 717,552 -

Acquisition of UGI - 584,303 - -

Disposals (265,877) (99,028) (265,877) (99,027)

Exchange Differences (90,633) (200,539) - -

Fair value adjustment (Note 8.5) 426,467 (24,827) 434,356 (83,765)

Closing balance 1,594,793 807,284 1,250,613 364,582

11.2.2 MOVEMENT IN SHORT TERM INVESTMENTS (EXCLUDING QUOTED EQUITIES)


2016 2015 2016 2015

$ $ $ $

Opening balance 892,007 1,187,272 380,000 390,000

Additions - 5,879,177 - 5,281,218

Investment income 205,505 642,139 165,505 298,776

Realized on maturity (1,097,512) (6,816,581) (545,505) (5,589,994)

Closing balance - 892,007 - 380,000

11.3 LONG TERM INVESTMENTS HELD TO MATURITY

Government, Municipal stocks and bonds 2,558,182 130,000 2,558,182 130,000

Money market deposits 150,000 300,000 150,000 300,000

2,708,182 430,000 2,708,182 430,000

The company holds investments in money market, Government, Municipal Stocks and Bonds with fi nancial institutions with interest rates ranging

between 1.5% to 10% and maturing in 36 to 182 months.

In 2015 the company held investments in money market deposits with fi nancial institutions with interest rates of 6% and maturity profi le of 28 to

54 months.

11.3.1 MOVEMENT IN LONG TERM INVESTMENTS HELD TO MATURITY


2016 2015 2016 2015

$ $ $ $

Opening balance 430,000 300,000 430,000 300,000

Additions 2,558,182 130,000 2,558,182 130,000

Investment income 49,632 - 49,632 -

Realized on maturity (329,632) - (329,632) -

Closing balance 2,708,182 430,000 2,708,182 430,000

11.4 FAIR VALUE MEASUREMENTS

The table below provides the fair value measurement hierarchy of the Group’s assets.

Quantitative disclosure fair value measurement hierarchy for assets as at 31 December 2016:



73


Group in active Market observable inputs Unobservable inputs

Level 1 Level 2 Level 3 31-Dec-16

Asset measured at fair value:

Quoted equity shares

Consumer 555,417 - - 555,417

Financial services 644,745 - - 644,745

Agro 394,631 - - 394,631

Unquoted equity shares

Financial services - - 17,493 17,493

Total 1,594,793 - 17,493 1,612,286


Company in active Market observable inputs Unobservable inputs

Level 1 Level 2 Level 3 31-Dec-16



Consumer 555,417 - - 555,417


Agro 394,631 - - 394,631

Unquoted equity shares

Financial services - - - -

Total 1,250,613 - - 1,250,613

2015 Level 1 Level 2 Level 3 31-Dec-15

Group



Consumer 358,119 - - 358,119


Agro 6,463 - - 6,463

Financial services - - 228,881 228,881

Total 807,284 - 228,881 1,036,165


74


2015 Level 1 Level 2 Level 3 31-Dec-15

Company



Consumer 358,119 - - 358,119


Agro 6,463 - - 6,463

Unquoted equity shares -


Total 364,582 - - 364,582

Description of signifi cant unobservable inputs to valuation:

The signifi cant unobservable inputs used in the fair value measurements categorized within Level 3 of the fair value hierarchy, together with a

quantitative sensitivity analysis as at 31 December 2016 and 2015 are as shown below:

31, December 2016

Valuation technique Signifi cant Range Sensitivity of the

unobservable inputs input to fair value

DCF Long-term growth 0.17% - 5% Increase/(decrease) in the

AFS fi nancial assets in method rate for cash fl ows growth rate would result in an

unquoted equity shares for subsequent increase (decrease) in

years fair value

WACC 7.55% - 27.10% Increase/(decrease) in WACC

would result in an (decrease)/

increase in fair value

31, December 2015

Valuation technique Signifi cant Range Sensitivity of the

unobservable inputs input to fair value

DCF Long-term growth 4% - 5% Increase/(decrease) in the

AFS fi nancial assets in method rate for cash fl ows growth rate would result in an

unquoted equity shares for subsequent increase (decrease) in

years fair value

WACC 13.99% - 16.12% Increase/(decrease) in WACC

would result in an (decrease)/

increase in fair value

For investment property fair value hierarchy refer to note 10.


75


11.5 OTHER NON-CURRENT ASSETS

Included in other non- current assets are long term staff loans amounting to $154,691 (2015 - $75,479).

Loans are issued to staff on an average interest rate of 12%. The repayment period is three years.

12 INVESTMENT IN SUBSIDIARIES

12.1 Information about subsidiaries

% equity % equity

Country of interest US$ interest $

Name Principal Activity Corporation 2016 2016 2015 2015

Thirty Samora Machel (Private) Limited Property Investment Zimbabwe 100% - 100% -

First Insurance Company Limited Insurance Solutions Uganda 0.00% - 55.49% 469,113

Marabou Investments (Private) Limited Property Investment Zimbabwe 100% 250,000 100% 250,000

United General Insurance Company Limited Insurance Solutions Malawi 46% 1,274,962 46% 1,274,962

1,524,962 1,994,075

Investment in Thirty Samora (Private) Limited is nil as this company was purchased during the Zimbabwe dollar era and at conversion the value was

not redenominated to United States Dollars (USD). There has not been subsequent investment in this subsidiary.

12.2 Acquisition in 2015

On 1 January 2015, the Company acquired 49% shareholding in United General Insurance Company Limited, a short term insurer in Malawi for

$1,274,962.

$827,474 was paid in 2015 and the balance of $447,488 was paid in 2016 upon receipt of the share certifi cate.

12.3 Reduction of interest in subsidiary

In July 2015 UGI issued 2,021,363 ordinary shares to a shareholder following conversion of preference shares to ordinary shares. This resulted in a

dilution in the company’s interest from 49% to 46%.

Below is the impact of the dilution in interest.

The Group’s share of Net Asset Value before issue of shares at 49% 1,849,062

The Group’s share of Net Asset Value after issue of shares at 46% 1,735,854

Difference recognised in retained earnings within equity (113,208)

12.3.1 Increase of interest in subsidiary

In January 2015, FICO invited shareholders to subscribe for a rights issue and the Group followed its rights. Some shareholders did not follow their

rights resulting in the Group’s interest in FICO increasing from 53.56% to 55.49%.

Below is the impact of the increase in interest;

The Group’s share of Net Asset Value before issue of shares at 53.56% 850,321

The Group’s share of Net Asset Value after issue of shares at 55.49% 942,752

Difference recognised in retained earnings within equity 92,431


76


12.4 Information about subsidiaries

% equity % equity

Country of interest US$ interest $

Name Principal Activity Corporation 2016 2016 2015 2015

Thirty Samora Machel Private Limited Property Investment Zimbabwe 0% - 0% -

First Insurance Company Limited Insurance Solutions Uganda 0.0000% - 44.5100% 345,989

United General Insurance Company Limited Insurance Solutions Malawi 54.00% 758,482 54.00% 1,451,493

Marabou Investments Property Investment Zimbabwe 0% - 0% -

758,482 1,797,482

12.5 Reconciliation of investments in subsidiaries


2016 2015 2016 2015

$ $ $ $

Opening balance - - 1,994,075 1,270,236

Impairment - FICO - - (369,113) (638,124)

Disposal of subsidiary - - (100,000) -

Additional Investment - - - 1,361,963

Closing balance - - 1,524,962 1,994,075

2016

The fi nancial performance of FICO had signifi cantly deteriorated due to lack of capital. A valuation done during 2016 showed that the value of the

company had shrunk to just above $300k. This meant that NDI’s 53% stake was valued at around $160k.

NDI also received an offer for $100k for its 53% stake from other investors during the course of 2016. This saw the investment being impaired by

$369,113.00 from a carrying amount of $469,113.00 to $100,000.00.

The value in use for FICO was calculated as $121,0000 and a discount rate of 27% was used. The sale of the subsidiary was effective 30 September

2016.

2015

The investment in First Insurance Company of Uganda was impaired by $638,124 in order to refl ect the estimated recoverable amount of the

investment.

The write down of the investment in FICO was based on the net asset value which approximated the fair value of the investment.

The Group estimated that the net asset value of $469,113 was equivalent to the recoverable value of the asset.

In 2015 an additional investment in First Insurance Company of Uganda was made of $87,001. Some shareholders did not follow their rights

resulting in change in shareholding from 53.56% to 55.49%.


77


12.6 Financial Information of the subsidiary that had a material non-controlling interest in 2016:

United General Insurance Company Limited of Malawi.

