Corporate Social Responsibility Report Highlights NICOZDIAMOND's Community Support

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Corporate Values Business Overview Corporate Social Responsibility Corporate Governance 2 4-5 7-8 9 - 10
Distribution 6
Contents
Directorate 11 Management 12 Chairmans Statement Managing Directors Report Report of the Directors Independent Auditors Report Financial Statements Analysis of Shareholders Notices to Shareholders Notice Annual General Meeting Proxy Form 13 - 14 15 - 17 18 - 19 20 21 - 66 67 - 68 69 70 71
Corporate Information
AUDITORS Ernst & Young Chartered Accountants ( Zimbabwe) Angwa City Cnr Julius Nyerere/Kwame Nkrumah Avenue P.O Box 62, Harare LEGAL PRACTITIONERS Dube, Manikai & Hwacha Commercial Law Chambers 6th Floor, Goldbridge Eastgate Complex Sam Nujoma Street Harare BANKERS Stanbic Bank First Banking Corporation 7th Floor 5th Floor Stanbic Centre FBC Centre 59 Samora Machel Avenue 45 Nelson Mandela Avenue Harare Harare SHARE TRANSFER SECRETARIES ZB Transfer Secretaries (Pvt) Ltd Ground Floor, ZB Centre 59 Kwame Nkrumah Avenue P O Box 2540 Harare
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Corporate Values
Our Vision
To be a highly visible and preferred provider of short term insurance solutions in our chosen markets.
Our Mission
To provide superior short term insurance solutions underpinned by a highly skilled and dedicated team for the benefit of all stakeholders.
Our Values
We believe in a shared vision and unity of purpose in everything we do. We regard our clients as partners in business We regard our employees as our most valued assets We are committed to transparency, professionalism and integrity We believe in nurturing human capital, thus creating high level competencies We recognize the need for a fair return on investment for our stakeholders We are socially responsible citizens We cherish cultural diversity
w w w. n i c o z d i a m o n d . c o m
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Business Overview
Business Classes
NICOZDIAMOND Insurance Limited (NICOZDIAMOND) offers a wide range of short-term insurance classes as follows: Fire and Allied Perils Insurance Marine Insurance Motor Insurance Engineering Insurance Aviation Insurance Accident Insurance Credit Insurance Golfers Insurance Travel Insurance Liability Insurance Money Policy provides for loss of money on the premises and/or in transit. Glass Cover for accidental breakage of internal and external glass, lettering or ornamental. Goods In Transit Cover is for accidental loss or damage to property whilst in transit by rail, road or air. Public Liability Covers a firms liability at law for injury to persons (other than employees) and damage to property (other than the firms own or for which they are responsible). Employers Liability Policy covers a firms legal liability to its employees for injuries arising at work due to the negligence of the employer. Professional Indemnity Protection for professional firms such as solicitors, architects and accountants against loss or damage suffered as a result of professional negligence. Personal Accident Covers death or bodily injury caused by violent, accidental, external and visible means. Benefits Available Policy provides compensation for loss of income as a result of death, permanent total disablement, temporary total disablement and payment of medical expenses. Fidelity Guarantee Provides cover against financial loss sustained as a result of fraudulent or dishonest acts of an employee.
These classes 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 include:-
Personal Insurance
Houseowners, Householders and All Risks Insurance are products designed mainly for the average owner/occupier of a private dwelling. The policy provides cover for both the building, contents of a house and all risks cover on specified valuables away from the home.
Commercial Insurance
Assets Policy This covers businesses against loss of or damage to property caused by fire and allied perils which include storms, burst pipes, floods, impact (by any road vehicles, horse or cattle), explosions, earthquakes, aircraft, non- political riots and malicious damage. Consequential loss Policy provides for protection to the business against loss of gross profit as a reduction in turnover following loss or damage caused by any risks covered under Assets Policy. Accounts Receivable Covers loss of / or damage to records of customer accounts resulting in the inability to trace or establish and recover the outstanding balances. Burglary Policy covers loss of / or damage to contents of premises as a result of theft following forcible and violent entry to or exit from premises.
Motor Insurance
The policy provides cover for any type of vehicle for the following benefits: - Third Party Covers the motorists legal ability to others as well as damage to other peoples property. - Third Party Fire & Theft Provides cover as for third party above, and also covers loss of or damage to the insured vehicle, caused by fire or theft.
Business Overview
- Comprehensive This is the most extensive form of motor insurance cover, which, in addition to providing the covers listed above, provides accidental damage cover to the insured vehicle. Reimbursement of tournament entry fees for cancellation due to unforeseen sickness or accidental injury. Liability arising from fraudulent use of the golf club swipe card.
Marine and Aviation Insurance

Hull Insurance Provides cover for loss of or damage to ships small yachts, motor boats and aircrafts, as well as machinery therein or thereon. Cargo Provides for deterioration, loss of or damage to cargo, carried by sea, air, rail or road.
Travel Insurance
Covermore is a worldwide leisure and business travel insurance package that enables Zimbabweans to access travel insurance locally. This is a foreign currency denominated policy with premiums payable in rand or any other hard currency. It provides global cover and is underwritten by SANTAM Limited of South Africa with emergency assistance provided by Europe Assistance. The policy covers for traveling emergencies such as: 1. Emergency medical expenses. 2. Journey cancellations. 3. Loss of Luggage.
NDI Golfers Plan

The policy covers risks associated with golfing to both amateurs and professionals alike. The policy provides the following cover: Declared golfing equipment against theft, loss or accidental damage. Accidental loss or damage to unspecified clothing and per sonal effects anywhere in the world. Legal liability to third parties for death or bodily injury caused whist playing or practicing a game of golf. Hole- in one. Hire of golfing equipment following loss, damage or delay when traveling to play.
New Product Launched

ChristianSure During the course of 2012 the company repackaged the existing insurance products into a special unique scheme for the Christian community and termed it Christiansure. Under this scheme, the company will sow 10% of the premium paid for every Christiansure policy taken by a member of that particular assembly, be it an individual or a corporate body, to the assembly concerned.
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Distribution
NICOZDIAMOND has presence in the following markets: Zimbabwe, Uganda, Zambia and Malawi. In a drive to fully capacitate and realize maximum benefit from the regional interests, the company is actively involved in skills transfers, staff secondments and technical assistance so that the level of operations reach optimal levels. NICOZDIAMOND is constantly on a drive for new opportunities to expand in the region and increase shareholder value.
First Insurance Company Limited (FICO) - Uganda This Ugandan firm is a NICOZDIAMOND subsidiary where the company also has a management and technical services agreement. The results of the Company are consolidated into the group results.
Diamond General Insurance Limited (formerly Cavmont) - Zambia NICOZDIAMOND has a shareholding and management contract in this company which has been the fastest growing short term insurance company in Zambia for the last three years.
United General Insurance Company Limited (UGI) - Malawi UGI Malawi remains one of the formidable players in the Malawi market and is the second largest short term insurance company in its market. NICOZDIAMOND has a management and technical services contract with the company.
Diamond General Insurance Limited - Zambia
United General Insurance Company Limited - Malawi
Corporate Social Responsibility

NICOZDIAMOND Making a Difference Changing Lives
In Hebrews 6: 10, the word says I will not forget the love you have shown me by serving others. All major religions teach and command their followers to give alms and help the less privileged in their communities and beyond. The message and the injunction to give is the common denominator of all religions. NICOZDIAMOND (NDI) takes this very seriously and thus each year dedicates an evening to raising funds for the less privileged in the society. NDI brings friends and partners in a common cause. By doing this NDI partners are blessed, NDI is blessed and shall be blessed even more as they continue give to the needy. Corporate Social Responsibility (CSR) is one of the core values for NICOZDIAMOND and over the years the company has been active in supporting the less privileged in trying times. The company aims to be a catalyst for long lasting and positive change and become a complete dynamo of good corporate citizenship. NDI has the passion to make a tangible difference in the communities that it operates. Hence it has started extending its reach to schools and would like to build on this by paying for fees for children who would otherwise not be able to proceed with their education. Recently NICOZDIAMOND launched ChristianSure, a product targeted at the Church and its congregation and the package also serves a CSR as it gives the church 10% of the premium paid. Since inception the following have benefited from NDI, CSR programmes which ranged from school fees, generators, beds, bed linen, text books, groceries, furniture, electric gates, clothing items, electrical goods, computers, classroom block, sanitary wear, etc.: Entembeni Old Peoples Home in Bulawayo Thembiso Childrens Home in Bulawayo Mucheke Old Peoples Home in Masvingo Shearly Cripps Home in Murehwa Good Shepherd Home in Chinhoyi Fairfield Orphanage in Mutare
Mr A. Nduna, NDI Chairman, handing over bunk beds to Tariro Project Trustee. Handover of Midlands Childrens Home water tanks Captain E Moyo of Bumhudzo Old Peoples Home receiving groceries and blankets from Mr A Nduna, NDI Chairman
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Corporate Social Responsibility

Gweru Childrens Home Tagwira Primary School in Chivhu Munyira School in Buhera Africa University in Mutare Chikurubi Female inmates in Harare Henry Murray School for the Deaf in Masvingo Emerald School for the Deaf in Harare
From the NDI 2012 CSR, Tariro Project a home in Harare received bunk beds and cash for clothes for the children; Bumhudzo in Chitungwiza received blankets and groceries; Emerald Hill School for the Deaf received laptops; Midlands Childrens Home in Gweru received a water tank and groceries. Entembeni Old Peoples home in Bulawayo received TV, radios, chairs, in Masvingo, school for the deaf received laptops and old peoples home received chairs, clothes and groceries, electric stoves for Chinhoyi and textbooks for Mutare.
Gloria Zvaravanhu presenting one of the laptops to Sister Tariro of Emerald Hill School for the Deaf.
The main project for 2013 is the Young People Intern Program where pupils from Form 4-Form 6 will be gathered (in groups) at NicozDiamond for 2 days for mentorship. The children will be mentored by captains of industry with the NDI Managing Director, Grace Muradzikwa leading the team. The pupils will be given chances to spend a day with the mentor learning what goes in the leaders offices. The programme which will be sponsored by NDI will kick off soon after examinations and will be starting with a group of 150 pupils from Harare. As a company, NDI has taken part in Charity events dinners, golf and other fund raising activities. A team of dedicated staff has also put a hand in making the CSR program a success. Staff contributed cash, clothing items, shoes, food stuffs and their time. Mrs Muradzikwa said, I am often surprised, and always delighted, by the sense of ownership of real pride that all of our employees take in our community initiatives. NDI prides itself in being a leader in developing means for long lasting and positive social change. Getting CSR right is a journey not a destination. Leaders face tough decisions with increasing
NICOZDIAMOND staff presenting chairs, groceries and clothes to Mucheke Old Peoples Home.
pressures to improve their bottom line and to be good corporate citizens. But we must persevere because the fruits of our labour today will make for a better tomorrow. Sympathy or the concern for ones fellows is essential for the cohesion and stability of society.
Corporate Governance
INTRODUCTION NICOZDIAMOND, its subsidiaries and associated companies is committed to good corporate governance and is guided by the Code of Corporate Practice set out in the Cadbury report of the United Kingdom and the King lll report. 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 reaffirms 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; BOARD OF DIRECTORS The Board comprises of eight non- executive Directors and the Managing Director. Board meetings are held on a quarterly basis and at such other times as are necessary under the chairmanship of a non-executive Director. All the Directors have unrestricted access to the advice and services of the Company Secretary. The roles of the Chairman and the Managing Director are separately held and are defined as to ensure a clear division of responsibility. The Board of Directors has overall responsibility for the companys systems of internal control. These systems are designed to provide reasonable assurance of the safeguarding of assets and the reliability of financial information. All Directors are subject to retirement by rotation and re-election by shareholders once every three years in accordance with the companys Articles of Association. The Board as a whole approves the appointments of new Directors. COMMITTEES OF THE BOARD The Audit & Risk Management Committee, Nominations Committee, Executive Remuneration Committee, Investments Committee and the Manpower Committee assist the Board in the discharge of its responsibilities. The power, duties and responsibilities of the committees are governed by their respective Charters as approved by the Board. These committees review matters on behalf of the Board and make recommendations for consideration by the Main Board. BOARD COMMITTEES
Are You Really Covered or E
AUDIT AND RISK MANAGEMENT COMMITTEE The Audit and Risk Management Committee comprises a majority of non executive Directors including its Chairperson. The executives responsible for Corporate Services , Operations, Internal Audit as well as the External Audit partner attend meetings of the Audit and Risk Management Committee by invitation. The committee meets at least four times a year. The Head of Internal Audit and the External Audit Partner have unrestricted access to the Chairman of the committee. The Audit and Risk Management Committee monitors internal control policies and procedures designed to safeguard company assets and to maintain the integrity of financial reporting. Among the specific 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
Be covered by a well capitalised A insurer and you'll never be exp
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Corporate Governance
and control and advises on the appointment, performance and remuneration of external auditors EXECUTIVE REMUNERATION COMMITTEE The committee is constituted by three Directors all of whom are non-executives, including the Chairperson of the Board. The committee meets at least twice a year. The committee is responsible for ensuring that senior executives are competitively remunerated in line with their contribution to the companys operating and financial performance, at levels which take into account industry and market bench marks as well as affordability and sustainability. INVESTMENTS COMMITTEE This committee is constituted with strong representation of non-executive Directors and is chaired by a non executive Director. Meetings are held once in every two months. The committee is responsible for the formulation of the Investment Policy of the company and reviewing investment strategy for compliance with such policy. MANPOWER COMMITTEE The Manpower Committee comprises a majority of non-executive directors. The committee meets at least four times a year. The committee is responsible for the companys 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. NOMINATIONS COMMITTEE The committee consists of non executive directors. The committee meets as the committee deems fit but however, meets at least once each year. 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.
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Directorate
Mr. Albert J Nduna (Chairman)
Mrs. Thembiwe C Mazingi (Vice Chairperson)
Mrs. Grace Muradzikwa (Managing Director)
Mr. George T. Mutendadzamera
Mrs. Rachel P. Kupara
Mr. James Karidza
Mr. Paul Brien
Mr. Barnabas Matongera
Mr. Harold A R Bijoux
NON- EXECUTIVE Mr. Albert J Nduna (Chairman) Mrs. Thembiwe C Mazingi (Vice Chairperson) Mr. Harold A R Bijoux Mr. Paul Brien Mr. James Karidza Mrs. Rachel P. Kupara Mr. Barnabas Matongera Mr. George T. Mutendadzamera EXECUTIVES Mrs. Grace Muradzikwa (Managing Director) COMPANY SECRETARY Mrs. Gloria Zvaravanhu BOARD COMMITTEES AUDIT AND RISK MANAGEMENT COMMITTEE Mrs. Rachel P Kupara (Chairperson) Mr. Paul Brien Mr. James Karidza Mr. George T. Mutendadzamera Mrs. Grace Muradzikwa- Executive
MANPOWER COMMITTEE Mrs. Thembiwe C Mazingi (Chairperson) Mr. Barnabas Matongera Mrs. Grace Muradzikwa - Executive EXECUTIVE REMUNERATION COMMITTEE Mr. Albert Joel Nduna (Chairman) Mrs. Thembiwe Chikosi Mazingi Mr. Barnabas Matongera INVESTMENTS COMMITTEE Mr. James Karidza (Chairman) Mr. Paul Brien Mr Barnabas Matongera Mrs. Grace Muradzikwa (Executive) NOMINATIONS COMMITTEE Mr. Albert Joel Nduna (Chairman) Mrs. Thembiwe Chikosi Mazingi Mr. Barnabas Matongera
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Management
Mrs. Gloria Zvaravanhu General Manager (Corporate Services)
Mrs. Grace Muradzikwa (Managing Director)
Mr. Noel Manika General Manager (Operations)

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Executive Management
Mrs. Grace Muradzikwa Managing Director Mrs. Gloria Zvaravanhu General Manager (Corporate Services) Mr. Noel Manika General Manager (Operations)