Summarised Statement of profi t and loss

Summarised Statement of profi t or loss

For the Year ended 31 December 2016 2016 2015

Gross premium written & other revenue/income 7,772,943 9,826,749

Reinsurance premium (2,201,115) (2,338,578)

Unearned premium provision (335,722) (496,521)

Net claims incurred (4,043,836) (4,026,963)

Net commission paid (428,679) (564,148)

Operating costs (2,022,694) (1,761,424)

(Loss)/Profi t before tax (1,259,103) 639,115

Share of Associate profi t 17,700 (8,318)

Tax expense 414,930 (111,068)

Total comprehensive income (826,473) 519,729

Attributable to non controlling interest (447,905) 280,653

Summarised Statement of Financial Position

As at 31 December 2016

Inventories, cash and bank balances & other current assets 6,103,088 6,475,829

Property and equipment & other non-current assets 2,093,990 1,669,734

Financial assets (non-current) 429,281 387,385

Trade and other payables (7,196,256) (5,838,664)

Interest bearing loans and borrowing and deferred tax liabilities (non-current) - -

Total equity 1,430,103 2,694,284

Non controlling interest (NCI) 758,482 1,451,493

Summary of cash fl ow information

For the Year ended 31 December 2016

Operating 189,797 1,204,212

Investing (67,589) (102,398)

Financing (57,434) (91,864)

Net increase/(decrease) in cash and cash equivalent 64,774 1,009,950

Dividend paid to Non-controlling Interest by UGI was $87,675 in 2016.

Dividend paid to Non-controlling Interest by UGI was $150,615 in 2015.


78


13 DEFERRED TAX


2016 2015 2016 2015

$ $ $ $

13.1 DEFERRED TAX ASSET 957,994 1,032,225 - 263,669

MOVEMENT IN DEFERRED TAX ASSET

Opening balance 1,032,225 31,818 263,669 -

Transfer from deferred tax liability (263,669) (81,452) (263,669) (81,452)

Deferred tax credit/(charge) for the year in profi t or loss 414,930 604,740 - 345,121

Acquisition of subsidiary - 746,850 - -

Discontinued operations (Note 8.8) (96,380) - - -


Closing balance 957,994 1,032,225 - 263,669

Deferred Tax Asset Analysis

Property and equipment (67,126) (41,228) - (14,600)

Investment properties 78,657 120,977 - 83,211

Unquoted equities - (9,689) - (9,689)

Investment in associates 47,377 72,583 - 38,471

Investment in subsidiaries - (27,971) - (27,971)

Held for trading - 70,422 - 70,422

Other non-current assets - 75,297 - 75,297

Trade receivables - (1,255,568) - (1,255,568)

Inventory - - - -

Deferred acquisition costs (1,106) (328,438) - (246,837)

Short-term investments - (1,431) - -

Unrealised exchange losses - 13,889 - 13,889

Trade payables - 633,013 - 633,013

Unquoted equities - - - -

Tax losses 4,538 139,198 - -

Short-term provisions 895,654 1,571,171 - 904,030

957,994 1,032,225 - 263,669

The Group has recognised a deferred income tax asset as it is probable that in the foreseeable future, taxable profi ts will be available against which

the deferred tax asset can be realised.

At 31 December 2016, the group subsidiariy had experienced a tax losses amounting to $17,624, (2015: $695,981).

The analysis of the deferred tax effect of tax losses is stated below:

Opening balance Loss/(utilisation) Disposal of subsidiary Closing balance

2016 balance 695,981 17,624.00 (695,981) 17,624

2015 balance 761,100 (65,119.00) - 695,981

2014 balance 70,631 690,469 - 761,100

2013 balance 134,756 (64,125) - 70,631

2012 balance 72,262 62,494 - 134,756

2011 balance 131,876 (59,614) - 72,262

2010 balance 236,763 (104,887) - 131,876

2009 balance - 236,763 - 236,763


79


13.2 DEFERRED TAX LIABILITY


2016 2015 2016 2015

$ $ $ $

At beginning of year 307,807 392,635 - 81,452

Exchange difference 6,045 (38) - -

Transfer to/(from) deferred tax asset (263,669) (81,453) (263,669) (81,452)

Deferred tax charge/(credit) for the year in profi t or loss 381,781 (3,337) 407,178 -

Balance at 31 December 431,964 307,807 143,509 -

Deferred Tax Analysis

Property, plant and equipment 36,484 16,208 22,221 -

Investment properties 232,102 291,599 (42,091) -

Other intangible assets 190,127 - 190,127 -

Investment in associates (23,516) - (23,516) -

Investment in subsidiaries 27,971 - 27,971 -

Investment held to maturity 16,427 - 16,427 -

Trade receivables 1,644,361 - 1,644,361 -

Deferred acquisition costs 229,377 - 229,377 -

Unrealised exchange losses (21,593) - (21,593) -

Trade payables (876,336) - (876,336) -

Short-term provisions (1,023,439) - (1,023,439) -

Estimated tax losses - - - -

431,965 307,807 143,509 -

14 STATUTORY DEPOSIT

Opening balance 125,224 152,135 - -

Additional investment 38,332 - - -

Discontinued operations/movement (163,556) (26,911) - -

Closing balance - 125,224 - -

This pertained entirely to FICO and is a requirement per the Insurance Act of Uganda that every insurer should establish and maintain at the central

bank a security deposit of at least 10% of the prescribed paid up capital of the company. This deposit is only available for distribution at liquidation

of the Company.

The balance is now nil after the investment in FICO was disposed.

15 INSURANCE RECEIVABLES Group Group Company Company

2016 2015 2016 2015

$ $ $ $

Trade Receivables and recoveries

Due from policy holders (Direct clients) 734,659 987,554 162,678 238,346

Due from reinsurers 2,774,453 3,131,575 527,812 497,387

Due from brokers, agents & intermediaries 7,536,726 6,755,408 6,099,117 4,608,163

Due from insurers 160,727 73,283 124,073 29,485

Provision for credit losses (393,432) (372,383) - -

10,813,133 10,575,437 6,913,680 5,373,380

Other trade receivables

Direct and treaty losses receivable 398,156 288,270 262,322 231,759

Grand Total 11,211,289 10,863,707 7,176,002 5,605,140


80


Premiums are generally payable at inception of policy, however, in certain instances payment terms over the policy period are agreed with the policy

holders.

As at 31 December 2016, trade receivables at initial value of $393,432 (2015 - $372,383) were impaired.

The Group cancels all policies which will be long over due and where premiums are deemed not collectable. The Group does not intend to keep

debtors above 365 days save for exceptional cases where clear payment plans are in place and are being adhered to.


15.1 Other receivables and pre-payments 2016 2015 2016 2015

$ $ $ $

Staff loans 307,622 189,002 291,489 162,440

Rentals receivable 6,731 4,300 6,731 4,300

Other receivables 221,349 294,310 159,681 122,978

Prepayments 32,149 42,636 29,835 17,062

567,851 530,248 487,736 306,780

Loans are issued to staff on an average interest rate of 12%. The repayment period is three years.

15.2 Trade Receivables and recoveries Group Group Company Company

2016 2015 2016 2015

$ $ $ $

Neither past due nor impaired Not due 2,853,145 1,458,568 2,853,145 1,380,124

Past due but not impaired 0-30 days 3,532,707 1,470,646 1,490,076 827,048

Past due but not impaired 31-60 days 1,624,385 1,550,434 643,506 730,408

Past due but not impaired 61-90 days 1,067,075 1,468,577 606,009 785,132

Past due but not impaired over 90 days 1,735,821 4,627,212 1,320,944 1,650,669

10,813,133 10,575,437 6,913,680 5,373,381

Movements in provision for credit losses

Opening balance (372,383) (18,849) - -

Acquisition of subsidiary - UGI - (172,270) - -

Exchange difference on translation of foreign operation 102,682 204,915 - -

Discontinued operations 160,717 (257,455) - -

Charge for the year (284,448) (128,724) - -

Balance at end of year (393,432) (372,383) - -

The carrying amounts of trade and other receivables approximate fair value.

An impairment analysis is performed at each reporting date on an individual basis for all clients.

16 INVENTORIES Group Group Company Company

2016 2015 2016 2015

$ $ $ $

Consumables and stationery 30,513 54,010 30,513 54,010

Property development costs - 3,224,720 - 3,224,720

30,513 3,278,730 30,513 3,278,730

The amounts under property development in 2015 relates to the Hatfi eld Cluster houses which were being developed for resale. In 2016 the

amounts were transferred to investment property after a decision was made to hold them for rentals.


81


16.1 Movement in inventories


2016 2015 2016 2015

$ $ $ $

Opening balance 3,278,730 2,953,745 3,278,730 2,953,745

Movement in consumables (23,497) 8,887 (23,497) 8,887

Reclassifi cation to investment property 10 (3,224,720) - (3,224,720) -

Property development - 316,098 - 316,098

Closing balance 30,513 3,278,730 30,513 3,278,730

17 DEFERRED ACQUISITION COSTS

Group

Insurance Insurance Insurance Insurance

contracts contracts contracts contracts

NDI FICO UGI

At 1 January 2015 827,639 87,120 383,954 1,298,713

Expenses deferred 1,339,207 27,078 11,074 1,377,359

Amortisation (1,208,256) (70,046) (123,025) (1,401,327)

At 31 December 2015 958,590 44,152 272,003 1,274,745

Expenses deferred 805,372 - 31,742 837,114

Discontinued operations - (44,152) - (44,152)

Amortisation (873,178) - - (873,178)

At 31 December 2016 890,784 - 303,745 1,194,529

Group Group Company Compan

2016 2015 2016 2015

$ $ $ $

18 CURRENT TAX PAYABLE

Balance at the beginning of the year 197,942 210,070 209,833 159,963

Prior year adjustment - - - -

Take on balance at acquisition 12.2 - 171,135 - -

Exchange rate movement on foreign operations (121) (99,530) - -

Amounts charged to statement of profi t or loss 8.7 425,168 473,895 415,863 291,371

Amounts paid (516,100) (557,630) (370,743) (241,501)

Balance at the end of the year 106,889 197,940 254,953 209,833


82


19 Related Party Disclosures

19.1 The fi nancial statements include the fi nancial statements of NicozDiamond Insurance Limited and the subsidiaries listed below:

Country of Primary Business

Incorporation Operation % Held

United General Insurance Limited Malawi Short term Insurance 46%

Thirty Samora Machel (Private) Limited Zimbabwe Property Investments 100%

Marabou Investments (Private) Limited Zimbabwe Property Investments 100%

Starwin Investments Zimbabwe Property Investments 100%

19.2 a) Transactions with related parties

Terms and conditions of transactions with related parties

For the year ended 31 December 2016, the Group has not recorded any impairment of receivables relating to amounts owed by related parties

(2015- nil). This assessment is undertaken each fi nancial year through examining the fi nancial position of the related party and the market in which

the related party operates. The repayment terms for related party balances differ per specifi c contracts.


2016 2015 2016 2015

$ $ $ $

Transactions with Related Parties

ZimRe Holdings Limited (ZHL) - (Shareholder)

Management Fees - - - -

Insurance premiums received 12,009 16,893 12,009 16,893

Claims & benefi ts paid - (6,735) - (6,735)

Fidelity Life Assurance Group (Associate of ZHL)


Claims & benefi ts paid (36,442) (34,192) (36,442) (34,192)

Medical aid contributions paid 165,642 (203,856) 165,642 (203,856)

Pension contributions paid - (410,124) - (410,124)

Baobab Reinsurance (subsidiary of ZHL)

Net reinsurance paid (219,386) (394,293) (219,386) (394,293)



CFI (Associate of ZHL)



ZimRe Property Investments (Subsidiary of ZHL)


Rentals paid 18,749 (23,068) 18,749 (23,068)


NATIONAL SOCIAL SECURITY AUTHORITY (Shareholder)




83



2016 2015 2016 2015

$ $ $ $

Nissan Clover Leaf (Associate)

Insurance premiums received - - -


Special Automobile Underwriters of Zimbabwe (Underwriting agency)


Malawi Re (Subsidiary of ZHL)

Reinsurance (185,784) (517,371)

19.2 b) Amounts owed to/(owed by) Related Parties

Receivables and Payables to Related Parties are as follows;

Receivables from Related Parties

M Bagalaaliwo - FICO shareholder - 21,442 - -

NicozUganda - 7,011 - -

Reinsurance Brokers International - 332,563 - -

Thirty Samora Machel (Private) Limited (subsidiary) - - 150,187 289,519

Marabou Investments (Private) limited (Subsidiary) - - 20,778 3,058

Malawi RE (Subsidiary of ZHL) 543,021 327,564 - -

First Insurance Company limited - - - 86,456

Diamond Seguros (Associate) - 40,000 - 40,000

Mozre, Mozambique Reseguros SA (subsidiary of ZHL) - 27,687 - 27,687

Zimbabwe Insurance Brokers - 45,989 - 45,989

ZimRe Holdings Limited (Shareholder) - 168,389 - 168,389

Special Automobile Underwriters of Zimbabwe (unquoted equity) - 16,179 - 16,179

United General Insurance Ltd Malawi (Subsidiary) - - 56,500 -

Starwin (Subsidiary) 1,135 - 1,135 -

544,156 986,824 228,600 677,277

The balances are classifi ed as current assets in the Statement of Financial Position


2016 2015 2016 2015

$ $ $ $

Payables to Related Parties

Malawi Re 185,784 517,371 - -

Reinsurance Brokers International - 105 - -

Special Automobile Underwriters of Zimbabwe 43,076 - 43,076 -

Diamond Seguros 19,576 - 19,576 -

Baobab Re - 7,511 - -

ZimRe Holdings Limited - 447,488 - 447,488

248,436 972,475 62,652 447,488

The balances are classifi ed as current liabilities in the Statement of Financial Position

Transactions with related parties are made on terms equivalent to those that prevail in arm’s length transactions. Outstanding balances at the


84


year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party

receivables or payables. For the year ended 31 December 2016, the Group has not recorded any impairment of receivables relating to amounts

owed by related parties (2014: $Nil). This assessment is undertaken each fi nancial year through examining the fi nancial position of the related party

and the market in which the related party operates.

Compensation of key management personnel of the Group


2016 2015 2016 2015

19.3 $ $ $ $

Short term employee benefi ts 777,746 847,843 739,775 747,896

Share based payments transactions - 53,175 - 53,175

Post employment pension 33,355 28,595 33,355 28,595

Total compensation paid to Key Management Personnel 811,101 929,613 773,130 829,666

The amounts disclosed in the table are the amounts recognised as an expense during the reporting period related to key management personnel.

Key management personnel comprises of executives


2016 2015 2016 2015

$ $ $ $

19.4 Executive Directors loan balance 65,081 48,957 65,081 48,957

The Group offers senior management a facility to borrow loans , repayable within fi ve years from date of disbursement . Such loans are

unsecured and the interest rate is 7% per annum.

The fair value of the loan is equivalent to the carrying amount. Appropriate shareholder approvals are sought annually.

20 CASH AND CASH EQUIVALENTS Group Group Company Company

2016 2015 2016 2015

$ $ $ $

Cash on hand and balances with banks 1,825,471 2,990,813 1,764,595 2,840,136

Deposits with original maturity less than 3 months 3,028,329 5,496,995 2,202,735 4,552,647

Total cash and bank 4,853,800 8,487,808 3,967,330 7,392,783

21 ORDINARY SHARE CAPITAL AND SHARE PREMIUM

Authorised Share Capital

600 000 000 ordinary shares of $0.005 each 3,000,000 3,000,000 3,000,000 3,000,000

Issued Share Capital

566 764 773 (2015 - 566 764 773) ordinary shares of $0.005 each 2,833,525 2,833,525 2,833,525 2,833,525

Share Premium 3,291,039 3,291,039 3,291,039 3,291,039

21.1 Dividend Paid

A fi nal dividend of 0.074 cents per share was declared for 2016, whilst a dividend of $289,905 was paid in 2015.


85


21.2 SHARE OPTIONS

Shareholders approved a share option scheme for 55,945,016 shares on 18 May 2010. Under the share option scheme , all permanent employees

of the company are awarded share options based on their grade in the organization, their individual performance in the year and the years served

in the organization. The allocation criterion is applied equally across both management and all permanent staff who have been with the company

for at least one year at the time of granting are eligible per the scheme rules.

Granted share options are exercised 40% after fi rst year, up to 80% after second year and in full after third year.

There were no share options granted in 2016, those granted in 2015 are exercisable as follows:

Granted in 2016 Granted in 2015

Amount

Exercisable from March 2015 - 4,486,472



Movements during the year

The following table illustrates the number and weighted average exercise price (WAEP) of and movements in share options during the year

Movements during the year 2016 2016 2015 2015

Number WAEP Number WAEP

Outstanding at 1 January 33,512,655 1.30 22,296,475 1.30

Granted during the year - - 11,216,180 1.30

Forfeited shares (7,187,144) -

Outstanding as at 31 December 26,325,511 33,512,655

The weighted average remaining contractual life for the share options outstanding as at 31 December 2016 was 2.75 years (2015- 3.75 years)

The forfeited shares relate to options that had been granted to employees who are no longer with the Company.