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Senior Management
Ms. Cathrine Musakwa Mr. Caleb Mtabvuri Mr. Nicholas Sayi Mrs. Joyce Nousenga Mrs. Rebecca Moyo Mr. Joseph Mashika Mrs. Agnes Mtotela Mr. Vusani Mapuke Ms. Odiline Kava Mr. Christopher Tapererwa Mr. Garikai Mhondera Mrs. Concilia Musarara Mr. Osborne Nyereyemhuka Mr. Godfrey Matambo Head Strategic Business Unit Head Strategic Business Unit Head Bulawayo Unit Head Technical Services Head Finance Head Treasury Head Human Resources Head IT Head Marketing Business Analyst Branch Controller Mutare Branch Controller Masvingo Branch Controller Chinhoyi Branch Controller Gweru
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Chairmans Statement
INTRODUCTION I present to you my report for the NICOZDIAMOND group of companies for the year ended 31 December 2012. BUSINESS ENVIRONMENT The insurance sector in Zimbabwe remained highly competitive, though the year saw a firming in rates for some classes of business. Given the subdued economic activity, the issue of affordability saw the insurance take up rate happening at a slower pace than had been anticipated. Liquidity challenges in the economy affected the collectability of premiums putting pressure on underwriters to accept extended payment terms. This depressed funds availed for new investments and resultantly investment returns. An increase in the frequency and severity of claims continues to be recorded across the industry, particularly for the motor and fire classes. The property market trends are behaving contrary to other sectors as property values continue to appreciate towards regional parity levels. There was downward pressure on money market interest rates whilst good recovery was recorded on the Zimbabwe Stock Exchange traded equities during the latter part of the year. FINANCIAL PERFORMANCE OVERVIEW In 2012, the group sustained the profitability trend that started in 2011 from both insurance underwriting and investments. Overall, the group made a profit after tax of $2,43 million for the year 2012, a growth of 45% on 2011. The group statement of financial position grew by 13.7% and 9.3% for the company. The capital at $8.9 million for the company was well above the new minimum capital requirement of $1,5million. Though the gross premium only grew by 5% to $24,8m, the group generated positive cash from operations of $0.9 million from a negative position in the prior year. The surplus cash from operations was applied mainly towards purchase of new investments and dividend payment. Reinsurance was higher in 2012 due to strategic review of treaty programmes to cushion the company following the bad claims experience of 2011. The overall claims experience, however, turned out to be much better than prior year as evidenced by the groups gross claims which declined by 6%.
Mr. Albert J Nduna (Chairman)
While the Uganda operation made an underwriting loss of $259,242 having suffered a bad claims cycle, Zimbabwe on the other hand made an underwriting profit of $367,039. This resulted in an overall underwriting profit of $107,797. Investments performance for the year was encouraging as the investment returns improved by 49,8% to $1,97 million. The property companies made good operating profits with Thirty Samora Machel contributing 45% of the investment income, NICOZDIAMOND 48% whilst FICO and Marabou contributed the balance of 7%. The work done on the buildings saw an increase in their valuation averaging 23% from the 2011 values. It is also encouraging to note that 58% of the $1,97 million investment income was realised whilst the balance was unrealised gains resulting from property and equities revaluations. 2012 A n n u a l R e p o r t
Overall, the group made a profit after tax of $2,43 million for the year 2012, a growth of 45% on 2011.
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Chairmans Statement
The Associates of the company, Clover Leaf Panel Beaters and Fidelity Funeral Assurance (Pvt) Ltd contributed $399,270 to group profits, an increase of 37% from prior period. REGIONAL OPERATIONS The group continues with its endeavours to diversify income streams by expanding into the region and presence was maintained in Zambia, Uganda and Malawi. ISO CERTIFICATION After the re-certification audits carried out at the end of 2012, the company has been recommended for re-certification on ISO Standard, ISO 9001:2008. SOCIAL RESPONSIBILITY The group has maintained its significance in uplifting the lives of the underprivileged in the various communities it operates through a variety of initiatives. CLAIMS PAYING ABILITY RATING The company still carries a strong claims paying ability rating (A-) which was rated by Global Credit Rating Company of South Africa (GCR). DIRECTORATE Mrs Rachel P. Kupara was nominated to the Board in August 2012 and her appointment will be considered by the shareholders at the next Annual General Meeting of the company. In terms of article 77 of the Companys Articles of Association, Mr James Karidza retires by rotation and being eligible, offers himself for re-election at the next Annual General Meeting of the Company. DIVIDEND The Directors propose a final dividend of 0.064 cents per share for 2012. This is an improvement of 39% on that declared for 2011 and is in line with the overall improvement in profitability of the group. OUTLOOK The company is optimistic about the continued recovery of the Zimbabwean economy and the inherent opportunities for the insurance industry in the future and is well placed in terms of capital, to exploit these opportunities that the recovery will present. In Uganda, the plans to recapitalize FICO are at an advanced stage and this move will make FICO more competitive and strategically position it to acquire significant new business. The investments made in refurbishments of the property portfolio in Zimbabwe are also expected to reward better returns into the future. APPRECIATION On behalf of the Board and shareholders I would like to extend my sincere appreciation to our valued clients, business providers, regulators, management and staff and all other stakeholders, for their continued support and commitment in the year.
Albert J Nduna CHAIRMAN 20 March 2013
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Managing Directors Report

MANAGING DIRECTORS REPORT It is with pleasure that I give an overview of the groups performance for the year 2012. Overall the performance of the group was sound with all key performance ratios raining on track. GENERAL BUSINESS OVERVIEW The group registered a growth of 45% in profitability for the year compared to 2011. The growth was largely driven by the investment income across all units within the group. Insurance entities recorded mild growth in terms of gross premiums following a purification of the book. For Zimbabwe, the short term insurance industry is characterised by many players competing for a relatively small stagnant market and this resulted in downward pressure on rates. Market retentions remained low as a result of limited capital for most players in the industry. This might however change in the short term following the upward review of minimum capital requirements. An increase in the number and magnitude of claims was noted across the industry, particularly for the motor, fire and farming classes. For the company however, the claims experience was better than that of 2011 on the back of improved underwriting and enhanced risk management. Though liquidity constraints persisted in the economy, the company saw an improvement in premium collections. A lot however, remains to be done at the macro and micro level to ensure that this area is maximised. Expense ratios in the industry remain high as the gross premiums being written are not yet at levels commensurate with the market structures and with the size of the economy. There is still a lot of potential as shown by the low insurance penetration levels. In Uganda, the performance of the entity continues to be affected by capital constraints. However, subsequent to year end, significant progress has been made to address the perennial capital issues. Growth opportunities are seen for the entity in the future. The Property entities in Zimbabwe performed well in line with market trends. Property values continue to appreciate towards regional parity levels. The measures to enhance the properties employed in 2012, paid off in terms of increase in rental incomes as well as capital appreciation of the buildings. The market remains characterised by low occupancy ratios particularly in Central Business Districts (CBD), as companies move out to alternatively
Mrs Grace Muradzikwa (Managing Director)
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(continued)
cheaper accommodation outside the CBD. The group however continued to enjoy good occupancy ratios during the year. FINANCIAL PERFORMANCE Group technical performance The table below highlights the Groups technical performance in 2012 compared to 2011: Retention ratio The retentions were lower in 2012 compared to that of prior year as a result of the conservative reinsurance program for NicozDiamond in 2012 in response to the 2011 bad claims experience. Claims ratio The net claims ratio showed a good improvement at 48%. It is expected that the Groups loss ratios will be maintained in the 45-55% region. This will be achieved through more stringent underwriting as well as reinsurance management. Expenses ratio The expenses ratio to NPW at 41% deteriorated from that of 2011 driven by the reduced NPW which is attributed to the higher reinsurance in 2012. Unit Performance The graph below shows the unit contribution to the group performance
Mild improvements were registered on most areas but the decline in Net Premium (as a result of the higher retentions) and an increase in expenses caused the decline in underwriting profit for the year. Retentions were conservatively designed to be lower, through the 2012 treaty programs, in response to the bad claims experience of 2011. Key Technical Ratios The graph below shows the key technical ratios of the Group for 2012 compared to 2011. NicozDiamond was the biggest contributor to Group profits at 58%, a growth in contribution of 28% compared to prior. The entity recorded 133% growth in profitability backed by underwriting profit growth of 117% and investment income growth of 61%. FICOs contribution declined because of the loss in 2012. The Property companies (Thirty Samora Machel and Marabou) contributed 48% to the Group profits. 63% of their contributions were from properties capital appreciation while the balance was operating profit from leasing. The associate companies, Clover Leaf Panel Beaters and Fidelity Funeral Assurance, contributed 17% to Group profits.
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(continued)
BUSINESS CLASS PERFORMANCE The quoted equities class still gave negative returns to the company though the amounts are lower than those of prior year. The company continues to hold on to loss making counters until such a time that meaningful recovery is recorded. All the losses are unrealized. Unquoted equities did not perform well compared to prior year as some of the investments were affected by significant debtors provisioning amidst the persisting liquidity challenges. KEY INVESTOR RATIOS Basic EPS Share Price NAVps ROCE (%) - DIVps Motor maintained its position as the biggest class followed by Fire, Accident, Engineering and Marine, respectively. The slight reduction in the contribution of the Motor class is mainly attributed to the recovery of the other classes. This is a positive development as it reduces concentration risk. INVESTMENT CLASS PERFORMANCE Dec-12 0.43 1.4 2.34 14 0.064 cents Dec-11 Growth 0.29 3 2.22 10 0.046 cents 48% -53% 5% 40% 39%
All the key ratios showed a growth on 2011 reflecting the groups growth in profitability. The share price performance for 2012 did not mirror the Groups improved performance. It is anticipated that the market price will correct in line with the Groups fundamentals. REGIONAL OPERATIONS In addition to Uganda, Zambia and Malawi, the group is still scouting for opportunities in the region. The pace of regional penetration initiatives is being affected by the regulatory approval processes in the respective countries, which generally take long. OUTLOOK The outlook for 2013 is encouraging. We remain focused on driving sustainable profitability and a strong balance sheet while seeking value adding services to our clients. This requires us to place customer service at the centre of all we do. The operations in Zimbabwe remain optimistic that recovery will continue to be witnessed on the economic front and that the planned elections of 2013 will bring forth a more enabling political and operating environment. The company has exciting products and I strongly believe our product lines have good future prospects in a growing Zimbabwean economy. The opportunities that Uganda presents remained untapped by FICO but the changes in the shareholding and capital structures in 2013 are envisaged to better place the company in the market place to tap into these opportunists.. APPRECIATION On behalf of management and staff, I wish to thank the shareholders, Directors, and all other stakeholders for the support extended to the company in 2012. I also wish to thank the staff in the Group for the increased efforts put in 2012 to make sure the Group progresses forward.
The Properties segment of the portfolio contributed the most to investment income. About 46% of the income from properties is operating income from the rent earning properties whilst the balance is unrealized fair value adjustments. The income from the money market, though still sizeable, is showing a decline as a result of the downward pressures on investment rates characterizing the market.
G. Muradzikwa Managing Director 20 March 2013 2012 A n n u a l R e p o r t
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Report of the Directors

Your Directors have pleasure in presenting their report together with the audited financial statements for the year ended 31 December 2012. 1. SHARE CAPITAL Ordinary shares Total shares in Issue Un-issued Authorized Ordinary shares Opening Issued shares Scrip Dividend Closing Issued Shares Mr. James Karidza retires by rotation and being eligible, in terms of the Article 77 of the companys articles of association, offers himself for re-election at the next AGM. 5. DIRECTORS INTERESTS As at 31 December 2012, the Directors held the following direct and indirect interests in the shares of the company: Name Grace Muradzikwa Albert Joel Nduna Total 2012 36 694 455 80,051 36 774 506 2011 36 622 779 78 827 36 701 606
Number 2012 565 858 859 34 141 141 600 000 000 Number 2012 559 510 159 6 348 700 565 858 859
Number 2011 559 510 159 40 489 841 600 000 000 Number 2011 559 510 159 559 510 159
As at 20 March 2013, the position remained the same.
As at 31 December 2012, 34 141 141 (2011-40 489 841) shares were under the control of the Directors.
2. RESULTS FOR THE YEAR ENDED 31 DECEMBER 2012 The results for the year are as set out in the accompanying financial statements, a summary of which is stated below; Summary of Group Results Gross Premium Written Operating Profit Profit before Taxation Profit After Taxation
6. DIVIDEND The Directors have recommended a final dividend of 0.064cents per share for the year ended 31 December 2012. The dividend will be paid to shareholders registered in the books of the company at close of business on 19th of April 2013. The dividend will be payable on or about 20 May 2013. Taxes will be deductible as applicable. 7. AUDITORS Shareholders will be requested to approve the remuneration of the Auditors for the financial year ended 31 December 2012 at the Annual General Meeting and appoint Auditors for the year 2013. 8. 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 Direc tors of similar sized companies. A resolution will be passed at the annual general meeting to approve Directors fees for the company totaling $78,561 in respect of the year under review.
2012 (US$) 24,782,769 1,526,752 2,453,851 2,426,481
2011 (US$) 23,546,519 1,342,203 1,594,378 1,669,039
3. RESERVES The movements in the reserves are set out in the accompanying financial statements. 4. DIRECTORATE During the year, Mr. Gladman Sabarauta resigned from the Board. The Board thanks him for his contributions during the period that h e served on the Board. To replace him on the Board, Mrs. Rachel Kupara is being proposed for election to the Board at the next AGM.
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Report of the Directors

9. DIRECTORS RESPONSIBILITY STATEMENT
(continued)
The Directors of the Company are responsible for the maintenance of adequate accounting records, and the preparation of financial statements for each financial period that gives a true and fair view of the state of affairs of the Company and the Group at the end of the financial period and of the results and cash flows 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 financial statements, and to safeguard, verify and maintain accountability of assets, and to prevent and detect material misstatements and losses. These 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 financial 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 financial statements have been prepared in full compliance with all Financial Reporting Standards and the Companies Act (Chapter 24:03). The financial statements have been audited by the groups external auditors, Ernst &Young, who have been given unrestricted access to all financial records and related data, including minutes of all meetings of the Board of Directors and Committees of the Board. The Directors confirm that all representations made to the independent auditors during the audit were valid and appropriate. The financial statements for the year ended 31 December 2012, were approved by the Board of Directors on 20 March 2013 and are signed on their behalf by:
. MR A.J NDUNA MRS. G MURADZIKWA CHAIRMAN MANAGING DIRECTOR
2012
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20
Consolidated Statement of Comprehensive Income

FOR THE YEAR ENDED 31 DECEMBER 2012
Group Group Company Company Note 2012 2011 2012 2011 $ $ $ $ Revenue Gross premium - non life 24,782,769 23,546,519 22,720,823 21,243,430 Premium ceded (10,629,662) (8,714,219) (10,082,549) (7,836,527) Net premium written 14,153,107 14,832,300 12,638,274 13,406,903 Unearned premium provision (39,098) (683,563) 91,795 (810,733) Earned premium 14,114,009 14,148,737 12,730,069 12,596,170 Brokerage commission and fees 2,408,633 1,954,733 2,241,535 1,844,384 Investment income 8.1 1,320,348 1,128,713 597,112 546,263 Other income 8.2 70,199 218,788 139,486 203,478 Total revenue 17,913,189 17,450,971 15,708,202 15,190,295 Total expenses (16,386,437) (16,108,768) (14,700,870) (14,506,130) Net benefits and claims 8.3 (6,735,154) (7,484,765) (6,336,755) (7,031,543) Commission and acquisition expenses (3,833,495) (3,380,337) (3,553,079) (3,101,461) Operating and administrative expenses 8.5 (5,817,788) (5,243,666) (4,811,036) (4,373,126) Operating profit 1,526,752 1,342,203 1,007,332 684,165 Other gains/(losses) 8.4 578,804 (33,166) 212,111 (211,955) Finance costs (50,975) (5,542) (21,360) (4,482) Profit before share of profit of associates 2,054,581 1,303,495 1,198,083 467,728 Share of associates profit 8.7 399,270 290,883 - - Profit before tax 2,453,851 1,594,378 1,198,083 467,728 Taxation 8.8 (27,370) 74,661 3,436 13,714 Profit for the period 2,426,481 1,669,039 1,201,519 481,442 Profit for the period attributable to: Equity holders of the parent 2,446,907 1,632,567 1,201,519 481,442 Non-controlling interests (20,426) 36,472 - - 2,426,481 1,669,039 1,201,519 481,442 Other comprehensive income: Exchange difference on translation of foreign operations 8.6 (35,054) (86,340) - - Other comprehensive income for the period net of tax (35,054) (86,340) - - Total comprehensive income for the year 2,391,427 1,582,699 1,201,519 481,442 Total comprehensive income attributable to: Equity holders of the parent 2,424,802 1,578,121 1,201,519 481,442 Non-controlling interests (33,375) 4,578 - - 2,391,427 1,582,699 1,201,519 481,442 Earnings per share (in cents): Basic earnings per share (cents) 6 0.43 0.29 0.13 0.05 Diluted earnings per share (cents) 6 0.43 0.29 0.13 0.05
2012
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Consolidated Statement of Financial Position