The share options were valued by an independent value using the Black-Scholes-Merton valuation model. Inputs into the Black-Scholes-Merton

valuation model are given below:

2016

Description Symbol Value Comment

Current price S0 1.30 cents Market price at grant date ( 10 March 2015)

Exercise Price K 1.30 cents As agreed by Board on resolution

Time period T 3 years Expected expiry of options in terms of scheme

Excepted volatility δ 0 Annualised standard deviation of share price daily returns for 3 years to

31 December 2015

Risk free rate r 8% Estimated average risk-free yield on 3-year government securities

Dividend yield Y 4.23% Average dividend yield for 2012 and 2014

2015

Description Symbol Value Comment

Current price S0 1.30 cents Market price at grant date ( 10 March 2015)

Exercise Price K 1.30 cents As agreed by Board on resolution

Time period T 3 years Expected expiry of options in terms of scheme

Excepted volatility δ 0 Annualised standard deviation of share price daily returns for 3 years to

31 December 2015

Risk free rate r 8% Estimated average risk-free yield on 3-year government securities

Dividend yield Y 4.23% Average dividend yield for 2012 and 2014


86


21.2.1 Share option costs

The movement of the share option reserve are shown through the profi t or loss (see note 8.4).

The movement in 2016 was ( $1,078), (2015:$53,175).


22 LOANS 2016 2015 2016 2015

$ $ $ $

22.1 LONG TERM LOANS

Long term loans are made up of:

Refurbishment Loan - 41,479 - 41,479

22.2 SHORT TERM LOANS

Short- term loans are made up of:

Refurbishment Loan - 53,429 - 53,429

22.3 Reconciliation of the long term and short term loan

Opening balance 94,908 148,799 94,908 148,799

Interest charged - 22,913 - 22,913

Payments made (94,908) (76,804) (94,908) (76,804)

Closing balance - 94,908 - 94,908

In 2012 NICOZDIAMOND took out a loan of $250,000 for property refurbishments. The loan had a fi ve year tenure at an interest rate of 15% per

annum. The balance of the loan was fully paid during the year.

23 INSURANCE AND OTHER PAYABLES


2016 2015 2016 2015

$ $ $ $

Due to policy holders, reinsurers 3,715,811 2,870,013 3,403,246 2,458,304

Other payables and accruals 2,903,112 3,247,748 2,507,949 2,254,713

Insurance payables are non interest bearing and are normally settled on 30 day terms.

Other payables are non interest bearing and have an average term of 60 days.

23.1 A further breakdown of other payable and accruals is as listed below:


2016 2015 2016 2015

$ $ $ $

Salary related accruals 84,611 174,409 61,693 132,697

Other Accruals 243,088 463,560 241,862 102,245

Motor Levy payable 594,550 805,259 571,095 805,259

Stamp duty 777,277 970,601 775,799 566,073

Deferred revenue (premiums paid in advance) 344,661 225,825 344,661 225,825

Dividend Payable 67,258 69,970 67,258 -

Leave Pay provision 151,305 142,729 151,305 142,729

Other payables 640,362 395,395 294,276 279,885

2,903,112 3,247,748 2,507,949 2,254,713


87



2016 2015 2016 2015

$ $ $ $

24 INSURANCE PROVISIONS

Outstanding claims provision 6,354,164 6,133,422 3,009,292 2,869,764

Incurred But Not Enough Reported Claims - 48,435 - 48,435

Incurred but not reported claims provisions 2,332,350 1,661,078 1,328,847 1,040,634

Total outstanding claims and IBNR 8,686,514 7,842,935 4,338,139 3,958,833

Unearned premium provision 6,352,134 6,826,960 4,453,588 4,801,119

Balance at 31 December 15,038,648 14,669,895 8,791,727 8,759,952

The insurance provisions as at 31 December 2016 and 31 December 2015 for the Company are actuarially determined in accordance with IPEC

guidelines.

The inputs which have a signifi cant effect on the recorded fair value are based on observable historical company and market data.

24.1 MOVEMENT IN OUTSTANDING CLAIMS AND IBNR


2016 2015 2016 2015

$ $ $ $

Opening balance 7,842,935 3,378,488 3,958,833 3,074,855

Exchange rate movement on foreign operations (848,635) (1,822,982) - -

Acquisition of Subsidiary - UGI - 4,536,424 - -

Disposal of subsidiary - 347,136 - -

Utilised in the year (3,175,705) (2,900,984) (2,649,544) (2,759,323)

Raised in the year 4,952,336 4,328,718 3,113,268 3,667,165

Claims payable (84,418) (23,865) (84,418) (23,864)

Closing balance 8,686,513 7,842,935 4,338,139 3,958,833

24.2 MOVEMENT IN UNEARNED PREMIUM PROVISION

Opening balance 6,826,960 4,658,364 4,801,119 4,138,251


Acquisition of Subsidiary - UGI - 1,919,770 - -

Disposal of subsidiary - (108,307) - -

Utilised in the year (4,414,657) (6,552,890) (4,374,329) (6,180,900)

Raised in the year 4,426,467 7,712,279 4,026,798 6,843,768

Closing balance 6,352,134 6,826,960 4,453,588 4,801,119

25 CASH RECEIPTS FROM CUSTOMERS

Opening balance for insurance and other receivables (excluding

prepayments) 12,338,143 8,199,749 6,572,135 7,021,157

Discontinued operation (625,576) - - -

Gross premiums receivable for the year 36,999,972 39,210,891 29,581,924 28,763,079

Other gross receivables for the year 2,145,711 2,777,959 1,682,480 2,095,167

Unrealised exchange gains (37,640) 20,111 (37,640) 26,215

Dividend received 37,793 56,247 37,793 34,221

Rentals revenue 292,173 192,995 66,287 52,662

Closing balance for trade and other debtors (excluding prepayments) (12,291,150) (12,338,143) (7,862,504) (6,572,135)

Cash received 38,859,426 38,119,809 30,040,475 31,420,366


88



2016 2015 2016 2015

$ $ $ $

26 CASH PAID TO SUPPLIERS AND EMPLOYEES

Opening balance for current liabilities (excluding tax) (21,760,130) (12,215,664) (13,920,457) (10,419,881)

Discontinued operation 1,018,304 - - -

Gross premiums payable/cedable for the year (12,767,084) (13,144,535) (10,565,969) (10,565,793)

Gross payables for benefi ts and claims, commission (19,168,918) (19,401,331) (14,338,287) (13,374,236)

Operating expenses (less depreciation) (6,652,840) (8,566,938) (4,903,536) (5,733,491)

Prepayments (32,149) (42,636) (29,835) (17,062)

Investment in property development Diamond Villas 16.1 - (316,098) - (316,098)

Movement in inventories 23,498 (8,887) 23,498 (8,887)

Closing balance for current liabilities (excluding tax) 21,906,005 21,760,130 14,765,574 13,920,457

Cash paid (37,433,314) (31,935,959) (28,969,012) (26,514,991)

27 RISK MANAGEMENT FRAMEWORK

27.1 Governance frame work

The primary objective of the Group’s risk and fi nancial management framework is to protect the Group’s shareholders from events that hinder the

sustainable achievement of fi nancial performance objectives, including failing to exploit opportunities. Key management recognises the critical

importance of having effi cient and effective risk management systems in place.

The Group established a risk management function with clear terms of reference from the Board of Directors, Audit and Risk Management

committee and the Management Committees. A Group policy framework which sets out the risk profi les for the Group, risk and management

control has been put in place. Each risk identifi ed has controls put in place to counter it and a member of senior management charged with

overseeing compliance.

The Audit and Risk Management committee of the Board approves the Group risk management policies. These policies defi ne the Group’s

identifi cation of risk and its interpretation, limit structure to ensure the appropriate quality and diversifi cation of assets, align underwriting and

reinsurance strategy to the corporate goals, and specify reporting requirements.

27.2 Approach to capital management

The Group seeks to optimise the structure and sources of capital to ensure that it is consistently maximising returns to the shareholders.

The Group’s approach to managing capital involves managing assets, liabilities, and risks in a coordinated way, assessing shortfalls between

reported and required capital levels on a regular basis and taking appropriate actions to infl uence the capital position of the Group in the light of

changes in economic conditions and risk characteristics. An important aspect of the Group’s overall capital management process is the setting of

target risk adjusted rates of return, which are aligned to performance objectives, to ensure that the Group is focused on the creation of value for

shareholders.