AS AT 31 DECEMBER 2012
Note Group Group Company Company 2012 2011 2012 2011 $ $ $ $ ASSETS Non-current assets 11,151,873 9,003,372 4,937,954 4,427,179 Property and equipment 9 1,194,168 1,105,733 1,027,531 937,688 Investment properties 10 8,013,253 6,677,444 1,865,958 1,668,390 Deferred tax asset 15.1 134,756 72,262 - - Investment in associates 8.7 958,345 559,075 63,010 63,010 Investment in unquoted equities 11.1 268,242 222,777 193,780 183,795 Investment at fair value through profit and loss 11.3 507,745 294,366 507,745 294,366 Investment in subsidiary 23 - - 1,279,930 1,279,930 Statutory deposit 13 75,364 71,715 - - Current assets 13,838,213 12,976,364 12,327,674 11,363,914 Insurance receivables 12 6,318,241 6,778,611 5,088,786 5,890,706 Inventories 4.22 48,557 47,344 48,557 47,344 Deferred acquisition costs 5(c) 650,336 624,483 553,789 572,150 Current tax receivable 21 47,800 - 65,824 65,824 Related party receivables 28 410,675 203,978 769,938 288,151 Other receivables and prepayments 12.1 336,631 305,032 176,026 191,453 Short-term investments 11.2 1,716,384 3,591,886 1,424,980 2,988,814 Cash and cash equivalents 22 4,309,589 1,425,030 4,199,774 1,319,472 Total assets 24,990,086 21,979,736 17,265,628 15,791,093 EQUITY AND LIABILITIES Equity attributable to owners of the parent 14,367,634 12,088,770 8,952,658 7,897,077 Share capital 14 2,828,995 2,797,251 2,828,995 2,797,251 Share premium 14 3,278,793 3,183,563 3,278,793 3,183,563 Retained earnings 8,146,837 5,998,847 2,844,870 1,916,263 Foreign currency translation reserve (188,573) (166,468) - - Capital reserve 24,596 24,596 - - Other reserves 276,986 250,981 - - Non-controlling interest 291,633 325,008 - - Total equity 14,659,267 12,413,778 8,952,658 7,897,077 Non-current liabilities 503,197 214,156 232,899 3,844 Deferred tax liability 15 259,411 189,502 408 3,844 Long term loan 17 243,786 24,654 232,491 - Current liabilities 9,827,622 9,351,802 8,080,071 7,890,172 Insurance payables 16 2,750,291 2,373,530 2,204,395 2,005,740 Related party payables 28 311,672 319,282 311,672 319,282 Other payables and accruals 16 1,267,912 980,176 1,011,616 869,380 Current tax payable 21 - 33,009 - Insurance provisions 18 5,497,747 5,645,805 4,552,388 4,695,770 TOTAL EQUITY AND LIABILITIES 24,990,086 21,979,736 17,265,628 15,791,093
The financial statements were approved and authorised for publication by the Board of Directors on 20 March 2013 and signed o n its behalf by: Chairman ................................................... Director ...................................................... Date 20 March 2013
22
Consolidated Statement of Cashflows

Cash flows from operating activities Group Group Company Company Note 2012 2011 2012 2011
Cash receipts from customers 19 27,592,549 24,059,801 25,279,281 21,199,620 Cash paid to suppliers and employees 20 (26,550,394) (24,624,005) (24,174,397) (21,745,063) Cash generated from/(utilised in)operations 1,042,155 (564,204) 1,104,884 (545,443) Finance costs (50,975) (5,542) (21,360) (4,482) Income tax paid (105,207) (68,223) - Net cash used generated from/(utilised in) operating activities 885,973 (637,969) 1,083,524 (549,925) Cash flows from investing activities Acquisition of subsidiary net of cash acquired 23 - (11,000) - (11,000) Purchase of property and equipment (375,709) (64,421) (333,280) (59,490) Acquisition and development of investment properties (451,168) (668,908) (3,381) (278,490) Investment income 710,994 696,191 609,129 642,014 Purchase of investments (2,056,665) (939,449) (1,729,573) (726,867) Proceeds from disposal of property and equipment 64,867 22,127 64,867 22,129 Proceeds from disposal of investments 4,092,595 1,846,938 3,352,553 1,653,439 Net cash generated from investing activities 1,984,914 881,478 1,960,315 1,241,735 Cash flows from financing activities Proceeds from long-term loan 250,000 27,677 250,000 Dividend paid 14.1 (145,938) - (145,938) Loan to subsidiary - (250,000) Repayment of loan (23,910) (3,023) (17,599) Net cash generated from financing activities 80,152 24,654 (163,537) Net increase in cash and cash equivalents 2,951,039 268,163 2,880,302 691,810 Cash and cash equivalents at beginning of year 1,425,030 1,082,540 1,319,472 627,662 Effects of exchange rate changes on cash and cash equivalent (66,480) 74,327 - Cash and cash equivalents as at 31 December 2012 22 4,309,589 1,425,030 4,199,774 1,319,472
2012 A n n u a l R e p o r t
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Consolidated Statement of Changes in Equity

Foreign
currency NonShare Share Retained Capital translation Other controlling capital premium earnings reserves reserves reserves Total interests Total equity Group US$ US$ US$ US$ US$ US$ US$ US$ US$
Balance at 1 January 2011 Transfer from distributable reserve Equity adjustment Excess of loss Total comprehensive income for the year (Loss)/Profit after tax for the period Other comprehensive income net of taxes Transfer to other reserves Transfer to capital reserves Balance as at 31 December 2011 Total comprehensive income for the year Profit/(Loss) after tax for the period Other comprehensive income net of taxes Scrip dividend issued Transfer to other reserves Cash dividend paid Balance as at 31 December 2012
2,797,251 - - - - - - - - 2,797,251 - - - 31,744 - - 2,828,995
3,183,563 - - - - - - - - 3,183,563 - - - 95,230 - - 3,278,793
2,094,193 2,341,731 (20,154) (19,865) 1,632,567 1,632,567 - (29,047) (578) 5,998,847 2,446,907 2,446,907 - (126,974) (26,005) (145,938) 8,146,837
24,018 - - - - - - - 578 24,596 - - - - - - 24,596
(112,022) 2,574,497 - (2,341,731) - (10,832) - - (54,446) - - - (54,446) - - 29,047 - - (166,468) 250,981 (22,105) - (22,105) - - - (188,573) - - - - 26,005 - 276,986
10,561,500 - (30,986) (19,865) 1,578,121 1,632,567 (54,446) - - 12,088,770 2,424,802 2,446,907 (22,105) - - (145,938) 14,367,634
278,241 - 53,825 (11,636) 4,578 36,472 (31,894) - - 325,008
10,839,741 22,839 (31,501) 1,582,699 1,669,039 (86,340) 12,413,778
(33,375) 2,391,427 (20,426) 2,426,481 (12,949) (35,054) - - - (145,938) 291,633 14,659,267
Foreign Currency Non Share Share Retained Capital Translation Other controlling capital premium earnings reserves reserves reserves Total interests Total equity Company US$ US$ US$ US$ US$ US$ US$ US$ US$ Balance at 1 January 2011 2,797,251 3,183,563 1,434,821 - - - 7,415,635 - 7,415,635 Total comprehensive income for the year - - 481,442 - - - 481,442 - 481,442 Profit after tax for the period - - 481,442 - - - 481,442 - 481,442 Other comprehensive income net of taxes - - - - - - - - - Balance as at 31 December 2011 2,797,251 3,183,563 1,916,263 - - - 7,897,077 - 7,897,077 Total comprehensive Income for the year - - 1,201,519 - - - 1,201,519 - 1,201,519 Profit after tax for the period - - 1,201,519 - - - 1,201,519 - 1,201,519 Other comprehensive income net of taxes - - - - - - - - Scrip dividend issue 31,744 95,230 (126,974) - - - - - Cash dividend - - (145,938) - - - (145,938) - (145,938) Balance as at 31 December 2012 2,828,995 3,278,793 2,844,870 - - - 8,952,658 - 8,952,658
Notes Capital reserves This pertains to First Insurance Company of Uganda (FICO) and is a statutory transfer done annually from retained earnings to capital reserves when there is a profit. There was no transfer to capital reserves in 2012. Other reserves Other reserves are made up of: i) Contingency reserve of $276,986 ($250,981 - 2011), relates to FICO. The Insurance Act of Uganda requires that a contingency reserve, which shall not be less than 2% of the gross premium or 15% of the net profits, which ever is greater, or any such other amount as the Commissioner may decide be accumulated until it reaches the minimum paid-up capital or 50% of the net premiums, which ever is the greater. During the year an amount of $26,005 was transferred to the reserve account. Foreign currency translation reserve This arose from translation of assets and liabilities of foreign operations into US dollars at the date of exchange prevailing at the reporting date and their statement of comprehensive income at exchange rate prevailing at the date of the transactions. Retained earnings The retained earnings of companies within the Group are as follows: 2012 2011 NicozDiamond 2,844,870 1,916,263 First Insurance Company (984,695) (888,159) Thirty Samora Machel 5,013,215 4,136,902 Marabou 14,343 9,691 Consolidation adjustments 1,259,104 824,150 8,146,837 5,998,847
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Notes to the Financial Statements