27.3 Capital Management objectives, policies and approach

The primary source of capital used by the Group is equity shareholders’ funds and reinsurance support. The primary objective of the Group’s

capital management is to ensure that it maintains a strong claims paying ability rating, healthy solvency and liquidity ratios in order to support its

business (underwriting capacity) and maximise shareholder value. The Group manages its capital structure and makes adjustments to it, in light

of changes in economic conditions. The Group monitors capital using a solvency ratio calculated as equity divided by Net Premiums Written. As at

31 December the solvency ratio was 66%(2014:66%). The solvency ratio comes down to 37% when upon factoring the capital guidelines issued

by the regulator mainly relating to the disallowance of Debtors above 90 days. This will however still be above the regulatory minimum solvency

margin of 25%.


89


The components of the Capital were as follows:


2016 2015 2016 2015

$ $ $ $

Share capital 2,833,525 2,833,525 2,833,525 2,833,525

Share premium 3,291,039 3,291,039 3,291,039 3,291,039

Retained earnings 12,514,434 11,456,638 6,186,738 4,461,722

Capital reserves - 30,394 - -

Foreign translation reserve (759,173) (892,290) - -

Other reserves 121,448 450,981 121,448 122,526

Total Equity 18,001,273 17,170,287 12,432,750 10,708,812

27.4 Regulatory framework

Regulators are primarily interested in protecting the rights of policy holders. The Group is monitored closely by the Regulator to ensure that it

satisfactorily manages affairs for the benefi t of policyholders. At the same time regulators are also interested in ensuring that the Group maintains

an appropriate solvency position to meet unforeseen liabilities arising from economic shocks or natural disasters.

The operations of the Group are also subject to regulatory requirements within the jurisdictions in which it operates. Such regulations, also impose

certain restrictive provisions (e.g. Solvency ratios) to minimise the risk of default and insolvency on the part of the insurance companies to meet

unforeseen liabilities as these arise. Minimum capital requirements as set by the Insurance and Pensions Commission in Zimbabwe is $1,500,000,

and the minimum capital applicable for Uganda is $372,301. Both entities are meeting capital requirements in their respective jurisdictions.

The Group’s Malawi subsidiary (UGI) is required by the Regulator (Reserve bank of Malawi) to have a minimum solvency ratio of 20% and a

minimum core capital of 50 million. As at 31 December 2016 the Company’s solvency ratio was 16% which is below the minimum required ratio.

27.5 Insurance and fi nancial risk

The principal risk the Group faces under insurance contracts is that the actual claims and benefi t payments or the timing thereof, differ from

expectations. This is infl uenced by the frequency of claims, severity of claims, actual benefi ts paid and subsequent development of long term

claims.

Therefore the objective of the Group is to ensure that suffi cient reserves are available to cover these liabilities. The above risk exposure is mitigated

by diversifi cation across a large portfolio claims. Therefore, the objective of the Group is to have suffi cient reserves available to cover these liabilities.

The risk exposure is mitigated by diversifi cation across a large portfolio of insurance contracts and geographical areas. The variability of risks is also

improved by careful selection and implementation of underwriting strategy guidelines, as well as the use of reinsurance arrangements.

The Group purchases reinsurance as part of its mitigation programme. Reinsurance ceded is placed on both a proportional and non-proportional

basis. The majority of proportional reinsurance is quota-share reinsurance which is taken out to reduce the overall exposure of the Group to

certain classes of business. Non-proportional reinsurance is primarily excess-of-loss reinsurance designed to mitigate the group’s net exposure to

catastrophe losses. Retention limits for the excess of loss reinsurance vary by product line.

Amounts recoverable from reinsurers are estimated in a manner consistent with the outstanding claims provision and are in accordance with the

reinsurance contracts. Although the Group has reinsurance arrangements, it is not relieved of its direct obligations to its policyholders and thus

a credit exposure exists with respect to ceded insurance, to the extent that any reinsurer is unable to meet its obligations assumed under such

reinsurance arrangements. The Group’s placement of reinsurance is diversifi ed such that it is neither dependant on a single reinsurer nor are the

operations of the Group substantially dependant upon any single reinsurance contract.

The Group principally issues the following type of general insurance contracts: motor, fi re, marine, accident, engineering, farming etc. The variability

of risks is improved by careful selection and implementation of underwriting strategies, which are designed to ensure that risks are diversifi ed in

terms of risk and level of insured benefi ts. This is largely achieved through diversifi cation across industry sectors and geography. Further, strict


90


claim review policies to assess all lodged claims, regular detailed review of claims handling procedures and frequent investigation of possible

fraudulent claims are all policies and procedures put in place to reduce the risk exposure of the Group. The Group further enforces a policy of

actively managing and promptly pursuing claims, in order to reduce its exposure to unpredictable future developments that can negatively impact

the business.

The major source of risk is motor class followed by Accident class in 2016. In 2015 the major source of risk was motor followed by the fi re class.

The table below sets out the concentration of insurance contract liabilities (outstanding claims and IBNR) by type of contract:

2016

Gross Liability Reinsurance recovery Net Liabilities

Motor 7,070,752 612,096 6,458,656

Fire 11,105,543 10,464,718 640,825

Marine 132,449 67,173 65,276

Engineering 254,268 73,140 181,128

Accident 1,604,316 413,608 1,190,708

Credit 176,660 28,588 148,072

Farming 2,183 - 2,183

Aviation (334) - (334)

20,345,837 11,659,323 8,686,514

2015

Gross Liability Reinsurance recovery Net Liabilities

Motor 6,021,724 923,160 5,098,564

Fire 2,065,566 2,125,614 (60,048)

Marine 132,496 24,645 107,851

Engineering 466,674 140,635 326,039

Accident 2,305,064 10,000 2,295,064

Credit 124,755 49,290 75,465

11,116,279 3,273,344 7,842,935

The geographical concentration of the Group’s insurance contract liabilities is noted below. The disclosure is based on the countries where the

business is written.


91


2016

Gross Liabilities Reinsurance of Liabilities Net Liabilities

Zimbabwe 14,357,120 10,382,600 3,974,520

Malawi 5,988,717 1,276,723 4,711,994

Total 20,345,837 11,659,323 8,686,514

2015

Gross Liabilities Reinsurance of Liabilities Net Liabilities

Zimbabwe 5,069,767 1,558,946 3,510,821

Malawi 4,869,294 1,305,962 3,563,332

Uganda 1,177,218 408,436 768,782

Total 11,116,279 3,273,344 7,842,935

Key assumptions

Material judgement is required in determining the liabilities and in the choice of assumptions. Assumptions in use are based on past experience,

current internal data, external market indices and benchmarks which refl ect current observable market prices and other published information.

Assumptions and prudent estimates are determined at the date of valuation and no credit is taken for possible benefi cial effects of voluntary

withdrawals. Assumptions are further evaluated on a continuous basis in order to ensure realistic and reasonable valuations.

Claims Development table

The following table is an assessment for IBNR and outstanding claims since 2010 on a net of reinsurance basis.

Loss year

Year Paid 2010 2011 2012 2013 2014 2015 2016 Total

0 5,653,333 8,726,438 6,938,830 7,869,671 8,048,424 8,698,141 11,060,754

1 5,653,333 8,726,438 6,938,830 7,869,671 8,048,424 8,698,141

2 5,653,333 8,874,749 6,961,991 7,681,242 8,709,661

3 5,653,333 8,874,758 6,963,703 7,686,647

4 5,653,333 8,880,039 6,992,906

5 5,653,333 8,932,320

6 5,653,333

7 - - - - - - - -

Cumulative estimate 5,653,333 8,932,320 6,992,906 7,686,647 8,709,661 8,698,141 11,060,754 59,792,556

of cumulate claims

incurred


92


Cumulative Paid Claims

Loss Year 2010 2011 2012 2013 2014 2015 2016 Total

0 4,379,092 6,238,866 5,613,474 5,107,311 5,513,484 5,975,472 6,911,347

1 5,923,507 8,414,268 7,203,247 7,442,302 7,981,751 8,434,083

2 6,012,887 8,686,498 7,371,975 7,602,000 8,311,565

3 6,385,361 8,755,818 7,384,989 7,605,576

4 6,444,376 8,803,509 7,404,166

5 6,448,111 8,823,908

6 6,448,111

7 - - - - - - - -

Cumulative payments 6,448,111 8,823,908 7,404,166 7,605,576 8,311,565 8,434,083 6,911,347 56,024,355

to date

Current estimate of (794,778) 108,412 (411,260) 81,071 398,096 264,058 4,149,407 3,768,201

surplus/(defi ciency)

% Surplus/Defi ciency)

of initial gross reserve -14% 1% -6% 1% 5% 3% 38% 6%

The following changes were made in coming up with the development table by the Actuary:

1. The Company does not revise its IBNR estimates

2. The table supplied as at 31 December 2015 allowed for changes in estimates but this has been changed to be in line with Company policy.