31 DECEMBER 2012
ber 2012. Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date when such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. All intra group balances, transactions, unrealised gains or loses resulting from intra-group transactions and dividends are eliminated in full. Total comprehensive income within a subsidiary are attributed to the non-controlling interest even if it results in a deficit balance. A change in the ownership interest of a subsidiary, without loss of control, is accounted for as an equity transactions. If the Group losses control over a subsidiary it: Derocognises the assets (including goodwill) and lia bilities of the subsidiary Derocognises the carrying amount of any non-controlling interest Derecognises the cumulative translation differences re corded in equity Recognises the fair value of the consideration received Recognises the fair value of any investment retained Recognises any surplus or deficit in profit or loss Reclassifies the parents share of components previously recognised in other comprehensive income to profit or loss or retained earnings, as appropriate. Investment in subsidiaries at company level is carried at cost. 3.2 GOING CONCERN The Companys business activities, together with the factors 3.4 Statement of changes in accounting policies and disclosures likely to affect its future development, performance and posThe accounting policies adopted are consistent with those of tion are set out in the Managing Directors Report on pagthe previous financial year, except for the following amendes 15 to17 The financial position of the company, its cash ments to IFRS effective as of 1 January 2012: flow, liquidity position and borrowing facilities are described on pages 21 to 66. In addition notes 23 and 24 to the finan- IAS 12 Income Taxes (Amendment) Deferred Taxes: Recovery cial statements include the companys objectives, policies and of Underlying Assets processes for managing its capital: its financial risk manage- IFRS 1 First-Time Adoption of International Financial Reportment objectives and its exposures to credit risk and liquidity ing Standards (Amendment) Severe risk. Hyperinflation and Removal of Fixed Dates for First-Time Adopters The company has considerable financial resources together IFRS 7 Financial Instruments: Disclosures (Amendments) with a diverse insurance book across different geographic IFRS 7 Financial Instruments : Disclosures Enhanced Derecogareas. As a consequence, the directors believe that the comnition Disclosure Requirements pany is well placed to manage its business risks successfully The adoption of the standards or interpretations is described despite the current uncertain economic outlook. below: The directors have a reasonable expectation that the company has adequate resources to continue in operational exisIAS 12 Income Taxes (Amendment) Deferred Taxes: Recovtence for the foreseable future. Thus they continue to adopt ery of Underlying Assets the going concern basis of accounting in preparing the annu al financial statements. The amendment clarified the determination of deferred tax on investment property measured at fair value and introduc3.3 Basis of Consolidation es a rebuttable presumption that deferred tax on investment The consolidated financial statements comprise the financial property measured using the fair value model in IAS 40 statements of the Group and its subsidiaries as at 31 Decemshould be determined on the basis that its carrying amount 2012 A n n u a l R e p o r t 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. The registered office of the Company is: Insurance Centre, 2nd Floor 30 Samora Machel Avenue, Harare. The consolidated financial statements of NICOZDIAMOND Insurance Limited for the period ended 31 December 2012 were authorised for issue in accordance with a resolution passed by the Directors on 20 March 2013. 2 REPORTING CURRENCY The financial statements are presented in United States Dollars (USD or US$) which is the companys functional and presentation currency and values are rounded to the nearest dollar. 3 BASIS OF PREPARATION 3.1 Statement of Compliance The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards, (IFRS), as issued by the international accounting standards Board (IASB). The consolidated financial statements have been prepared on a historical cost basis, except for investment properties, financial assets and liabilities that have been measure at fair value. As permitted by IFRS4 Insurance Contracts, the Group continues to apply the existing accounting policies that were applied prior to the adoption of IFRS.
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31 DECEMBER 2012 (continued)
will be recovered through sale. It includes the requirement IAS 19 Employee Benefits (Revised) that deferred tax on non-depreciable assets that are meaThe IASB has issued numerous amendments to IAS 19. These sured using the revaluation model in IAS 16 should always range from fundamental changes such as removing the corribe measured on a sale basis. The amendment is effective for dor mechanism and the concept of expected returns on plan annual periods beginning on or after 1 January 2012 and has assets to simple clarifications and re-wording. The Group been no effect on the Groups financial position, performance made a voluntary change in accounting policy to recognise or its disclosures. actuarial gains and losses in other comprehensive income in the current period. However, the amended standard will im IFRS 1 First-Time Adoption of International Financial Reportpact the net benefit expense as the expected return on plan ing Standards (Amendment) Severe assets will be calculated using the same interest rate as apHyperinflation and Removal of Fixed Dates for First-Time plied for the purpose of discounting the benefit obligation. Adopters The amendment becomes effective for annual periods begin The IASB provided guidance on how an entity should resume ning on or after 1 January 2013. The Group is currently assesspresenting IFRS financial statements when its functional curing the full impact of the amendments. rency ceases to be subject to hyperinflation. The amendment is effective for annual periods beginning on or after 1 July IAS 28 Investments in Associates and Joint Ventures (as re2011. The amendment had no impact to the Group. vised in 2011) As a consequence of the new IFRS 11 Joint Arrangements, and IFRS 7 Financial Instruments: Disclosures Enhance IFRS 12 Disclosure of Interests in Other Entities, Derecognition Disclosure Requirements IAS 28 Investments in Associates, has been renamed IAS 28 InThe amendment requires additional disclosure about finanvestments in Associates and Joint Ventures, and describes the cial assets that have been transferred but not derecognised to application of the equity method to investments in joint venenable the user of the Groups financial statements to undertures in addition to associates. The revised standard becomes stand the relationship with those assets that have not been effective for annual periods beginning on or after 1 January derecognised and their associated liabilities. In addition, the 2013. amendment requires disclosures about the entitys continuing involvement in derecognised assets to enable the users IAS 32 Offsetting Financial Assets and Financial Liabilities to evaluate the nature of, and risks associated with, such inAmendments to IAS 32 volvement. The amendment is effective for annual periods These amendments clarify the meaning of currently has a beginning on or after 1 July 2011. The Group does not have legally enforceable right to set-off. The amendments also any assets with these characteristics so there has been no efclarify the application of the IAS 32 offsetting criteria to fect on the presentation of its financial statements. settlement systems (such as central clearing house systems) which apply gross settlement mechanisms that are not simul3.4.1 Standards issued but not yet effective taneous. These amendments are not expected to impact the Standards issued but not yet effective up to the date of isGroups financial position or performance and become efsuance of the Groups financial statements are listed below. fective for annual periods beginning on or after 1 January This listing is of standards and interpretations issued, which 2014. the Group reasonably expects to be applicable at a future date. The Group intends to adopt those standards when they IFRS 1 Government Loans Amendments to IFRS 1 become effective. The Group expects that adoption of these These amendments require first-time adopters to apply the standards, amendments and interpretations in most cases not requirements of IAS 20 Accounting for Government Grants to have any significant impact on the Groups financial posiand Disclosure of Government Assistance, prospectively to tion or performance in the period of initial application but government loans existing at the date of transition to IFRS. additional disclosures will be required. In cases where it will Entities may choose to apply the requirements of IFRS 9 (or IAS have an impact the Group is still assessing the possible im39, as applicable) and IAS 20 to government loans retrospecpact. tively if the information needed to do so had been obtained at the time of initially accounting for that loan. The exception IAS 1 Presentation of Items of Other Comprehensive Income would give first-time adopters relief from retrospective mea Amendments to IAS 1 surement of government loans with a below-market rate of The amendments to IAS 1 change the grouping of items preinterest. The amendment is effective for annual periods on or sented in other comprehensive income (OCI). Items that could after 1 January 2013. The amendment has no impact on the be reclassified (or recycled) to profit or loss at a future point Group. in time (for example, actuarial gains and losses on defined benefit plans and revaluation of land and buildings) would IFRS 7 Disclosures Offsetting Financial Assets and Financial be presented separately from items that will never be reLiabilities Amendments to IFRS 7 classified (for example, net gain on hedge of net investment, These amendments require an entity to disclose information exchange differences on translation of foreign operations, about rights to set-off and related arrangements (e.g., collatnet movement on cash flow hedges and net loss or gain on eral agreements). The disclosures would provide users with available-for-sale financial assets). The amendment affects information that is useful in evaluating the effect of netting presentation only and has no impact on the Groups financial arrangements on an entitys financial position. The new disposition or performance. closures are required for all recognised financial instruments that are set off in accordance with IAS 32 Financial Instruments: Presentation. The disclosures also apply to recognised
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financial instruments that are subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are set off in accordance with IAS 32. These amendments will not impact the Groups financial position or performance and become effective for annual periods beginning on or after 1 January 2013. IFRS 9 Financial Instruments: Classification and Measurement IFRS 9, as issued, reflects the first phase of the IASBs work on the replacement of IAS 39 and applies to classification and measurement of financial assets and financial liabilities as defined in IAS 39. The standard was initially effective for annual periods beginning on or after 1 January 2013, but Amendments to IFRS 9 Mandatory Effective Date of IFRS 9 and Transition Disclosures, issued in December 2011, moved the mandatory effective date to 1 January 2015. In subsequent phases, the IASB will address hedge accounting and impairment of financial assets. The adoption of the first phase of IFRS 9 will have an effect on the classification and measurement of the Groups financial assets, but will not have an impact on classification and measurements of financial liabilities. The Group will quantify the effect in conjunction with the other phases, when the final standard including all phases is issued. IFRS 10 Consolidated Financial Statements, IAS 27 Separate Financial Statements IFRS 10 replaces the portion of IAS 27 Consolidated and Separate Financial Statements that addresses the accounting for consolidated financial statements. It also addresses the issues raised in SIC-12 Consolidation Special Purpose Entities. IFRS 10 establishes a single control model that applies to all entities including special purpose entities. The changes introduced by IFRS 10 will require management to exercise significant judgement to determine which entities are controlled and therefore are required to be consolidated by a parent, compared with the requirements that were in IAS 27. Based on the preliminary analyses performed, IFRS 10 is not expected to have any impact on the currently held investments of the Group. This standard becomes effective for annual periods beginning on or after 1 January 2013. IFRS 11 Joint Arrangements IFRS 11 replaces IAS 31 Interests in Joint Ventures and SIC-13 Jointly-controlled Entities Non-monetary Contributions by Venturers. IFRS 11 removes the option to account for jointly controlled entities (JCEs) using proportionate consolidation. Instead, JCEs that meet the definition of a joint venture must be accounted for using the equity method. IFRS 12 Disclosure of Interests in Other Entities IFRS 12 includes all of the disclosures that were previously in IAS 27 related to consolidated financial statements, as well as all of the disclosures that were previously included in IAS 31 and IAS 28. These disclosures relate to an entitys interests in subsidiaries, joint arrangements, associates and structured entities. A number of new disclosures are also required, but has no impact on the Groups financial position or performance. This standard becomes effective for annual periods beginning on or after 1 January 2013. These amendments will not impact the Groups financial position or performance and become effective for annual periods beginning on or after 1 January 2013.
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IFRS 13 Fair Value Measurement IAS 34 Interim Financial Reporting IFRS 13 establishes a single source of guidance under IFRS for The amendment aligns the disclosure requirements for total all fair value measurements. IFRS 13 does not change when an segment assets with total segment liabilities in i n t e r i m entity is required to use fair value, but rather provides guidfinancial statements. This clarification also ensures that interance on how to measure fair value under IFRS when fair value im disclosures are aligned with annual disclosures.These imis required or permitted. The Group is currently assessing the provements are effective for annual periods beginning on or impact that this standard will have on the financial position after 1 January 2013. and performance, but based on the preliminary analyses, no material impact is expected. This standard becomes effective 4 Summary of significant accounting policies for annual periods beginning on or after 1 January 2013. The following is a summary of the Group accounting poli cies which are consistant with those of the previous financial 3.4.2 Annual Improvements May 2012 year. These improvements will not have an impact on the Group, but include: 4.1 Business combination Business Combinations are accounted for using the acquisi IAS 1 Presentation of Financial Statements tion method. The cost of an acquisition is measured as the agThis improvement clarifies the difference between volungregate of the consideration transferred, measured at acquitary additional comparative information and the minimum sition date fair value and the amount of any non-controlling required comparative information. Generally, the minimum interest in the acquiree. For each business combination, the required comparative information is the previous period. Group has an option to measure any non-controlling interests in the acquiree either at fair value or at the non-controlling IAS 16 Property Plant and Equipment interests proportionate share of the acqurees identifiable This improvement clarifies that major spare parts and servicnet assets. ing equipment that meet the definition of property, plant and equipment are not inventory. When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification IAS 32 Financial Instruments, Presentation and designation in accordance with the contractual terms, This improvement clarifies that income taxes arising from diseconomic circumstances and pertinent conditions at acquisitributions to equity holders are accounted for in accordance tion date. This includes the separation of embedded derivawith IAS 12 Income Taxes. tives in host contracts by the acquiree. No reclassification of insurance contracts is required for business combination.
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Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interest over the net identifiable assets acquired and liabilities assumed. If the value of the net assets acquired is in excess of the aggregate consideration transferred, the gain is recognised in profit or loss. Fair values for non-life insurance contracts are derived by calculating the present value of claims reserves. If this consideration is lower than fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to an appropriate cash generating unit that is expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. Where goodwill forms part of a cash-generating unit and part of the operations within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation of and the portion of the cash generating unit retained. Impairment of non-financial 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 assets recoverable amount. An assets recoverable amount is the higher of its fair value less costs to sell 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 flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, recent market transactions are taken into account, if available. An impairment loss is recognised as an expense immediately, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease. 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, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation increase. Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective assets.
4.2
4.3
2012
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All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. 4.4 Investment in Associates The Groups investments in its associates are accounted for using the equity method. An associate is an entity in which the Group has significant influence and which is neither a subsidiary nor joint venture. Under the equity method the investment in the associate is carried in the statement of financial position at cost plus post-acquisition changes in the Groups share of net assets of the associate. Any changes in the Groups share of profits are recorded in profit 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 comprehensive income reflects the share of the results of operations of the associates. This is profit attributable to equity holders of the associates and therefore is profit after tax. Profit or losses resulting from transactions between the Group and the associates are eliminated to the extent of the interest in the associates. The financial statements of the associates are prepared for the same reporting period as the Group. 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 Groups 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 profit of an associate in the income statement. Upon loss of significant influence 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 significant influence and the fair value of the remaining investment and proceeds from disposal is recognised in profit or loss. 4.5 Financial assets Initial recognition and measurement Financial assets within the scope of IAS39 are classified as financial assets at fair value through profit or loss, loans and receivables. The Group determines the classification of its financial assets at initial acquisation. All financial assets are recognised initially at fair value plus transaction costs, except in the case of financial assets recorded at fair value through profit or loss. The Groups financial assets include cash and long-term deposits, and other receivables, loans and other receivables, quoted and unquoted financial instruments and investments at fair value through profit and loss. Fair Value of financial assets The fair value of investments that are actively traded in organised financial markets is determined by reference to a quoted market bid prices at the close of business on the reporting date, without any deduction for transaction costs. For all other financial instruments not traded in an active market, the fair value is determined by using the net asset value. As in thecurrent economic environment, this was concluded to be a reflection of fair value. Subsequent Measurement The subsequent measurement of financial assets depends on their classification as described below: Financial assets at fair value through profit and loss Financial assets at fair value through profit and loss are those financial assets held for trading or financial assets designated as such upon initial recognition. Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near term. Derivatives, including separated imbedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments or a financial guarantee contract. These investments are initially recorded at fair value. Subsequent to initial recognition , these investments are measured at fair value. Fair value adjustments and realised gains and losses are recognised in the profit or loss. Loans and other receivables These are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
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These investments are initially recognised at cost, being the 4.6 Financial Liabilities fair value of the consideration paid for the acquisition of the Initial recognition and measurement investment. All transaction costs directly attributable to the All financial liabilities are recognised initially at fair value acquisition are also included in the cost of the investment. and, in the case of loans and borrowings, minus directly atAfter initial measurement, loans and receivables are meatributable transaction costs. sured at amortised cost using the effective interest rate meth od (EIR) less impairment. Financial liabilities include other payables and accruals. Gains and losses are recognised in the profit or loss when in- Subsequent Measurement vestments are derecognised or impaired as well as through The measurement of financial liabilities depends on their clasthe amortisation process. sification as follows: Derecognition of financial assets Financial liabilities at fair value through profit or loss A financial asset is derecognised when: Financial liabilities at fair value through profit or loss includes; financial liabilities held for trading and financial liabilities - The right to receive cash flows from the asset has ex designated upon initial recognition as at fair value through pired profit and loss. - The Group has transferred substantially all the risks and rewards of the asset or the Group has transferred Financial liabilities are classified as held for trading if they are control of the as set. acquired for the purpose of selling in the near term. Impairment of financial assets Interest bearing loans The Group assesses at each reporting date whether there is After initial recognition, interest bearing loans and borrowany objective evidence that a financial asset or group of fiings are subsequently measured at amortised cost using the efnancial assets is impaired. A financial asset or group of finanfective interest rate method. Gains and losses are recognised cial assets is deemed to be impaired if, and only if, there is in the profit or loss when the liabilities are derecognised. objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the Derecognition of financial liabilities asset and that loss event has an impact on the estimated fuA financial liability is derecognised when the obligations unture cash flows of the financial asset or the group of financial der the liability is discharged or cancelled or expires. When assets that can be reliably estimated. an existing financial liability is replaced by another from the same lender or substantially modified, such an exchange or modification is treated as derecognition of the original liabil - For financial assets carried at amortised cost, if there is obity and the recognition of a new liability. The differences in jective evidence that an impairment loss has been incurred, terms of carrying amounts is recognised in profit or loss. the amount of the loss is measured as the difference be tween the assets carrying amount and the present value 4.7 Reinsurance of estimated future cash flows (excluding future expected The Group cedes insurance risk in the normal course of busicredit losses that have not yet been incurred). The present ness for all of its businesses. Reinsurance assets represent balvalue of the estimated future cashflows is discounted at ances due from reinsurance companies. Amounts recoverable the financial assets original effective interest rate. If a loan from reinsurers are estimated in a manner consistent with the has a variable interest rate, the discount rate for measuring outstanding claims provisions, settled claims associated with any impairment loss is the current EIR. the reinsurer policies and in accordance with the related rein surance contract. On initial recognition the reinsurance re Evidence of impairment may include indications that the ceivables/payables are measured at fair value received/paid debtors or a group of debtors is experiencing significant fior receivable/payable. Subsequently reinsurance balances are nancial difficulty, default or delinquency in interest or princimeasured at amortised cost using the effective interest rate pal payments, the probability that they will enter bankruptcy method. or other financial reorganisation. Reinsurance assets are reviewed for impairment at each re Unquoted Equities porting date or more frequently when an indication of im The unquoted equities are valued using the net asset valuapairment arises during the reporting year. Impairment occurs tion method at each financial reporting date. Impairment is when there is objective evidence as a result of an event that assessed based on the same criteria as financial assets carried occurred after initial recognition of the reinsurance asset that at fair value through profit or loss. However the amount rethe group may not receive all outstanding amounts due uncorded for impairment is the cumulative loss measured as the der the terms of the contract and the event has a reliably difference between the net carrying amount and the current measurable impact on the amounts that the group will refair value. Any impairment loss is recognised in the profit or ceive from the reinsurer. The impairment loss is recorded in loss. the profit or loss.
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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 classification 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. 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 the profit 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 financial reporting purposes at the reporting date. Deferred tax liabilities are recognised for all taxable temporary differences except: - in respect of taxable temporary differences associated with investments in subsidiaries, associates, and interests in joint venture, where 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. - when the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and at the time of the transaction, affects neither the accounting profit nor taxable profit or loss. Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit 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 transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and - in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests
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 profit or loss immediately, the date of purchase and are not amortised. 4.8 Insurance Receivable Insurance receivables are recognised when due and measured on initial recognition at the fair value of the consideration received or receivable. Subsequent to initial recognition, insurance receivables are measured at amortised cost, using the effective interest rate method. 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 the profit or loss. Insurance receivables are derecognised when the derecognition criteria for financial assets as described in note 4.6 has been met. Cash and cash equivalents Cash and short-term deposits in the statement of financial 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 insignificant risk of change in value. For the purposes of the consolidated statement of cash flows, cash and cash equivalents consists of cash and short-term deposits as defined above, net of outstanding bank overdrafts.
4.9
4.10 Taxes Current income tax Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered
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in joint ventures, 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 profit 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 sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each statement of financial position date and are recognised to the extent that it has become probable that future taxable profit 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 to 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 profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underline transaction either in other comprehensive income or directly in equity. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority. Value added tax (VAT) Revenues and expenses subject to VAT are recognised net of the amount of value added tax except: - Where the value added tax incurred on purchase of assets or services is not recoverable from the taxation authority in which case the VAT is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and - receivables and payables that are stated with the amount of VAT included. The net amount of VAT receivable from or payable to the taxation authority is included as part of receivables or payables in the statement of financial position. 4.11 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 wheth
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er the fulfillment of arrangement is dependant on the use of a specific asset or asset, and the arrangement conveys a right to use the asset even if that right is not explicitly specified in an arrangement. Group as a lessee Finance leases, which transfer to the Group substantially all the risks and benefits 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 finance 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 reflected in profit 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 profit 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 benefits of ownership of the asset are classified 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. Foreign Currency translation The Groups consolidated financial statements are presented in USD which is also the parent companys functional currency. Each company in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. (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 profit or loss. 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 notification and settlement of certain types of claims, therefore the ultimate cost of which cannot be known with certainty at the financial 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 flows and claims handling administration costs are used. Any deficiency is immediately charged to the profit 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. 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
4.13
4.12
(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 first qualifies for recognition. 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 currencyare translated using the exchange rates at the date when their fair value was determined.
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to initial recognition, they are measured at amortised costs Equity-settled transactions. using the effective interest rate method. The cost of equity-settled transaction with employees is mea sured by reference to the fair value at the date on which they Derecognition insurance payables are granted. The fair value is determined as the market value Insurance payables are derecognised when the obligation unof the equities. der the liability is settled, cancelled or expired. The cost of equity-settled transactions is recognised, together 4.14 Pensions and other post employment benefits with a corresponding increase in equity, over the period in The Group operates a defined contributions pension plan which the performance and/or service conditions are fuladministered by Fidelity Life Assurance. The Group and emfilled, ending on the date on which the relevant employees ployees contribute 7.5% and 16.5% of the pensionable salabecome fully entitled to the award (the vesting date) ries respectively. The assets of the fund are held in separate trustee administered fund. The cumulative expense recognised for equity-settled trans acti0ns at each reporting date until the vesting period reflects In addition the National Social Security Scheme was introthe extent to which the vesting period has expired and the duced on 1 October 1994 and with effect from that date all groups best estimate of the number of equity instruments employees became members of the scheme to which both that will ultimately vest the profit or loss charge or credit for employees and the company contribute. The companys oblia period represents the movement in cumulative expense recgations under the scheme are limited to specific contributions ognised as at the beginning and end of the period. as legislated from time to time and are presently 6% of pen sionable emoluments. Employees contribute the amount. No expense is recognised for awards that do not ultimately Refer to note 8.5 for the figures. vest, except for awards where vesting is conditional upon a market condition, which are treated as vesting irrespective 4.15 Provisions of whether or not market condition is satisfied, provided that Provisions are recognised when the Group has a present obliall other performance and/or service conditions are satisgation (legal or constructive) as a result of a past event, and fied. it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a When the terms of an equity-settled award are modified, reliable estimate can be made of the amount of the obligathe minimum expense recognised is the expense as if the tion. Where the group expects some or all of a provision to terms had not yet been modified. An additional expense is be reimbursed, the reimbursement is recognised as a separate recognised immediately. However, if a new award is substiasset, but only when the reimbursement is virtually certain. tuted for the cancelled award, and designated as a replaceThe expense relating to any provision is presented in the profment award on the date that it is granted, the cancelled and it or loss net of any reimbursement. new awards are treated as if they were a modification of the original award, as described in the previous paragraph. The Onerous Contracts dilutive effect of outstanding options is reflected as addition A provision is recognised for onerous contracts in which the al share dilution in the computation of diluted earnings per unavoidable costs of meeting the obligations under the conshare. tract exceed the expected economic benefits expected to be received under it. The unavoidable costs reflects the least net 4.17 Equity movements cost of exiting the contract, which is the lower of the cost of Ordinary share capital fulfilling it and any compensation or penalties arising from The Group has issued ordinary shares that are classified as eqfailure to fulfill it. uity instruments. Incremental external costs that are directly attributable to the issue of these shares are recognised in eq4.16 Share-based payment transactions uity net of tax. Share Based Payments Employees (including senior executives) of the Group receive Treasury shares and contracts on own shares remuneration in the form of share-based payment transacOwn equity instruments which are reacquired (treasury tions, whereby employees render services as consideration for shares) are deducted from equity and accounted for at equity instruments (equity-settled transaction). In situations weighted average cost. No gain or loss is recognised in the where equity instruments are issued and some or all of the profit or loss on the purchase, sale, issue or cancellation of the goods or services received by the entity as consideration cangroups own equity instruments. Any difference between the not be specifically identified, they are measured as the differcarrying amount and the consideration is recognised in other ence between the fair value of the share based payment and capital reserves. the fair value of any identifiable goods or services received at Contracts on own shares that require physical settlement of the grant date. a fixed number of own shares for a fixed consideration are classified as equity and added to or deducted from equity.
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Contracts on own shares that require net cash settlement or provide a choice of settlement are classified as trading instruments. Changes in the fair value are reported in the profit or loss. Dividend on ordinary share capital Dividend on ordinary shares are recognised as a liability and deducted from equity when they are approved by the groups shareholders. Dividend for the year that are approved after the reporting date are dealt with as an non-adjusting event after the reporting date. 4.18 Revenue Recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the payment is being made. 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. 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 financial instrument to the net carrying amount of the financial 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 the profit or loss on investments include gains and losses on financial 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. Fees and Commission Commission income is only from ceded reinsurance. The fees are recognised as revenue per policy over the period of the policy. 4.19 Benefits, claims and expenses recognition Gross benefits 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 tot he processing and settlement of claims, a reduction for the value of salvage and other recoveries and any adjustments to claims outstanding from previous years.
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Finance cost Interest paid is recognised in the profit 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 financial liability. 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 the profit and 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 profit and 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. Reinsurance Claims Amounts recoverable from reinsurers on claims incurred or outstanding claims are shown as a deduction to the gross benefits. 4.20 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 accummulated impairment losses. Replacement or major inspection costs are capitalised when incurred and if its probable that future economic benefits associated .with the item will flow 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 - Computer Equipment and Software 5 years - Office Equipment 10 years - Motor Vehicles 5 years - Furniture and fittings 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 benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is included in the profit or loss in the year the asset is derecognised. Investment Properties 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 reflects market conditions at the reporting date. Gains or losses arising from changes in the fair values of investment properties are included in profit or loss in the year in which they arise. Investment properties are derecognised when either they have been disposed of or when the investment is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are recognised in profit or loss in the year of retirement or disposal. 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
4.21
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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. Property held for long term rental yields that is not occupied by the Group companies is classified as investment property. Investmentproperty comprises freehold land and buildings. It is carried at fair value. Fair value is based on active market, adjusted, if necessary, for any difference in the nature, location or condition of the specific asset. 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 the profit or loss. Property located on land that is held under operating lease is classified 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. 4.22 Inventories The inventories are made up of stationery and other office consumables and are valued at the lower of cost and net realisable value. As at 31 December 2012 inventories amounted to $48,557 (2011- $47,344). 5 SOURCES OF ESTIMATION UNCERTAINITY The preparation of the consolidated financial 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. Judgments In the process of applying the Groups accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the consolidated financial 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 significant risks and rewards of ownership of these properties and accounts for the contracts as operating leases. (b) Valuation of financial assets using valuation techniques The unquoted equities are valued using the net asset valuation method. Though it is the most conservative of the valuation methods, it was deemed the less subjective method compared to the other valuation methods. The use of other methods, other than net asset value present challenges and may result in inaccurate valuations in a market like ours. Most inputs to valuation techniques such as predictability of cashflows, accuracy of discount rates and appropriateness of comparable indicators such as earning models are difficult to obtain. Such a scenario provides a challenge in the use of other methods. Estimates and assumptions The key assumptions concerning the future and other key sources of estimating uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. (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
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costs (DAC). (The DAC percentage is split between commis- The Group engaged an independent evaluation specialist to sions (15%) and management fees (5%)). As 31 December assess fair value as at 31 December 2012. A valuation meth2012 UPR was $3,432,419, (2011 - $3,421,449). The movement odology based on a discounted cashflow model was used on the unearned premium reserve are shown through profit together with reference to market based evidence using and loss. As at 31 December 2012 DAC was $650,336, (2011 comparable prices adjusted for specific market factors such as $624,483). nature, location and condition of the property. (d) Insurance Contract Liabilities The determined fair value of the investment properties is Outstanding claims most sensitive to the estimated yield as well as the long term Outstanding claims represent the ultimate cost (net of salvacancy rate. The key assumption used to determine the fair vage recoveries) of setting all claims arising from events that value of the investment properties are further explained in have occurred up to the reporting date. Accrual is made for note 10. the estimated costs of claims net of anticipated recoveries un der reinsurance arrangements notified but not settled at year 6 EARNINGS PER SHARE end. Basic earnings per share amounts is calculated by dividing the net profit for the year attributable to ordinary shareholders Incurred but not reported claims provision (IBNR) of the parent by the weighted average number of ordinary Claims incurred but not reported (IBNR) claims provision, is a shares outstanding at the reporting date. provision for claims arising out of events which have occurred by the reporting date but have not yet been reported at that Diluted earnings per share is calculated by dividing the net date. profit attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding The group does not use actuarial claims projection techduring the year plus the weighted average number of ordiniques. However, the historical patterns have led the group nary shares that would be issued on the conversion of all the to determine the following parameters as appropriate estidilutive potential ordinary shares into ordinary shares. mates of the related provision: Headline earnings per share is calculated by dividing the net IBNR 5% of NPW profit attributable to ordinary equity holders of the parent DAC 20% of UPR (15% Commissions and 5% underwriting company after eliminating any profits or losses associated with sale or termination of discounted operations or from expenses). permanent devaluation or write off of their values, by the weighted average number of shares outstanding at the re (e) Deferred tax assets and liabilities porting date. Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available The following reflects the income and share data used in the against which the losses can be utilised. Significant managebasic diluted and headline earnings per share computations: ment judgement is required to determine the amount of deferred tax asset that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies. Further details on taxes are disclosed on note number 15. (f) Fair value on investment properties The Group carries its investment properties at fair value, with changes on fair value being recognised in the profit or loss
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Profit for the period attributed to equity holders of the parent (US$) Weighted number of shares for basic EPS Effect of Share options Weighted number of shares for diluted EPS Basic earnings per share (US cents) Diluted earnings per share (US cents) Group 2012 2,446,907 565,798,859 - 565,798,859 0.43 0.43 Group 2011 1,632,567 559,450,159 - 559,450,159 0.29 0.29
The weighted number of shares takes into account the weighted average effect of scrip dividend issued during the year.
7 SEGMENT INFORMATION For management purposes, the Group is organised into business units based on their products and services and two reportable seg ment as follows: 1) Short tem insurance 2) Property investment. - Short term insurance segment provides general insurance products to individuals and businesses. Revenue in this segment is derived primarily from insurance premiums , investment income and fair value gains and losses on investments. - The property segment leases offices and residential properties owned by the Group which are surplus to the Groups require ments. - No operating segments have been aggregated to form the above reportable operating segments. - Management monitors operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. - Segment performance is evaluated based on operating profit or loss and is measured consistently with operating profit or loss in the consolidated financial statements.
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SEGMENT REPORT - 2012 Group 2012 1. Analysis by products and services Short-term insurance Property Total 1. Profit and loss items US$ US$ US$ Revenue from external customers 21,395,431 - 21,395,431 Revenue from related parties 3,387,338 - 3,387,338 Total revenue 24,782,769 - 24,782,769 Investment Income & other revenue 1,001,930 967,421 1,969,351 Net benefits and claims (6,735,154) - (6,735,154) Net Commission and acquisition expenses (1,424,862) - (1,424,862) Reinsurance & UPR (10,668,760) - (10,668,760) Finance costs (28,408) (22,567) (50,975) Other operating and administrative expenses (5,817,788) - (5,817,788) Total benefits, claims and other expenses (24,674,972) (22,567) (24,697,539) Operating Profit before Share of Associate 1,109,727 944,854 2,054,581 Share of profit of associates 399,270 - 399,270 Taxation 70,687 (98,057) (27,370) Segment Result 1,579,684 846,797 2,426,481 Statement of financial position items Total Assets 19,370,318 5,619,768 24,990,086 Total Liabilities (9,614,052) (716,767) (10,330,819) Investment in associates included in non-current assets 958,345 - 958,345 2. Analysis by geographical areas Zimbabwe Uganda Total US$ US$ US$ Revenue from external customers 19,333,485 2,061,946 21,395,431 Revenue from related parties 3,387,338 - 3,387,338 Total revenue 22,720,823 2,061,946 24,782,769 Investment Income & other revenue 1,832,653 136,698 1,969,351 Net benefits and claims (6,336,755) (398,399) (6,735,154) Net Commission and acquisition expenses (1,311,545) (113,317) (1,424,862) Reinsurance & UPR (9,990,754) (678,006) (10,668,760) Finance costs (43,927) (7,048) (50,975) Other operating and administrative expenses (4,693,368) (1,124,420) (5,817,788) Total benefits, claims and other expenses (22,376,349) (2,321,190) (24,697,539) Operating Profit before Share of Associate 2,177,127 (122,546) 2,054,581 Share of profit of associates 399,270 - 399,270 Taxation (94,621) 67,251 Segment Result 2,481,776 (55,295) Statement of financial position items Total Assets 23,385,481 1,604,605 Total Liabilities (9,174,109) (1,156,710) Investment in associates included in non-current assets 958,345 - (27,370) 2,426,481 24,990,086 (10,330,819) 958,345
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SEGMENT REPORT - 2011 Group 2011 1. Analysis by products and services Short-term insurance Property Total 1. Profit and loss items US$ US$ US$ Revenue from external customers 20,227,349 - 20,227,349 Revenue from related parties 3,319,170 - 3,319,170 Total revenue 23,546,519 - 23,546,519 Investment Income & other revenue 718,008 596,328 1,314,336 Net benefits and claims (7,484,765) - (7,484,765) Net Commission and acquisition expenses (1,425,604) - (1,425,604) Reinsurance & UPR (9,397,783) - (9,397,783) Finance Costs (5,542) - (5,542) Other operating and administrative expenses (5,243,666) - (5,243,666) Total benefits, claims and other expenses (23,557,360) - (23,557,360) Operating Profit before Share of Associate 707,166 596,328 1,303,495 Share of profit of associates 290,883 290,883 Taxation (33,176) 107,837 74,661 Segment Result 964,874 704,165 1,669,039 Statement of financial position items Total Assets 17,266,069 4,713,667 21,979,736 Total Liabilities (9,248,888) (317,072) (9,565,961) Investment in associates included in non-current assets 559,075 - 559,075 2. Analysis by geographical areas Zimbabwe Uganda Total US$ US$ US$ Revenue from external customers 17,924,260 2,265,420 20,189,680 Revenue from related parties 3,319,170 37,669 3,356,839 Total revenue 21,243,430 2,303,089 23,546,519 Investment Income & other revenue 1,134,115 180,221 1,314,336 Net benefits and claims (7,031,542) (453,223) (7,484,765) Net Commission and acquisition expenses (1,257,077) (168,527) (1,425,604) Reinsurance & UPR (8,647,261) (750,522) (9,397,783) Finance costs (4,482) (1,060) (5,542) Other operating and administrative expenses (4,278,246) (965,420) (5,243,666) Total benefits, claims and other expenses (21,218,608) (2,338,752) (23,557,360) Operating Profit before Share of Associate 1,158,937 144,558 1,303,495 Share of profit of associates 290,883 - 290,883 Taxation 121,552 (46,891) 74,661 Segment Result 1,571,372 97,667 1,669,039 Statement of financial position items Total Assets 20,375,131 1,604,605 21,979,736 Total Liabilities (8,409,254) (1,156,710) (9,565,964) Investment in associates included in non-current assets 559,075 - 559,075
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Group Group Company Company 2012 2011 2012 2011 $ $ $ $ 8.1 Investment income Rental income from investment properties 694,750 567,362 76,126 49,059 Dividend income from financial assets through profit and loss 60,374 5,413 60,374 5,413 Interest income from financial assets at fair value through profit and loss 492,130 499,886 389,866 435,806 Other interest income 73,094 56,052 70,746 55,985 1,320,348 1,128,713 597,112 546,263 8.2 Other income Management Fees receivable 56,008 203,478 139,486 203,478 Other 14,191 15,310 - - 70,199 218,788 139,486 203,478 8.3 NET BENEFITS AND CLAIMS Gross benefits and claims paid 10,799,028 11,439,356 9,710,211 10,452,960 Claims recovered from reinsurers (3,845,749) (4,418,727) (3,247,351) (3,874,740) Gross change in contract liabilities Change in outstanding losses provision (206,122) 318,612 (89,302) 309,210 Change in IBNR claims provision (12,003) 145,524 (36,803) 144,113 Total gross change in contract liabilities (218,125) 464,136 (126,105) 453,323 Net benefits and claims 6,735,154 7,484,765 6,336,755 7,031,543
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Group Group Company Company 2012 2011 2012 2011 $ $ $ $ 8.4 OTHER GAINS/(LOSSES) Profit/(loss) on disposal of property and equipment 18,507 (50,410) 18,507 (58,321) Gain on disposal of financial assets through profit and loss 84,616 79,824 84,616 79,824 Bad debts recovery 5,494 39,346 - - Gain on disposal of investment property 4,330 - 4,330 - Investment Property Expenses (353,557) (411,008) - - (240,610) (342,248) 107,453 21,503 Unrealised gains/ (losses) Fair value gains on investment property 959,488 686,569 244,189 145,900 Fair value loss on financial assets through profit and loss (159,288) (421,072) (159,288) (421,072) Fair value (loss)/gain on unquoted equities 9,987 38,321 9,987 38,321 Unrealised exchange gain 9,227 5,264 9,770 3,393 819,414 309,082 104,658 (233,458) Net other gains/(losses) 578,804 (33,166) 212,111 (211,955) 8.5 Operating and administrative expenses Other operating expenses include the following: Auditors remuneration for the audit - current year 22,297 11,125 22,297 24,748 Auditors remuneration for audit (net of taxes) 80,306 66,069 62,500 45,000 Directors fees and emoluments 136,159 57,572 78,561 41,852 Wages and salaries (excluding executive management) 1,878,075 1,485,321 2,022,107 1,479,540 Salaries - Executive management 432,000 332,244 432,000 332,244 Pension costs 219,031 180,563 200,765 167,574 Social security costs 54,697 47,542 23,804 20,818 Depreciation 305,555 273,092 265,275 229,640 Impairment reversal - (13,077) - (13,077) Legal fees 4,399 20,353 4,399 17,063 Reversals of receivables - 287,708 - 381,536 Impairment of receivables 78,494 6,467 - - Other operating and administration costs 2,606,775 2,488,687 1,699,328 1,646,188 5,817,788 5,243,666 4,811,036 4,373,126 8.6 Components of other comprehensive income Exchange difference on foreign operation translation (35,054) (86,340) - -