3. The 2016 current estimate od surplus/(defi ciency) is equivalent to outstanding claims reserve and IBNR recommended as at 31 December

2016.

Sensitivities

The following analysis is performed for reasonably possible movements in key assumptions with all other assumptions held constant, showing the

impact on gross, and net liabilities, profi t before tax and equity.

31 December 2016 Changes in Impact on Impact on Impact on Impact on

assumptions liabilities net list profi t before tax equity

Average claim cost +10% 78,833 78,833 (78,833) (78,833)

31 December 2015 Changes in Impact on Impact on Impact on Impact on

assumptions liabilities net list profi t before tax equity

Average claim cost +10% 320,732 320,732 (320,732) (320,732)

28 Credit Risk

Credit risk is risk that one party to a financial instrument will cause a financial loss to the other party by failing to discharge an obligation. T h e

following policies and procedures are in place to mitigate the Group’s exposure to credit risk:

• Net exposure limits are set for each counterparty or group of counterparties are set each year by the Board of Directors, (i.e. limits are set

for investments counterparties and cash deposits).

• Reinsurance is placed with counter parties that have a good credit rating and concentration of risks is avoided by following policy guidelines

in respect of counterparties’ limits that are set each year by the Board of Directors and are subject to regular reviews.

At each reporting date, management performs an assessment of creditworthiness of reinsurers and review the reinsurance placement

strategy.

• Risks arising on uncertainty in underwriting are managed through termination of policies.


93


Collateral

The amount and type of collateral required depends on an assessment of the credit risk of the counterparty.

Excessive risk concentration

Concentrations arise when a number of counterparties are engaged in similar business activities, or activities in the same geographical region, or

have economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or

other conditions. Concentrations indicate the relative sensitivity of the Group’s performance to developments affecting a particular industry.

Credit risk from balances with banks and fi nancial institutions is managed by the Group’s Investment committee in accordance with the Group’s

policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty.

The limits are set to minimise the concentration of risks and therefore mitigate fi nancial loss through a counterparty’s potential failure to make

payments.

28.1 Credit Exposure

The Group’s maximum exposure to credit risk is equal to the carrying amounts of fi nancial assets as disclosed on the statement of fi nancial position.

The Group’s maximum exposure for fi nancial guarantees is equal to the maximum amount the entity could have to pay if the guarantee is called

on. The maximum risk exposure presented below does not include the exposure that arise in the future as a result of the changes in values.

31 December 2016 $

Financial guarantees 526,935

31 December 2015

Financial guarantees 220,000

28.2 Liquidity Risk

Liquidity risk is that risk that the Group will encounter diffi culty in meeting obligations associated with fi nancial instruments. The following policies

and procedures are in place to mitigate the Group’s exposure to liquidity risk.

- Guidelines are set for asset allocation, portfolio limit structures and maturity profi les of assets in order to ensure suffi cient funding is available to

meet insurance and investment contracts obligations.

- Contingency funding plans are in place, which specify minimum proportion of funds to meet emergency calls as well as specifying events that

trigger such plans.

Maturity Profi les

The Group maintains a portfolio of highly marketable and diverse assets that can be easily liquidated in the event of an unforeseen interruption of

cash fl ow. The table that follows summarises the maturity profi le of the non-derivative fi nancial assets and fi nancial liabilities of the Group.

Unearned premiums have been excluded from the analysis as they are not contractual obligations.


94


Maturity Analysis (contractual undiscounted cash fl ow basis)

Group

2016 Carrying Amount Up to one year 1-3 years Total

Financial Assets

Investment in unquoted equities 17,493 17,493 - 17,493

Investment held to maturity 2,708,182 - 3,161,483 3,161,483

Insurance receivables 11,211,289 11,211,289 - 11,211,289

Related party receivables 544,156 544,156 - 544,156

Other receivables 830,184 567,851 262,333 830,184

Short-term investments 1,594,793 1,594,793 - 1,594,793

Cash and cash equivalents 4,853,800 4,853,800 - 4,853,800

Total undiscounted assets 21,759,897 18,789,382 3,423,816 22,213,198

Financial Liabilities

Insurance payables 3,715,811 3,715,811 - 3,715,811

Related party payables 248,436 248,436 - 248,436

Other payables and accruals 2,903,112 2,903,112 - 2,903,112

Claims Payable 15,038,648 15,038,648 - 15,038,648

Total undiscounted liabilities 21,906,007 21,906,007 - 21,906,007

Net liquidity surplus (146,110) (3,116,625) 3,423,816 307,191

Company


Financial Assets


Investment held to maturity 2,708,182 - 3,161,483 3,161,483



Other receivables and prepayments 640,389 487,736 152,653 640,389



Total undiscounted assets 15,988,609 13,127,774 3,314,136 16,441,910





Claims Payable 8,791,727 8,791,727 - 8,791,727

Total undiscounted Liabilities 14,765,574 14,765,574 - 14,765,574

Net liquidity surplus 1,223,035 (1,637,800) 3,314,136 1,676,336


95


Group


Financial Assets


Investment held to maturity 430,000 - 561,859 561,859

Statutory deposit 125,224 125,224 - 125,224



Other Receivable 530,248 375,557 154,691 530,248



Total undiscounted assets 23,351,984 22,767,292 716,550 23,483,842


Long term loans 41,479 - 41,479 41,479


Short-term loans 53,429 53,429 - 53,429



Claims Payable 14,669,895 14,669,895 - 14,669,895

Total undiscounted Liabilities 21,855,038 21,813,560 41,479 21,855,039

Net liquidity surplus 1,496,945 953,732 675,071 1,628,803

Company


Financial Assets

Investment in unquoted equities 2,011,568 2,011,568 - 2,011,568

Investment held to maturity 430,000 - 561,859 561,859



Other Receivable 306,780 306,780 - 306,780

Short-term investments 744,582 744,582 - 744,582


Total undiscounted assets 17,168,130 16,738,130 561,859 17,299,989


Long term loans 41,479 - 41,479 41,479


Short-term loans 53,429 53,429 - 53,429



Claims Payable 8,759,952 8,759,952 - 8,759,952

Total undiscounted Liabilities 14,015,365 13,973,886 - 14,015,365

Net liquidity surplus 3,152,765 2,764,244 520,380 3,284,624


96



28.3 Market Risk

Market risk is the risk that the fair value or future cash fl ows of a fi nancial instrument will fl uctuate because of changes in market prices. Market

risk comprises three types of risk: foreign exchange rates (currency risk), market interest rates (interest rate risk) and market prices, (price risk).

(a) Foreign Currency Risk

Currency risk is the risk that the fair value of future cash fl ows of a fi nancial instrument will fl uctuate because of changes in foreign exchange

rates. The Group’s principal transactions are carried in United Sates Dollars and its exposure to foreign exchange risk arise primarily with respect to

South African Rand, Ugandan Shillings and Malawian Kwacha. The Group’s fi nancial assets are primarily denominated in the same currencies as

its insurance and investment contract liabilities, which mitigates the foreign currency exchange rate risk for the foreign operations. Thus the main

foreign exchange risk arises from recognised assets and liabilities denominated in currencies other than those in which insurance and investment

contract liabilities are expected to be settled.

(b) Foreign Currency Sensitivity

The Group’s principal foreign currency exposures are to the USD against the Malawian Kwacha . The table below illustrate the hypothetical

sensitivity to the Group’s reported profi t (I/S) and net assets (Equity) to a 10% increase and decrease in the US$/UGX and US$/Mal Kwacha (MWK)

exchange rates at the year end date, assuming all other variables remain unchanged. The sensitivity of 10% represents the Directors’ assessment

of a possible change.

2016 P/L $) Equity ($)

US$ weakens by 10% to MWK (93,515) (137,904)

US$ strengthens by 10% to MWK 76,512 168,549

Exchange rate applied USD: MWK 711 726

2015 P/L $) Equity ($)

US$ weakens by 10% to MWK (48,254) (247,839)

US$ strengthens by 10% to MWK 58,977 302,914

Exchange rate applied USD: MWK 498 643

Positive fi gures represent an increase in profi t or increase in value on net assets.