This arose from the foreign translation of First Insurance Company (FICO), from Ugandan Shillings (functional currency) to United States Dollars (reporting currency). The rate used to translate the Statement of Financial Position was $1:UGX 2,686 (2011 - 2,565).
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8.7 Investment in associates Reconciliation of the carrying amount Group Group Company Company Balance at beginning of the year 559,075 268,192 63,010 63,010 Share of profit for the year 399,270 290,883 - - Balance at year end 958,345 559,075 63,010 63,010 Information on associates - Clover Leaf Panel Beaters Country of incorporation Zimbabwe Zimbabwe Principal activities Motor industry Motor industry Percentage holding 45% 45% Year end December December Year-end used for inclusion in group accounts December December Non-current assets 74,090 72,944 Current assets 299,705 294,077 Current liabilities (57,671) (111,449) Net assets 316,123 255,572 Information on associates - Fidelity Funeral Assurance Country of incorporation Zimbabwe Zimbabwe Principal activities Life Assurance Life Assurance Percentage holding 23.9% 23.9% Year end December December Year-end used for inclusion in group accounts December December Non-current assets 94,172 70,116 Current assets 586,992 278,509 Current liabilities (95,236) (13,536) Non-current liabilities (6,397) (6,397) Net assets 579,531 328,692 8.8 Taxation (credit)/expense Current tax 64,907 55,930 - - Deferred tax - liability movement 24,957 (190,205) - (152,294) Deferred tax - asset movement (62,494) 59,614 (3,436) 138,580 27,370 (74,661) (3,436) (13,714) Tax rate reconciliation Tax at normal rate -25.75% -25.75% -25.75% -25.75% Adjust for: Effect of non-deductible expenses 3.4% 5.1% 5.8% 123.8% Effect of non-taxable income 27.5% (6.9%) 75.8% (134.8%) Other effects (6.3%) 22.9% (55.6%) 33.9% 1.1% (4.7%) (0.3%) (2.9%)
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9. PROPERTY AND EQUIPMENT Group Freehold Land Motor Equipment Furniture & Buildings vehicles & computers & fittings Total US$ US$ US$ US$ US$ Cost Balance as at 1 January 2011 365,956 844,474 353,090 325,161 1,888,681 Exchange rate movement on foreign operations (91,304) (1,919) (3,631) (5,503) (102,357) Additions - 90,132 52,477 52,916 195,525 Reclassification to investment property (64,652) - - - (64,652) Disposals - (97,487) (25,793) (55,858) (179,138) Balance as at 31 December 2011 210,000 835,200 376,143 316,716 1,738,059 Exchange rate movement on foreign operations - (1,377) (2,064) (3,094) (6,535) Additions - 284,416 122,320 19,779 426,515 Disposals - (101,100) - (1,646) (102,746) Balance at 31 December 2012 210,000 1,017,139 496,399 331,755 2,055,293 Accumulated Depreciation Balance as at 1 January 2011 - (189,873) (143,194) (133,893) (466,960) Charge for the year - (168,237) (66,566) (38,289) (273,092) Eliminated on disposals - 55,212 19,234 15,711 90,157 Impairment losses/ (reversals) recognised in P/L - - 2,122 10,955 13,077 Exchange rate movement on foreign operations - 1,592 1,861 1,039 4,492 Balance on 31 December 2011 - (301,306) (186,543) (144,477) (632,326) Charge for the year - (196,396) (79,911) (29,248) (305,555) Eliminated on disposals - 72,878 - 900 73,778 Exchange rate movement on foreign operations - 528 948 1,502 2,978 Balance at 31 December 2012 - (424,296) (265,506) (171,323) (861,125) Carrying amount at 31 December 2012 210,000 592,843 230,893 160,432 1,194,168 Carrying amount at 31 December 2011 210,000 533,894 189,600 172,239 1,105,733 9. PROPERTY AND EQUIPMENT Company Freehold Land Motor Equipment Furniture & Buildings vehicles & computers & fittings Total US$ US$ US$ US$ US$ Balance at 01 January 2011 210,000 824,389 248,843 207,088 1,490,320 Additions - 62,455 18,708 25,133 106,296 Disposals - (85,500) (12,015) (54,775) (152,290) Balance at 31 December 2011 210,000 801,344 255,536 177,446 1,444,326 Additions - 284,416 86,352 13,318 384,086 Disposals - (101,100) - (1,646) (102,746) Balance at 31 December 2012 210,000 984,660 341,888 189,118 1,725,666 Accumulated Depreciation Balance on 01 January 2011 - (174,158) (96,913) (82,313) (353,384) Charge for the year - (162,770) (46,562) (20,308) (229,640) Eliminated on disposals - 43,225 5,456 14,628 63,309 Impairment reversals on disposal - - 2,122 10,955 13,077 Balance on 31 December 2011 - (293,703) (135,897) (77,038) (506,638) Charge for the year - (190,778) (56,514) (17,983) (265,275) Eliminated on disposals - 72,878 - 900 73,778 Balance at 31 December 2012 - (411,603) (192,411) (94,121) (698,135) Carrying amount at 31 December 2012 210,000 573,057 149,477 94,997 1,027,531 Carrying amount at 31 December 2011 210,000 507,641 119,639 100,408 937,688
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Group Group Company Company 2012 2011 2012 2011 10 INVESTMENT PROPERTIES 1. Reconciliation of the carrying amount Balance at 1 January 6,677,444 5,307,761 1,668,390 1,243,900 Additions 451,168 668,908 3,381 278,490 Disposals (50,000) - (50,000) Exchange rate movement on foreign operations (24,848) (50,446) - Reclassification from owner occupied property - 64,652 - Fair value adjustments 959,489 686,569 244,187 146,000 Balance at 31 December 8,013,253 6,677,444 1,865,958 1,668,390 2. Income and expenses related to investment property Rental income from investment property recognised in 694,750 567,362 76,126 49,059 Profit and loss. Direct operating expenses (repairs, maintenance, etc) for: 353,557 411,008 15,879 2,225 - Property that generated rentals during the periods Investment properties are stated at fair value as at 31 December 2012 and 31 December 2011. Fair values were determined, with reference to valuations performed by an accredited independent valuer. For commercial properties values were calculated using a discounted cashflow approach and are based on current rental income plus any anticipated uplifts at the next rent review, assuming no future growth in rental income. This uplift and the discount rate were derived from rates implied by recent market transactions on similar properties. For residential properties the open market value method is used in comparison with recent market transactions on similar properties. The valuer applied the following rentals based on market information. Location Offices Retail Industrial rent/sq metre rent/sq metre rent/sq metre Harare Bulawayo Gweru Mutare 6.5 3 - 5 3 3 15 10 - 15 8 - 10 6 2.5 1 - 1.5 2 1.5
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The valuer used the investment method to arrive at a realistic capital value hence in our opinion the properties are fairly valued. A conservative o pen monthly rate of $6.00 was used considering the hardships most businesses in Zimbabwe are facing. In undertaking the valuations, the valuer took into considerations void rates and arrears currently applying to the individual properties in the portfolio. A rental yield of 10% was used to discount the properties. This yield was obtained from some concluded transactions and consideration of account prices and offers that had been received for properties currently on the market, formally or otherwise, although the transaction may not have been concluded. The valuer also adjusted and applied the implied values in the manner we considered appropriate. 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 specific residential properties. The Discounted Cash Flow Method involves the projection of a series of periodic cash flows either to an o perating property or a development property. To this projected cash flow series, an appropriate, market derived discount rate is applied to establish an indication of the present value of the income stream associated with the property. The calculated periodic cash flow is typically estimated as gross rental income less vacancy and collection losses and less operating expenses. A series of periodic net operating incomes, along with an estimate of the terminal value anticipated at the end of the projection period, are discounted to present value. T h e aggregate of the net present values equals the market value of the property. The rental income that arose during the year is included in investment income. Investmentproperties 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 investment properties valued at $524,000 were pledged as security for a mortgage loan valued at $232,491 as at 31 December 2012.
Sensitivity analysis The following analysis shows the impact of a 10% decline/increase in property value on profit and net assets. 2012 Profit Net Assets ($) 10% decline in property value (801,325) (801,325) 10% increase in property value 801,325 801,325 Positive figures represent an increase in profit or increase in value on net assets.
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11 INVESTMENTS 11.1 INVESTMENT IN UNQUOTED EQUITIES AT FAIR VALUE THROUGH PROFIT AND LOSS Group Group Company Company 2012 2011 2012 2011 %age Holding Fidelity Life Asset Management (Zimbabwe) 1.92% 19,081 16,496 19,081 16,496 Uganda Reinsurance 1.00% 37,230 - - Central Broadcasting Service (Uganda) 17.61% 37,232 38,982 - Diamond General Insurance (Zambia) 11% 174,699 167,299 174,699 167,299 268,242 222,777 193,780 183,795
11.1.1 MOVEMENTS IN UNQUOTED EQUITIES Opening balance 222,777 210,505 183,795 167,404 Additions - purchase of stake in Uganda Reinsurance 37,230 - - Fair value adjustments 9,985 16,391 9,985 16,391 Exchange rate movement on foreign operations (1,750) (4,119) - Closing balance 268,242 222,777 193,780 183,795 11.2 SHORT TERM INVESTMENTS AT FAIR VALUE THROUGH PROFIT AND LOSS Government, Municipal stocks and bonds 350,000 499,389 350,000 200,000 Money market deposits 1,020,012 2,210,293 728,608 1,906,610 Quoted equities 346,372 882,204 346,372 882,204 Grand Total 1,716,384 3,591,886 1,424,980 2,988,814 11.2.1 MOVEMENT IN QUOTED EQUITIES Opening balance 882,204 1,439,151 882,204 1,439,151 Additions 309,822 1,114,437 309,822 1,114,437 Disposals (686,366) (1,250,312) (686,366) (1,250,312) Fair value adjustment (159,288) (421,072) (159,288) (421,072) Closing balance 346,372 882,204 346,372 882,204 11.2.2 MOVEMENT IN SHORT-TERM DEPOSITS Opening balance 2,709,682 3,465,966 2,106,610 2,950,475 Additions 878,537 4,057,447 821,831 2,974,300 Investment income 492,130 499,886 389,866 435,806 Disposals (2,710,337) (5,313,617) (2,239,699) (4,253,971) Closing balance 1,370,012 2,709,682 1,078,608 2,106,610 11.3 LONG TERM INVESTMENTS AT FAIR VALUE THROUGH PROFIT AND LOSS Money market deposits 507,745 294,366 507,745 294,366 11.3.1 LONG TERM DEPOSITS Opening balance 294,366 144,366 294,366 144,366 Additions 250,000 150,000 250,000 150,000 Disposals (36,621) - (36,621) Closing balance 507,745 294,366 507,745 294,366 11.4 Fair value measurements recognised in the statement of financial position The table below provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value grouped into levels 1 to 3 based on the degree to which the fair value is observable: - Included in the Level 1 category are financial assets that are measured in whole or in part by reference to published quotes in an active market. A financial instrument is regarded as quoted in an active market if quoted prices are readily and r egularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency and those prices r epresent actual and regular ly occurring market transaction on an arms length basis: - Included in the Level 2 category are financial assets measured using a valuation technique based on assumptions that are supported by prices from observable current market transactions, and
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- Included in the Level 3 category are financial assets measured using non market observable inputs. This means that fair values are determined in whole or part using a valuation technique (model) based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data. The main asset classes in this category are unlisted equity instruments. 2012 Level 1 Level 2 Level 3 31-Dec-12 Group Investment in unquoted equities - - 268,242 268,242 Listed equities 346,372 - - 346,372 Short term deposits 1,020,012 - - 1,020,012 Government Securities 350,000 - - 350,000 Long term deposits - 507,745 - 507,745 Total 1,716,384 507,745 268,242 2,492,371 Company Investment in unquoted equities - - 193,780 193,780 Listed equities 346,372 - - 346,372 Short term deposits 728,608 - - 728,608 Government Securities 350,000 - - 350,000 Long term deposits - 507,745 - 507,745 Total 1,424,980 507,745 193,780 2,126,505 2011 31-Dec-11 Group Investment in unquoted equities - - 222,777 222,777 Listed equities 882,204 - - 882,204 Short term deposits 2,210,293 - - 2,210,293 Government Securities 499,389 - - 499,389 Long term deposits - 294,366 - 294,366 Total 3,591,886 294,366 222,777 4,109,029 Company Investment in unquoted equities - - 183,795 183,795 Listed equities 882,204 - - 882,204 Short term deposits 1,906,610 - - 1,906,610 Government Securities 200,000 - - 200,000 Long term deposits - 294,366 - 294,366 Total 2,988,814 294,366 183,795 3,466,975 12 INSURANCE RECEIVABLES Due from policy holders (Direct clients) 826,441 787,613 227,500 145,771 Due from reinsurers 1,536,281 1,231,975 937,302 1,060,618 Due from brokers, agents & intermediaries 2,493,350 3,989,940 2,478,005 3,989,940 Due from insurers 48,645 96,908 48,645 96,907 Write off - (381,536) - (381,536) Impairment (78,494) (6,467) - 4,826,223 5,718,433 3,691,452 4,911,700 Other trade receivables Direct and treaty losses receivable 1,397,334 979,006 1,397,334 979,006 Rentals receivable 94,684 81,172 - 1,492,018 1,060,178 1,397,334 979,006 Grand Total 6,318,241 6,778,611 5,088,786 5,890,706 As at 31 December 2012, trade receivables at initial value of $78,494, (2011 - $6,467) were impaired. The Group writes off all policies which will be long over due and where premiums were 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 being adhered to.
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12.1 OTHER RECEIVABLES AND PREPAYMENTS Group Group Company Company 2012 2011 2012 2011 Deposits (Uganda) 21,404 37,207 - Staff loans 49,947 22,107 46,106 21,973 Accrued interest - investments 54,091 63,662 51,344 58,669 Receivable on disposal of investments 26,479 - 26,479 Other prepayments 184,710 182,056 52,097 110,811 336,631 305,032 176,026 191,453 Trade receivables are non-interest bearing and are generally on 30 to 365 day terms depending on agreed payment plans. 12.2 Trade receivables and recoveries age analysis 0-30 days 1,189,149 619,261 802,323 619,261 31-60 days 707,161 2,476,865 336,703 1,670,132 61-90 days 1,077,194 1,017,822 942,162 1,017,822 over 90 days 1,852,719 1,604,485 1,610,264 1,604,485 4,826,223 5,718,433 3,691,452 4,911,700 Movements in the allowance for credit losses Balance at the beginning of the period (6,467) (93,828) - Impairment losses (72,027) 87,361 - (78,494) (6,467) - The carrying amounts of trade and other receivables approximate fair value. 13 STATUTORY DEPOSIT Opening balance 71,715 73,143 - Movement 3,649 (1,428) - Closing balance 75,364 71,715 - This pertains 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.
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14 ORDINARY SHARE CAPITAL AND SHARE PREMIUM Group Group Company Company 2012 2011 2012 2011 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 565 798 859 (2011 - 559 450 159) ordinary shares of $.005 each 2,828,995 2,797,251 2,828,995 2,797,251 Share Premium 3,278,793 3,183,563 3,278,793 3,183,563 During the year the issued share capital was increased by $126,974 from the issue of 6 348 700 ordinary shares. These shares were offered to existing shareholders as scrip dividend. 14.1 Dividend Paid Declared and paid during the year Dividends on ordinary shares: Final dividend for 2011:0.046 cents per share 145,938 - 145,938 145,938 - 145,938 14.2 SHARE OPTIONS Shareholders approved a new share option scheme in 2010 but no shares have been granted as at 31 December 2012. 15 DEFERRED TAX LIABILITY Group Group Company Company 2012 2011 2012 2011 At beginning of year 189,502 379,707 3,844 17,558 Prior year deferred tax adjustment 44,952 - - Deferred tax (release)/charge for the year in profit or loss 24,957 (190,205) (3,436) (13,714) Balance at 31 December 2012 259,411 189,502 408 3,844 Deferred Tax Analysis Property plant and equipment 63,823 200,545 45,620 180,170 Investment Properties 311,874 197,519 71,074 32,236 Trade receivables 27,971 991,654 27,971 991,654 Estimated tax losses 34,969 (1,168,448) 34,969 (1,168,448) Quoted equities 9,689 (255,506) 9,689 (255,506) Trade payables (561,655) - (561,655) Other liabilities (422,091) - (422,091) Other assets 794,831 223,738 794,831 223,738 259,411 189,502 408 3,844
15.1 DEFERRED TAX ASSET 134,756 72,262 - MOVEMENT IN DEFERRED TAX ASSET Opening balance 72,262 131,876 - Credit/(debit) to profit and loss 62,494 (59,614) - Closing balance 134,756 72,262 - Deferred tax assets have been recognised by the Group from the subsidiary FICO. These will be recovered from future taxable profits. 16 TRADE AND OTHER PAYABLES Due to policy holders, reinsurers 2,750,291 2,373,530 2,204,395 2,005,740 Other payables 1,267,912 980,176 1,011,616 869,380 Trade 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.
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17 LONG TERM LOAN Group Group Company Company 2012 2011 2012 2011 Long term loan are made up of: Motor Vehicle Loan - FICO 11,295 24,654 - Refurbishment Loan - NDI 232,491 - 232,491 243,786 24,654 232,491 The FICO long term loan of $24,654 relates to motor vehicle finance, obtained for two years at interest rate of 15% per annum. During the year NICOZDIAMOND took out a loan of $250,000 for property refurbishments. The loan is for five years at an interest rate of 15% per annum. Group Group Company Company 2012 2011 2012 2011 18 INSURANCE PROVISIONS Outstanding claims provision 1,396,646 1,503,229 1,151,525 1,164,681 Incurred but not reported claims provisions 668,682 721,127 631,914 670,345 Total outstanding claims and IBNR 2,065,328 2,224,356 1,783,439 1,835,026 Unearned premium provision 3,432,419 3,421,449 2,768,949 2,860,744 Balance at 31 December 2012 5,497,747 5,645,805 4,552,388 4,695,770 18.1 MOVEMENT IN INSURANCE PROVISIONS Opening balance 5,645,805 4,581,535 4,695,770 3,404,596 Utilised in the year (3,199,293) (2,295,133) (2,860,745) (2,050,012) Raised in the year 3,051,235 3,359,403 2,717,363 3,341,186 Closing balance 5,497,747 5,645,805 4,552,388 4,695,770 19 CASH RECEIPTS FROM CUSTOMERS Opening balance for trade and other debtors 7,221,399 5,205,260 6,199,444 4,265,582 Impairment (78,494) (6,467) - Gross premiums receivable for the year 24,782,769 23,546,521 22,720,823 21,243,430 Other gross receivables for the year 2,522,538 1,970,045 2,223,966 1,844,386 Unrealised exchange gains/ losses (9,769) (1,521) (9,769) (3,393) Rentals Revenue 553,104 567,362 76,126 49,059 Closing balance for trade and other debtors (excluding prepayments) (7,398,998) (7,221,399) (5,931,309) (6,199,444) Cash received 27,592,549 24,059,801 25,279,281 21,199,620 20 CASH PAID TO SUPPLIERS AND EMPLOYEES Opening balance for current liabilities (excluding tax) (9,403,622) (7,984,441) (7,842,829) (6,368,565) Gross premiums payable/cedable for the year (10,629,663) (8,714,218) (10,082,549) (7,836,527) Gross payables for benefits and claims, commission (10,527,360) (11,704,735) (9,779,678) (11,113,874) Operating expenses (less depreciation) (5,966,257) (5,475,497) (4,558,358) (4,147,716) Prepayments 57,837 (128,336) 58,714 (100,811) Movement in inventory (1,213) (20,399) (1,213) (20,399) Closing balance for current liabilities (excluding tax) 9,919,884 9,403,621 8,031,516 7,842,829 Cash paid (26,550,394) (24,624,005) (24,174,397) (21,745,063)
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21 CURRENT TAX (RECEIVABLE)/PAYABLE RECONCILIATION Group 2012 Group 2011 Company 2012 Company 2011 Balance at the beginning of the year 33,009 32,574 (65,824) (65,824) Amounts charged to statement of comprehensive income 64,907 55,930 - Prior year adjustment (40,509) (12,728) - Amounts charged to statement of comprehensive income (105,207) (68,223) - Balance at the end of the year (47,800) 33,009 (65,824) (65,824) 22 CASH AND CASH EQUIVALENTS Cash on hand and balances with banks 1,461,909 419,007 1,352,094 313,449 Deposits with maturity less than 3 months 2,847,680 1,006,023 2,847,680 1,006,023 Total cash and bank 4,309,589 1,425,030 4,199,774 1,319,472 23 INVESTMENT IN SUBSIDIARIES Opening balance - - 1,279,930 1,268,930 Additional Investment - - - 11,000 Closing balance - - 1,279,930 1,279,930 An additional investment of $11,000 was made into FICO in 2011 in response to a capital call to meet the required solvency in the Ugandan Company. 24 RISK MANAGEMENT FRAMEWORK 24.1 Governance frame work The primary objective of the Groups risk and financial management framework is to protect the Groups shareholders from events that hinder the sustainable achievement of financial performance objectives, including failing to exploit opportunities. Key man agement r ecognises the critical importance of having efficient and effective risk management systems in place. The Group has 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 profiles for the Group, risk and management control has been put in place. Each risk identified profile has 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 define the Groups identification of risk and its interpretation, limit structure to ensure the appropriate quality and diversification of assets, align underwriting and reinsurance strategy to the corporate goals, and specify reporting requirements. 24.2 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 share holders. The Groups 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 influence the capital position of the Group in the light of changes in economic conditions and risk characteristics. An important aspect of the Groups overall capital management process is the setting of target risk adjusted rates of return, which are aligned to performance objec tives and ensure that the Group is focused on the creation of value for shareholders.
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24.3 Capital Management objectives, policies and approach The primary source of capital used by the Group is equity shareholders Funds and borrowings. The primary objective of the Groups capital management is to ensure that it maintains a strong credit rating and healthy capital 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 gearing ratio calculated as debt divided by equity. As at 31 December the gearing ratio was strong and there was a debt of $243,786. The components of the Capital were as follows: Group Group Company Company 2012 2011 2012 2011 Share Capital 2,828,995 2,797,251 2,828,995 2,797,251 Share Premium 3,278,793 3,183,563 3,278,793 3,183,563 Retained Earnings 8,146,837 5,998,847 2,844,870 1,916,263 Capital Reserves 24,596 24,596 - Foreign Translation Reserve (188,573) (166,468) - Other Reserves 276,986 250,981 - Total Equity 14,367,634 12,088,770 8,952,658 7,897,077 24.4 Regulatory framework Regulators are primarily interested in protecting the rights of policy holders and monitor them closely to ensure that the Group is satisfactorily managing affairs for their benefit. 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 regula tions, 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. 24.5 Insurance and financial risk The principal risk the Group faces under insurance contracts is that the actual claims and benefit payments or the timing thereof, differ from expectations. This is influenced by the frequency of claims, severity of claims, actual benefits paid and subsequent development of long term claims. Therefore, the objective of the Group is to have sufficient reserves available to cover these liabilities. The risk exposure is mitigated by diversification 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 groups 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 Groups placement of reinsurance is diversified 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, fire, 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 diversified in terms of risk and level of insured benefits. This is largely achieved through diversification across industry sectors and geography. Further, strict 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.
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The major source of risk is motor class followed by Fire, for both 2012 and 2011 financial years. The table below sets out the concentration of non-life insurance contract liabilities (outstanding claims and IBNR) by type of contract: 2012 Gross Reinsurance Net Liability Liability Liabilities Motor 4,177,383 2,737,571 1,439,812 Fire 1,045,173 863,885 181,288 Marine 40,970 40,970 - Engineering 184,056 45,408 138,648 Accident 1,253,162 976,040 277,122 Credit 30,958 2,500 28,458 Farming 1,537 1,537 - Aviation 728 728 - 6,733,967 4,668,639 2,065,328 2011 Gross Reinsurance Net Liability Liability Liabilities Motor 1,934,604 516,511 1,418,093 Fire 905,034 463,587 441,447 Marine 20,355 5,548 14,807 Engineering 60,043 5,836 54,207 Accident 582,101 308,619 273,482 Credit 16,448 - 16,448 Farming 2,372 - 2,372 Aviation 3,500 - 3,500 3,524,457 1,300,101 2,224,356 The geographical concentration of the Groups non-life insurance contract liabilities is noted below. The disclosure is based on the countries where the business is written.
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2012 Gross Reinsurance Net Liabilities Liabilities Liabilities Zimbabwe 6,013,502 4,193,294 1,820,208 Uganda 720,465 475,345 245,120 Total 6,733,967 4,668,639 2,065,328 2011 Gross Reinsurance Net Liabilities Liabilities Liabilities Zimbabwe 2,564,020 728,994 1,835,026 Uganda 960,437 571,107 389,330 Total 3,524,457 1,300,101 2,224,356 Claims Development table The following table show the estimates of cumulative incurred claims, including both claims notified and IBNR for each successive accident year at each reporting date, together with cumulative payments to date. Gross non-life insurance contract outstanding claims provision for 2012: Accident Year 2009 2010 2011 2012 At end of accident year 1,877,969 5,043,467 8,102,915 6,308,664 One year later 1,119,041 1,927,443 2,884,062 Two years later 489,734 105,262 - - Three years later 1,372 - - 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, profit before tax and equity. 31 December 2012 Changes in Impact on gross Impact on Impact on profit Impact assumptions liabilities net liabilities before tax on equity Average claim cost +10% 674 207 (207) (207) 31 December 2011 Changes in Impact on gross Impact on Impact on profit Impact assumptions liabilities net liabilities before tax on equity Average claim cost +10% 352 222 (222) (222)
58