(c) Interest Rate Risk

Interest rate risk is the risk that the value or future cash fl ows of a fi nancial instrument will fl uctuate because of changes in market interest rates.

The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s long term debt obligations which carry fi xed

interest rates. The Group is not exposed to the risk of changes in market interest rates as a result of the fi xed nature of interest rates. As a result

of the fi xed nature of interest rates, no sensitivity analysis has been presented

(d) Equity Price Risk

Equity price risk is the risk that the fair value of future cash fl ows of a fi nancial instrument will fl uctuate because of changes in market prices (other

than those arising from interest rate risk or currency risk), whether those changes are caused by factors specifi c to the individual fi nancial instrument

or its issuer, or factors affecting all similar fi nancial instrument or its issuer, or factors affecting all similar fi nancial instruments traded in the market.

A substantial part of the Group’s equity portfolio comprises listed counters. Unlisted counters are subjected to periodic fi nancial analysis and

review. The Group’s equity price risk policy is to manage such risks by setting and monitoring objectives on investments, setting limits and ensuring

diversifi cation of the portfolio. The Board reviews and approves all the equity investment decisions.

97


Below is a table showing the impact on the group profi t before tax and fair values due to changes in market prices. There is no impact on equity

31 December 2016 analysis:

impact on profi t before tax

US$

10% 42,647

-10% (42,647)

31 December 2015 analysis: impact on profi t before tax

US$

10% 36,458

-10% (36,458)

At the reporting date, the exposure to listed equity securities at fair value through profi t and loss was $426,467 [2015:(24,827)]

29.1 Operational Risk

Operational risk is the risk of loss arising from system failure, human error, fraud or external events. When controls fail to perform, operational

risks can cause damage to reputation, have legal or regulatory implications or can lead to fi nancial loss. The Group cannot expect to eliminate

all operational risks, but by initiating a rigorous control framework and by monitoring and responding to potential risks, the Group is able to

manage the risks. Controls include effective segregation of duties, access controls authorisation and reconciliation procedures, staff education and

assessment processes, including the use of internal audit. Business risks such as changes in environment technology and the industry are monitored

through the Group’s strategic planning and budgeting process.

29.2 Contingencies and Commitments

(a) The Group operates in the insurance industry and is subject to legal proceedings in the normal course of business. The Group is also subject

to insurance solvency regulations in all the territories where it operates and has complied with all these solvency regulations.

There are no contingencies associated with the Group’s compliance or lack of compliance with such regulations. No changes were made in the

objectives, policies or processes during the years.

b) Stamp Duty

During the fi nancial year, the tax authorities observed that the non-life insurance industry in Zimbabwe was not complying with the requirements of

the Finance Act when computing and collecting Stamp Duty from clients. This would have resulted in signifi cant Stamp Duty obligations to the tax

authorities by the company. However, the matter was resolved amicably and the industry was pardoned by the Ministry of Finance and Economic

Development. As a result, the potential tax obligations were not accrued by the company.

(c) Commitments:

Group 2016 2015

Authorised capital expenditure not contracted for 1,673,786 643,733

Authorised capital expenditure contracted for 168,022 516,778


98



30 OPERATING LEASE COMMITMENTS - GROUP AS LESSOR

The Group has entered into commercial property leases on its

investment property portfolio, consisting of the Group’s surplus

offi ce and residential buildings. These property leases typically

have lease terms of between 1-3 years and include clauses which

enable periodic upward revision of the rental charge according to

prevailing market conditions. Some leases contain options to cancel

before the end of the lease term.

Future minimum rentals receivable under non-cancellable operating

leases as at 31 December are as follows:

Group 2016 2015

Within 1 year 320,744 390,000

*Due to uncertainties that exists in the operating environment,

rentals due from operating leases for periods beyond one year

could not be determined since lease agreements contain escalation

clauses. The rates of which are determined from time to time by

prevailing market conditions.

31 Standards issued but not yet effective

The standards and interpretations that are issued, but not yet

effective, up to the date of issuance of the Group’s fi nancial

statements are disclosed below. The Group intends to adopt these

standards, if applicable, when they become effective.

IFRS 9 Financial Instruments

On 24 July 2014, the International Accounting Standards Board

(IASB) issued the fi nal version of IFRS 9: Financial Instruments

bringing together the classifi cation and measurement, impairment

and hedge accounting phases of the IASB’s project to replace

IAS 39:Financial Instruments: Recognition and measurement and

all previous versions of IFRS 9. The classifi cation and measurement

requirements address specifi c application issues arising in IFRS

9 (2009) that were raised by preparers, mainly from the fi nancial

services industry. The expected credit loss model addresses concerns

expressed following the fi nancial crisis that entities recorded losses

too late under IAS 39.

IFRS 9 stipulates that fi nancial assets are measured at amortised

cost, fair value through profi t or loss, or fair value through other

comprehensive income, based on both the entity’s business

model for managing the fi nancial assets and the fi nancial asset’s

contractual cash fl ow characteristics.

Apart from the “own credit risk” requirements, classifi cation and

measurement of fi nancial liabilities is unchanged from existing

equirements. IFRS 9 is applicable for annual periods beginning on or

after 1 January 2018, but early adoption is permitted. The Group is

currently assessing the impact of IFRS 9.

IFRS 15 - Revenue from Contracts with Customers

The IASB has issued the revenue recognition standard IFRS 15

Revenue from Contracts with Customers, which replaces all existing

IFRS Revenue requirements. The core principle of IFRS 15 is that the

revenue is recognised to depict the transfer of promised goods or

services to customers in an amount that refl ects the consideration

to which the entity expects to be entitled in exchange for those

goods or services.

IFRS 15 establishes a fi ve step model that will apply to revenue

earned from a contract with a customer (with limited exceptions),

regardless of the type of revenue transaction or the industry. The

standard’s requirements will also apply to the recognition and

measurement of gains and losses on the sale of some non-fi nancial

assets that are not an output of the entity’s ordinary activities (e.g.

sale of property, plants and equipment or intangibles). Extensive

disclosures will be required, including disaggregation of total

revenue; information about performance obligations; changes in

contract asset and liability account balances between periods and

key judgements and estimates.

The standard is effective for annual period beginning on or after

1 January 2018, but early adoption is permitted. The Group is still

assessing the impact of the standard on its contracts with customers.

IFRS 16- Leases

IFRS 16 was issued in January 2016 and it replaces IAS 17 Leases,

IFRIC 4 Determining whether an Arrangement contains a Lease,

SIC-15 Operating Leases-Incentives and SIC-27 Evaluating the

Substance of Transactions. Involving the Legal Form of a Lease.

IFRS 16 sets out the principles for the recognition, measurement,

presentation and disclosure of leases and requires lessees to account

for all leases under a single on-balance sheet model similar to the

accounting for fi nance leases under IAS 17. The standard includes

two recognition exemptions for lessees – leases of ’low-value’ assets

(e.g., personal computers) and short-term leases (i.e., leases with a

lease term of 12 months or less). At the commencement date of a

lease, a lessee will recognise a liability to make lease payments (i.e.,

the lease liability) and an asset representing the right to use the

underlying asset during the lease term (i.e., the right-of-use asset).

Lessees will be required to separately recognise the interest expense

on the lease liability and the depreciation expense on the right-

of-use asset. Lessees will be also required to remeasure the lease

liability upon the occurrence of certain events (e.g., a change in

the lease term, a change in future lease payments resulting from a

99


change in an index or rate used to determine those payments). The

lessee will generally recognise the amount of the remeasurement of

the lease liability as an adjustment to the right-of-use asset.

Lessor accounting under IFRS 16 is substantially unchanged from

today’s accounting under IAS 17. Lessors will continue to classify

all leases using the same classifi cation principle as in IAS 17 and

distinguish between two types of leases: operating and fi nance

leases.

IFRS 16 also requires lessees and lessors to make more extensive

disclosures than under IAS 17.

IFRS 16 is effective for annual periods beginning on or after 1 January

2019. Early application is permitted, but not before an entity applies

IFRS 15. A lessee can choose to apply the standard using either a full

retrospective or a modifi ed retrospective approach. The standard’s

transition provisions permit certain reliefs. In 2017, the Group plans

to assess the potential effect of IFRS 16 on its consolidated fi nancial

statements.