25 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. The following policies and procedures are in place to mitigate the Groups 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 s et 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. Collateral The amount and type of collateral required depends on an assessment of the credit risk of the counterparty. 25.1 Credit Exposure The Groups maximum exposure to credit risk for the components of the statement of financial position at 31 December 2012 and 2011 is the carrying amounts as presented in Note 10 expect for financial guarantees. The Groups maximum exposure for financial 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. The maximum exposure is shown gross, before the effect of mitigation through the use of master netting or collateral agreements and the use of credit derivatives. 31 December 2012 $ Financial guarantees 58,473 31 December 2011 Financial guarantees 392,638 25.2 Liquidity Risk Liquidity risk is that risk that the Group will encounter difficulty in meeting obligations associated with financial instruments. The following policies and procedures are in place to mitigate the Groups exposure to liquidity risk. - Guidelines are set for asset allocation, portfolio limit structures and maturity profiles of assets in order to ensure sufficient 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. Excessive Risk Concentration Concentrations arise when a number of counterparties are engaged in similar business activities, or activities in the same geograph ical 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 Groups performance to developments affecting a particular industry. In order to avoid excessive concentrations of risk, the Groups policies and procedures include specific guidelines to focus on the maintenance of a diversified portfolio. Identified concentrations of credit risks are controlled and managed accordingly.
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Maturity Profiles 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 flow. The table that follows summarises the maturity profile of the non-derivative financial assets and financial liabilities of the Group. Unearned premiums have been excluded from the analysis as they are not contractual obligations. Maturity Analysis (contractual undiscounted cash flow basis) 2012 Carrying Up to one year 1-3 years No maturity Total Amount date Financial Assets Financial assets at fair value through profit and loss 1,877,757 1,370,012 507,745 - 1,877,757 Insurance receivables 6,318,241 6,318,241 - - 6,318,241 Related Party receivables 410,675 410,675 - - 410,675 Cash and cash equivalent 4,309,589 4,309,589 - - 4,309,589 Quoted equities 346,372 346,372 - - 346,372 Total undiscounted assets 13,262,633 12,754,888 507,745 - 13,262,633 Financial Liabilities Borrowings 243,786 - 243,786 - 243,786 Insurance Payables 2,750,291 2,750,291.37 - - 2,750,291 Other Payables 1,267,913 1,267,913.39 - - 1,267,913 Outstanding claims 2,065,328 2,065,327.67 - - 2,065,328 Related Party Payables 311,672 311,672.00 - - 311,672 Total undiscounted Liabilities 6,638,990 6,395,204 243,786 - 6,638,990 Total liquidity gap 6,623,643 6,359,684 263,959 - 6,623,643 2011 Carrying Up to one year 1-3 years No maturity Total Amount date Financial Assets Financial assets at fair value through profit and loss 3,004,048 2,709,682 294,366 - 3,004,048 Insurance receivables 6,778,611 6,778,611 - - 6,778,611 Related Party receivables 203,978 203,978 - - 203,978 Cash and cash equivalents 1,425,030 1,425,030 - - 1,425,030 Quoted equities 882,204 882,204 - - 882,204 Total undiscounted assets 12,293,871 11,999,505 294,366 - 12,293,871 Financial Liabilities
Borrowings 24,654 - 24,654 - 24,654 Insurance Payables 2,373,530 2,373,530 - - 2,373,530 Other Payables 980,176 980,176 - - 980,176 Outstanding claims 2,224,356 2,224,356 - - 2,224,356 Related Party Payables 319,282 319,282 - - 319,282 Total undiscounted Liabilities 5,921,997 5,897,343 24,654 - 5,921,997 Total liquidity gap 6,371,874 6,102,162 269,712 - 6,371,874
60
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25.3 Market risk Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate 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) Currency Risk Currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in for eign exchange rates. The Groups principal transactions are carried in United Sates Dollars and its exposure to foreign exchange risk arise primarily with respect to South African Rand and Ugandan Shillings. The Groups financial 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 o perations. Thus the main foreign exchange risk arises from recognised assets and liabilities denominated in currencies other than t hose in which insurance and investment contract liabilities are expected to be settled. The currency risk is effectively managed by t he Group through non-derivative financial instruments. The Groups principal foreign currency exposures are to the USD against the Ugandan Shilling (UGX). The table below illustrate the hypothetical sensitivity to the Groups reported profit (I/S) and net assets (Equity) to a 10% increase and decrease in the US$/UGX Ex change rates at the year end date, assuming all other variables remain unchanged. The sensitivity of 10% represents the Directors assessment of a possible change. 2012 P/L ($) Equity ($) US$ weakens by 10% to UGX (9,097) 212,045 US$ strengthens by 10% to UGX (23,406) (439,971) Exchange rate applied USD: UGX 2,626 2,686 2011 P/L ($) Equity ($) US$ weakens by 10% to UGX 1,473 184,257 US$ strengthens by 10% to UGX (4,554) (426,086) Exchange rate applied USD: UGX 2,523 2,565 Positive figures represent an increase in profit or increase in value on net assets. (b) Interest rate risk Interest rate risk is the risk that the value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Floating rate instruments expose the Group to cash flow interest rate by maintaining an appropriate mix of fixed and variable rate instruments. The policy also requires it to manage the maturities of interest bearing financial liabilities. Interest on floating rate instruments is re-priced at intervals of less than one year. Interest on fixed interest rate instruments is priced at incep tion of the financial instrument and is fixed until maturity. The Group has no material exposure to interest rate risk. (c) Equity Price Risk Equity price risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market. The exposure to the Group is the maximum exposure representing the equity exposure.
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26.1 Operational risks Operational risks is the risk of loss arising from system failure, human error, fraud or external events. When controls fail to per form, operational risks can cause damage to reputation, have legal or regulatory implications or can lead to financial loss. The Group cannot expect to eliminate all operational risks, but by initiating a rigorous control framework and by monitoring and respond ing 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 Groups strategic planning and budgeting process.
26.2 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 regulations in all the territories where it operates and has complied with all these solvency regulations. There are no contingencies associated with the Groups compliance or lack of compliance with such regulations. No changes were made in the objectives, policies or processes during the years. (b) The Group has entered into commercial property leases on its investment property portfolio. (c) Commitments: 2012 2011 Authorised capital expenditure 426,515 195,525 Contracted for capital expenditure - - 27 OPERATING LEASE COMMITTEMNETS - GROUP AS LESSOR The Group has entered into commercial property leases on its investment property portfolio, consisting of the Groups surplus office and residential buildings. These propertyleases 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 break be fore the end of the lease term. Future minimum rentals receivable under non-cancellable operating leases as at 31 December are as follows: Group Group 2012 2011 Within 1 year 694,750 567,362 *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 are determined from time to time by prevail ing market condition 28 Related Party Disclosures The financial statements include the financial statements of Nicozdiamond Insurance Limited and the subsidiaries listed below: Country of Incorporation Primary Business Operation % Held First Insurance Company Limited Uganda Short term Insurance 63.06% Thirty Samora Machel (Private) Limited Zimbabwe Property Investments 100% Marabou Investments (Private) Limited Zimbabwe Property Investments 100% a) Transactions with other related parties Terms and conditions of transactions with related parties
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Related party transactions are ordinarily entered on terms equivalent to those that prevail in arms length transactions and where this is not the case appropriate approval are sought from those charged with governance. Outstanding balances at the 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 2012, the Group has not recorded any im pairment of receivables relating to amounts owed by related parties (2011- nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates. Group Group 2012 2011 $ $ ZimRe Holdings Limited (ZHL) loans payable (206,767) (175,437) Long-term loan 107,745 144,366 Consideration receivable 288,491 - Insurance premiums received 15,629 8,363 Claims & Benefits (781) - Fidelity Life Assurance Group Insurance Premiums received 64,821 35,321 Medical Aid contributions paid (83,999) (126,662) Pension contributions paid (200,765) (167,574) Baobab Reinsurance Net reinsurance paid (963,451) (815,524) Insurance premiums received 95,153 95,201 Claims & Benefits (51,652) 327,042 Zimbabwe Insurance Brokers Insurance premium received 2,567,199 2,587,563 Brokerage commission and fees paid (549,173) (333,331) Claims & benefits (1,100,473) (1,388,744)
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Group Group 2012 2011 $ $ Reinsurance Brokers International Net insurance premiums 1,511 4,444 Reinsurance (1,022,713) (1,060,456) Claims & Benefits 318,266 433,143 CFI Net insurance premiums 235,411 55,220 Claims & Benefits (118,559) - Standard Fire and General (SFG) (Associate of ZHL) Co-insurance - (4,744)
SUIB Insurance premium received - 37,669 Zimre Property Investments Insurance premium received 81,782 68,625 Rentals paid (32,330) (86,905) Claims & Benefits (13,325) - NATIONAL SOCIAL SECURITY AUTHORITY Insurance premium received 388,434 295,539 Claims & Benefits (135,136) - ALLIED BANKING GROUP Insurance premium received 94,089 79,524 Nissan Clover Leaf Insurance premium received 61,340 51,701 Claims Paid (130,160) (34,508) b) Amounts owed to/(owed by) Related Parties Receivable from and Payables to Related Parties are as follows;
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Group Group Company Company 2012 2011 2012 2011 Receivables from Related Parties SUIB - 37,669 - Thirty Samora Machel - - 344,460 110,788 Marabou Investments (Private) limited - - 14,803 11,054 A Mundial - Angola 60,882 153,200 60,882 153,200 Diamond General Insurance - Zambia - 13,109 - 13,109 ZimRe Holdings Limited 288,491 - 288,491 First Insurance Company limited 60,163 - 60,163 Special Automobile Underwriters of Zimbabwe 1,139 - 1,139 410,675 203,978 769,938 288,151 Payables to Related Parties Santam Insurance - South Africa 104,905 143,845 104,905 143,845 ZimRe Holdings Limited 206,767 175,437 206,767 175,437 311,672 319,282 311,672 319,282 29 EVENTS AFTER THE REPORTING PERIOD There were no material events subsequent to the reporting date, that have a financial impact on the Group.
66
Shareholders Analysis

ANALYSIS OF SHAREHOLDERS AS AT 31 DECEMBER 2012

No. of shares held 1 - 500 501-1000 1001-5000 5001-10000 10001-20000 20001-50000 50001-100000 100001-500000 500001-1000000 1000001 and Over Totals Issued Shares 526,098 450,215 2,537,170 1,822,067 3,205,884 4,681,601 4,857,405 15,098,267 6,115,609 526,564,543 % of Total 0.09% 0.08% 0.45% 0.32% 0.57% 0.83% 0.86% 2.67% 1.08% 93.06% No. of Shareholders 2,515 680 1,231 266 238 152 72 71 9 32 5,266 % of Total 47.76% 12.91% 23.38% 5.05% 4.52% 2.89% 1.37% 1.35% 0.17% 0.61%
565,858,859
ANALYSIS BY CATEGORY
Classification COMPANY LOCAL PENSION FUNDS NOMINEES - LOCAL BANKS COMPANY FOREIGN LOCAL RESIDENT INVESTMENTS TRUST,ETC. INSURANCE EMPLOYEES WARRANT NOT PRESENTABLE NEW NON RESIDENT NON_RESIDENT ESTATES Totals Issued Shares 198,399,094 177,235,918 67,996,200 38,107,179 34,803,880 20,262,650 14,569,417 6,614,159 3,758,252 2,462,029 1,632,108 11,814 6,159 % of Total 35.06% 31.32% 12.02% 6.73% 6.15% 3.58% 2.57% 1.17% 0.66% 0.44% 0.29% 0.00% 0.00% No. of Shareholders 137 20 60 3 1 4,119 114 9 14 776 5 1 7 5,266 % of Total 2.60% 0.38% 1.14% 0.06% 0.02% 78.22% 2.16% 0.17% 0.27% 14.74% 0.09% 0.02% 0.13%
565,858,859
2012
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Shareholders Analysis

(continued)
TOP 10 SHAREHOLDERS
Shareholder ZIMRE HOLDINGS NATIONAL SOCIAL SECURITY AUTHORITY ZIMBABWE ALLIED BANKING CORPORATION KINGDOM NOMINEES (PRIVATE) LIMITED SANTAM LIMITED BARD NOMINEES (PVT) LTD LOCAL AUTHORITIES PENSION FUND GEDUL INVESTMENTS (PVT) LTD NICOZ DIAMOND INSURANCE COMPANY LTD GURAMATUNHU FAMILY TRUST No. of Shares 184,264,590 159,103,579 38,089,480 36,694,455 34,803,880 16,314,802 9,889,614 6,384,475 4,780,578 4,690,939 495,016,392 % Holding 32.56% 28.12% 6.73% 6.48% 6.15% 2.88% 1.75% 1.13% 0.84% 0.83% 87.47%
TOTAL
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Notices to the Shareholders

CHANGE OF SHARE TRANSFER SECRETARIES
This serves to notify all shareholders that the company transfer secretaries are changing from Regatta Transfer Secretaries to ZB Transfer Secretaries with effect from 1 April 2013. Shareholders who want information about their shareholding, dividend payment or any other share administrative matters should with effect from 1 April 2013 direct their enquiries to: ZB Transfer Secretaries (Pvt) Ltd Ground Floor, ZB Centre 59 Kwame Nkrumah Avenue P O Box 2540 Harare Tel: 759660/5/6 or 796841/3/4 Shareholders are also requested to submit/update their banking details and their e-mail address to the above address or to any of the following: rmutakwa@zb.co.zw; amusumha@zb.co.zw; smahaja@zb.co.zw. Alternatively, they can submit the same at their nearest ZB Bank branch countrywide.
DIVIDEND ANNOUNCEMENT
The Board has recommended a dividend of 0.064 cents per share for the year ended 31 December 2012. The dividend shall be payable to members registered in the books of the company on Friday the 19th of April 2013 and shareholders will have an option to elect either cash or scrip dividend. The following timetable will be followed; Last Day to Register 19 April 2013 Closure of Register 20-22 April 2013 Mailing of Forms of Election 22 April 2013 Latest Time and Date of Receipt of Forms of Election - 4.00pm 16 May 2013 Share Certificate /Dividend Warrants Mailed on or about 20 May 2013 Shareholders are requested to submit/update their bank details to the Transfer Secretaries and also immediately contact the Transfer Secretaries should they not have received their dividend election forms by 6 May 2013; ZB Transfer Secretaries (Pvt) Ltd Ground Floor, ZB Centre 59 Kwame Nkrumah Avenue P O Box 2540 Harare Tel: 759660/5/6 or 796841/3/4 rmutakwa@zb.co.zw; amusumha@zb.co.zw; smahaja@zb.co.zw. Submissions can also be made at any ZB Bank branch countrywide. By Order of the Board NICOZDIAMOND Insurance Limited
G Zvaravanhu Company Secretary 19 April 2013
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Notice of Annual General Meeting

Notice is hereby given that the 11th Annual General Meeting of the shareholders of NICOZDIAMOND Insurance Limited will be held at the NICOZ DIAMOND Auditorium, 7th floor Insurance Centre, 30 Samora Machel Avenue, on 22 May 2013 at 1200 hours for purpose of transacting the following business: ORDINARY BUSINESS 1. To receive, consider and adopt the financial statements and reports of the Directors and Auditors of the company for the financial year ended 31 December 2012. To sanction the final dividend of 0.064 cents per share. To re-elect Directors retiring by rotation, and appoint new Board members. In terms of Article 77 of the companies Articles of Association, Mr. James Karidza retires by rotation and being eligible, offers himself for re- election. To elect Mrs. Rachel Kupara as non-executive Director of the company. To elect Mr Bruce Campbell as a non-executive Director of the company. To approve the remuneration of the auditors for the past audit. To approve re-appointment of Ernst & Young Chartered Accountants Zimbabwe as auditors of the company until the conclusion of the next Annual General Meeting. To approve the remuneration of the Directors for the past financial year. To transact all such business as may be transacted at an Annual General Meeting.
2. 3.
4. 5.
6. 7.
SPECIAL BUSINESS 8. Share buy-back To consider and if deemed fit, to approve with or without modification, the resolutions set out below. The special resolution is required to be passed by a majority of seventy five per cent of those present and voting( including proxy votes), representing not less than twenty five per cent of the total number of votes in the company. That the company, may undertake general repurchase by way of open market transactions on the Zimbabwe Stock Exchange(ZSE) of any of its own ordinary shares in such manner or on such terms as the directors from time to time determine provided that; the authority in terms of this special resolution shall expire on the earlier of the holding of the next Annual General Meeting or the passage of 15 months since the date of the resolution; and for each share, the minimum price that may be paid is 10% (ten percent) above and 10% below the weighted average of the market price of the shares for the five days immediately preceding the date of repurchase; and The maximum number of shares authorized to be acquired is no more than 10% (ten percent) of the companys ordinary issued share capital.
i. ii. iii.
Directors statement The Directors, in considering the effect of any such repurchases will duly take into account the ability of the company for a period twelve months, to pay its debts in the ordinary course of business, the maintenance of an excess of assets over liabilities, and the adequacy of ordinary capital and reserves as well as the adequacy of working capital. In terms 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 the Board NICOZDIAMOND Insurance Limited
G Zvaravanhu Company Secretary 26 April 2013
70
Proxy Form
I/We ...............................being a member(s) of the above Company and entitled to vote, hereby appoint.....................................................................of.......................................................... or failing him/her,............................................................................................................................................................................... or failing him/her, the Chairperson of the Annual General Meeting, as my/our proxy to vote for me/us and on my/our behalf at the Annual General meeting of NicozDiamond Shareholders to be held in the NICOZDIAMOND Auditorium, 7th Floor, Insurance Centre, 30 Samora Machel Avenue, Harare, at 1200 hours on Wednesday, 22 May 2013, and at any adjournment thereof. Signed this .......................... day of ................................2013
SIGNATURE OF MEMBER
Company Seal or Stamp
Notes: 1. In terms of Section 129 of the Companies Act [Chapter 24:03] a member entitled to vote at the Annual General Meeting is entitled to appoint one or more proxies to attend and vote and speak in his stead. A proxy need not be a member of the Company. 2. 3. 4. 5. 6. In terms of Article 89 of the Companys Articles of Association, to be valid, proxy forms should be completed and deposited at the registered office of the Company in Harare, not less than twenty four (24) hours before the time for holding the meeting. Any alteration to this proxy form must be signed by the person signing the proxy form. Duly completed proxy forms must be lodged with, or posted to the companys registered office, NicozDiamond Insurance Limited, 2nd Floor Insurance Centre, 30 Samora Machel Avenue, P O Box 1256, Harare so as to be received by them not later than 1200 hours on Tuesday, 21 May 2013. The completion and lodging of this form will not preclude the relevant Shareholder from attending the AGM and voting thereat, in person to the exclusion of any proxy appointed in terms hereof, should such Shareholder wish to do so. The authority of a person signing the Form of Proxy under a power of attorney or on behalf of a company must be attached to the Form of Proxy unless the power of attorney has already been registered by NicozDiamond or in the case of a company; this Form of Proxy is sealed.
2012
A n n u a l
R e p o r t
71
Notes
72

Corporate Social Responsibility Report Highlights NICOZDIAMOND's Community Support

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Corporate Social Responsibility

Corporate Social Responsibility

Are You Really Covered or E

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Mr. Albert J Nduna (Chairman)

Mrs. Thembiwe C Mazingi (Vice Chairperson)

Mrs. Grace Muradzikwa (Managing Director)

Mr. George T. Mutendadzamera

Mrs. Rachel P. Kupara

Mr. James Karidza

Mr. Paul Brien

Mr. Barnabas Matongera

Mr. Harold A R Bijoux

Mrs. Gloria Zvaravanhu General Manager (Corporate Services)

Mrs. Grace Muradzikwa (Managing Director)

Mr. Noel Manika General Manager (Operations)

Mr. Albert J Nduna (Chairman)

Albert J Nduna CHAIRMAN 20 March 2013

Managing Directors Report

Mrs Grace Muradzikwa (Managing Director)

Managing Directors Report

Managing Directors Report

G. Muradzikwa Managing Director 20 March 2013 2012 A n n u a l R e p o r t

Report of the Directors

As at 20 March 2013, the position remained the same.

2012 (US$) 24,782,769 1,526,752 2,453,851 2,426,481

2011 (US$) 23,546,519 1,342,203 1,594,378 1,669,039

Report of the Directors

. MR A.J NDUNA MRS. G MURADZIKWA CHAIRMAN MANAGING DIRECTOR

Consolidated Statement of Comprehensive Income

Consolidated Statement of Financial Position

Consolidated Statement of Cashflows

Consolidated Statement of Changes in Equity

2,797,251 - - - - - - - - 2,797,251 - - - 31,744 - - 2,828,995

3,183,563 - - - - - - - - 3,183,563 - - - 95,230 - - 3,278,793

24,018 - - - - - - - 578 24,596 - - - - - - 24,596

278,241 - 53,825 (11,636) 4,578 36,472 (31,894) - - 325,008

10,839,741 22,839 (31,501) 1,582,699 1,669,039 (86,340) 12,413,778

(33,375) 2,391,427 (20,426) 2,426,481 (12,949) (35,054) - - - (145,938) 291,633 14,659,267

Notes to the Financial Statements

Notes to the Financial Statements

Notes to the Financial Statements

Notes to the Financial Statements

Notes to the Financial Statements

Notes to the Financial Statements

Notes to the Financial Statements

Notes to the Financial Statements

Notes to the Financial Statements

Notes to the Financial Statements

Notes to the Financial Statements

Notes to the Financial Statements

Notes to the Financial Statements

Notes to the Financial Statements

Notes to the Financial Statements

Notes to the Financial Statements

Notes to the Financial Statements