IAS 12 Recognition of Deferred Tax Assets for Unrealised

Losses – Amendments to IAS 12

The amendments clarify that an entity needs to consider whether

tax law restricts the sources of taxable profi ts against which it may

make deductions on the reversal of that deductible temporary

difference. Furthermore, the amendments provide guidance on

how an entity should determine future taxable profi ts and explain

the circumstances in which taxable profi t may include the recovery

of some assets for more than their carrying amount.

Entities are required to apply the amendments retrospectively.

However, on initial application of the amendments, the change

in the opening equity of the earliest comparative period may be

recognised in opening retained earnings (or in another component

of equity, as appropriate), without allocating the change between

opening retained earnings and other components of equity. Entities

applying this relief must disclose that fact. These amendments

are effective for annual periods beginning on or after 1 January

2017 with early application permitted. If an entity applies the

amendments for an earlier period, it must disclose that fact. These

amendments are not expected to have any impact on the Group.

Amendments to IFRS 10, IFRS 12 and IAS 28 - Applying the

Consolidation Exception

The amendments address issues that have arisen in applying the

investment entities exception under IFRS 10. The amendments to

IFRS 10 clarify that the exemption from presenting consolidated

fi nancial statements applies to a parent that is a subsidiary of an

investment entity, when the investment entity measures all of its

subsidiaries at fair vale. Furthermore, the amendments to IFRS 10

clarify that only a subsidiary of an investment entity that is not

an investment entity itself and that provides support services to

the investment entity is consolidated. All other subsidiaries of an

investment entity are measured at fair value.

Amendments to IAS 28 allow the investor , when applying the

equity method to retain the fair value measurement applied by the

investment entity associate or joint venture to its interests in the

subsidiaries.

The amendments are effective for annual periods beginning on or

after 1 January 2016 and are not expected to affect the Group as no

companies in the Group meet the defi nition of an investment entity.

IAS 7 Disclosure Initiative – Amendments to IAS 7

The amendments to IAS 7 Statement of Cash Flows are part of

the IASB’s Disclosure Initiative and require an entity to provide

disclosures that enable users of fi nancial statements to evaluate

changes in liabilities arising from fi nancing activities, including both

changes arising from cash fl ows and non-cash changes. On initial

application of the amendment, entities are not required to provide

comparative information for preceding periods. These amendments

are effective for annual periods beginning on or after 1 January

2017, with early application permitted. Application of amendments

will result in additional disclosure provided by the Group.

IFRIC Interpretation 22 Foreign Currency

Transactions and Advance Consideration

The interpretation clarifi es that in determining the spot exchange

rate to use on initial recognition of the related asset, expense or

income (or part of it) on the derecognition of a non-monetary asset

or non-monetary liability relating to advance consideration, the date

of the transaction is the date on which an entity initially recognises

the nonmonetary asset or non-monetary liability arising from the

advance consideration. If there are multiple payments or receipts in

advance, then the entity must determine a date of the transactions

for each payment or receipt of advance consideration.

32 Events after the reporting period

There were no events after the reporting date that require disclosure


100


Analysis of Shareholders

33 SHAREHOLDER ANALYSIS AS AT 31 DECEMBER 2016

TOP TEN SHAREHOLDERS

Rank Shareholder No. of Shares % 31-Dec-16 Holding

1 National Social Security Authority * 254,186,084 44.85%

2 Zimre Holdings Limited 163,088,065 28.78%

3 Zimbabwe Allied Banking Group 38,089,480 6.72%

4 Loxmill Investments 36,632,256 6.46%

5 Stanbic Nominees 15,131,185 2.67%

6 Local Authorities Pension Fund 9,991,914 1.76%

7 Guramatunhu Family Trust 4,898,784 0.86%

8 Nagar Dhansuk 1,901,330 0.34%

9 Remo Investment Brokers 1,850,062 0.33%

10 Manika Noel Ngonidzaishe 1,681,147 0.30%

Shares Reported 527,450,307 93.06%

Shares Not Reported 39,314,466 6.94%

Shares Issued 566,764,773 100.00%

Holders 5212

* NSSA shareholdings has been consolidated

101



SHARE HOLDING DISTRIBUTION

Range Shares % Shares Holders % Holders

1-500 532,279 0.09 2,518 48.31

501-1000 482,193 0.09 713 13.68

1001-5000 2,577,993 0.45 1,218 23.37

5001-10000 1,790,038 0.32 259 4.97

10001-20000 3,082,369 0.54 223 4.28

20001-50000 4,463,710 0.79 142 2.72

50001-100000 3,655,804 0.65 55 1.06

100001-500000 12,349,323 2.18 58 1.11

500001-1000000 4,801,756 0.85 7 0.13

1000001-99999999999 533,029,308 94.05 19 0.36

Totals 566,764,773 100.00 5,212 100.00

SHAREHOLDING PER CATEGORY

Group Code Total Holding Percentage Number of Percentage

Holding Shareholders Count

COMPANY LOCAL 347,258,839 61.29 235 5.00

PENSION FUNDS 127,700,780 22.05 19 0.36

NOMINEES LOCAL 16,364,407 2.89 25 0.48

BANK 38,089,534 6.72 2 0.04

LOCAL RESIDENT 25,681,387 5.00 4,861 92.78

INVESTMENT, TRUST AND PROPERTY COMPANIES 7,191,409 1.27 44 0.84

INSURANCE COMPANIES 1,511,105 0.27 4 0.08

EMPLOYEE 2,097,418 0.37 10 0.19

NEW NON RESIDENT 864,202 0.15 7 0.13

ESTATES 5,692 0.00 5 0.10

Totals 566,764,773 100.00% 5,212 100.00%

Analysis of Shareholders

102


As announced by the Board Chairman, in his statement accompanying the 2016 Financial results published on 17 March 2017, the Board

has recommended a dividend of 0.074 cents per share for the year ended 31 December 2016.

The dividend shall be payable to members registered in the books of the company on Thursday the 13th of April 2017.

All shareholders who will participate in the Mandatory offer published on 27 March 2017 will accrue their dividends in full regardless of

when they tender their shares.

The following timetable will be followed:

• Last Day to Trade Cum Div 06 April 2017

• Shares Trade Ex Div 07 April 2017

• Last Day to Register 13 April 2017

• Dividend Payment Date 27 April 2017

Shareholders are requested to submit/update their bank details to the Transfer Secretaries;

ZB Transfer Secretaries (Pvt) Ltd

1st Floor, 21 Natal Road Tel: +2638677002001, 04-304046, 04-304049, 04-304044

Avondale Email: [email protected]; [email protected]; [email protected].

Harare

Zimbabwe

Submissions can also be made at any ZB Bank branch countrywide and clearly marked “ZB Transfer Secretaries/NicozDiamond”.

By order of NicozDiamond Insurance Limited Board

G. Zvaravanhu

Company Secretary

29 March 2017

Notices to Shareholders - Dividend

103


Notice is hereby given that the 15th Annual General Meeting of the shareholders of NICOZDIAMOND Insurance Limited will be held at

the NICOZDIAMOND Auditorium, 7th Floor Insurance Centre, 30 Samora Machel Avenue, on 6 June 2017 at 1200 hours for purpose of

transacting the following business:

ORDINARY BUSINESS

1. To receive, consider and adopt the fi nancial statements and reports of the Directors and Auditors of the Company for the fi nancial

year ended 31 December 2016.

2. To sanction the fi nal dividend of 0.074 cents per share.

3. To approve the appointment of Mrs. N. Mukwehwa and Mr. Kiritkumar Naik as Directors of the Company.

4. To re-elect Director retiring by rotation.

In terms of Article 77 of the companies’ Articles of Association, Mrs. T.C Mazingi retires by rotation and being eligible; offers herself

for re-election.

5. To approve the remuneration of the Directors for the past fi nancial year.

6. To approve the remuneration for the Auditors for the past audit.

7. To appoint Ernst & Young Chartered Accountants Zimbabwe as auditors of the Company until the conclusion of the next Annual

General Meeting.

8. To transact all such business as may be transacted at an Annual General Meeting.

In terms of section 129 of the Companies Act (Chapter 24:03) a member entitled to attend and vote at a meeting is entitled to appoint a

proxy to attend and vote on a poll and speak in his stead. A proxy need not be a member of the Company. Proxy forms must be lodged

with the secretaries not less than forty-eight hours before the time for holding the meeting.

By order of NicozDiamond Insurance Limited Board

G. Zvaravanhu

Company Secretary

27 April 2017

Notices to Shareholders - AGM

104

2016 Annual Report print€¦ · NICOZDIAMOND INSURANCE 2016 ANNUAL REPORT Contents Page Corporate Values 2 Product Overview 3 Distribution 4 Corporate Social Responsibility 5 - 6

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