2012 annual report@annual

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Contents

CorporateInformationAUDITORSErnst & Young Chartered Accountants ( Zimbabwe)Angwa CityCnr Julius Nyerere/Kwame Nkrumah AvenueP.O Box 62, Harare

LEGAL PRACTITIONERSDube, Manikai & HwachaCommercial Law Chambers

6th Floor, Goldbridge Eastgate ComplexSam Nujoma StreetHarare

BANKERSStanbic Bank First Banking Corporation7th Floor 5th FloorStanbic Centre FBC Centre59 Samora Machel Avenue 45 Nelson Mandela AvenueHarare Harare

SHARE TRANSFER SECRETARIESZB Trans er Secretaries (Pvt) LtdGround Floor, ZB Centre59 Kwame Nkrumah AvenueP O Box 2540Harare

Page

Corporate Values 2

Business Overview 4 - 5

Distribution 6

Corporate Social Responsibility 7 - 8Corporate Governance 9 - 10

Directorate 11

Management 12

Chairmans Statement 13 - 14

Managing Directors Report 15 - 17

Report o the Directors 18 - 19

Independent Auditors Report 20

Financial Statements 21 - 66

Analysis o Shareholders 67 - 68Notices to Shareholders 69

Notice Annual General Meeting 70

Proxy Form 71

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CorporateValues

Our VisionTo be a highly visible and pre erred provider o short term insurance solutions inour chosen markets.

Our MissionTo provide superior short term insurance solutions underpinned by a highly skilled

and dedicated team or the beneft o 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

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Business Classes

NICOZDIAMOND Insurance Limited (NICOZDIAMOND) o ers a widerange o short-term insurance classes as ollows:

Fire and Allied Perils Insurance Marine Insurance Motor Insurance Engineering Insurance Aviation Insurance Accident Insurance Credit Insurance Golfers Insurance Travel Insurance Liability Insurance

These classes are urther split into numerous insurance products pro-viding cover against most insurable risks. As the scope o insuranceis so broad, those covers which have broad similarities are groupedtogether. The di erent types o insurance covers include:-

Personal InsuranceHouseowners, Householders and All Risks Insurance are products de-signed mainly or the average owner/occupier o a private dwelling.The policy provides cover for both the building, contents of a houseand all risks cover on specifed valuables away rom the home.

Commercial Insurance

Assets PolicyThis covers businesses against loss o or damage to property causedby re and allied perils which include storms, burst pipes, oods, im-pact (by any road vehicles, horse or cattle), explosions, earthquakes,aircraft, non- political riots and malicious damage.

Consequential lossPolicy provides or protection to the business against loss o gross

proft as a reduction in turnover ollowing loss or damage caused byany risks covered under Assets Policy.

Accounts ReceivableCovers loss o / or damage to records o customer accounts resultingin the inability to trace or establish and recover the outstanding bal-ances.

BurglaryPolicy covers loss o / or damage to contents o premises as a resulto the t ollowing orcible and violent entry to or exit rom premises.

MoneyPolicy provides or loss o money on the premises and/or in transit.

GlassCover for accidental breakage of internal and external glass, letter -ing or ornamental.

Goods In TransitCover is or accidental loss or damage to property whilst in transit byrail, road or air.

Public LiabilityCovers a frms liability at law or injury to persons (other than em-ployees) and damage to property (other than the frms own or orwhich they are responsible).

Employers LiabilityPolicy covers a frms legal liability to its employees or injuries arisingat work due to the negligence o the employer.

Pro essional IndemnityProtection for professional rms such as solicitors, architects and ac-

countants against loss or damage su ered as a result o pro essionalnegligence.

Personal AccidentCovers death or bodily injury caused by violent, accidental, externaland visible means.

Bene ts AvailablePolicy provides compensation for loss of income as a result of death,permanent total disablement, temporary total disablement and pay -ment o medical expenses.

Fidelity GuaranteeProvides cover against fnancial loss sustained as a result o raudu-lent or dishonest acts o an employee.

Motor Insurance

The policy provides cover or any type o vehicle or the ollowingbenefts:

- Third Party Covers the motorists legal ability to others as well as damage to oth-er peoples property.

- Third Party Fire & The t Provides cover as for third party above, and also covers loss of ordamage to the insured vehicle, caused by re or theft.

BusinessOverview

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- ComprehensiveThis is the most extensive form of motor insurance cover, which, inaddition to providing the covers listed above, provides accidentaldamage cover to the insured vehicle.

Marine and Aviation Insurance

Hull InsuranceProvides cover for loss of or damage to ships small yachts, motorboats and aircrafts, as well as machinery therein or thereon.

CargoProvides for deterioration, loss of or damage to cargo, carried by sea,air, rail or road.

NDI Gol ers Plan

The policy covers risks associated with golfng to both amateurs andpro essionals alike. The policy provides the ollowing cover:

Declared gol ng equipment against theft, loss or accidentaldamage.

Accidental loss or damage to unspeci ed clothing and personal e ects anywhere in the world.

Legal liability to third parties for death or bodily injurycaused whist playing or practicing a game o gol .

Hole- in one. Hire of gol ng equipment following loss, damage or delay

when traveling to play.

Reimbursement of tournament entry fees for cancellationdue to un oreseen sickness or accidental injury.

Liability arising from fraudulent use of the golf club swipecard.

Travel InsuranceCovermore is a worldwide leisure and business travel insurance pack-age that enables Zimbabweans to access travel insurance locally. Thisis a oreign currency denominated policy with premiums payable inrand or any other hard currency. It provides global cover and is un-derwritten by SANTAM Limited o South A rica with emergency assis-tance provided by Europe Assistance.

The policy covers or traveling emergencies such as:1. Emergency medical expenses.2. Journey cancellations.3. Loss o Luggage.

New Product Launched

ChristianSureDuring the course o 2012 the company repackaged the existing in-surance products into a special unique scheme for the Christian com-munity and termed it Christiansure. Under this scheme, the companywill sow 10% o the premium paid or every Christiansure policy tak-en by a member of that particular assembly, be it an individual or acorporate body, to the assembly concerned.

BusinessOverview

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NICOZDIAMOND has presence in the ollowing markets: Zimba-

bwe, Uganda, Zambia and Malawi. In a drive to fully capacitate

and realize maximum bene t from the regional interests, the com -

pany is actively involved in skills transfers, staff secondments and

technical assistance so that the level o operations reach optimal

levels. NICOZDIAMOND is constantly on a drive or new opportuni-

ties to expand in the region and increase shareholder value.

First Insurance Company Limited (FICO) - Uganda

This Ugandan frm is a NICOZDIAMOND subsidiary where the com-

pany also has a management and technical services agreement.

The results o the Company are consolidated into the group re-

sults.

Diamond General Insurance Limited ( ormerly Cavmont) - Zambia

NICOZDIAMOND has a shareholding and management

contract in this company which has been the astest growing short

term insurance company in Zambia or the last three years.

United General Insurance Company Limited (UGI) - Malawi

UGI Malawi remains one o the ormidable 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.

Distribution

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United General Insurance Company Limited - MalawiDiamond General Insurance Limited - Zambia


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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 ollowers to give almsand help the less privileged in their communities and beyond. Themessage and the injunction to give is the common denominator oall religions.

NICOZDIAMOND (NDI) takes this very seriously and thus each yeardedicates an evening to raising unds or the less privileged in thesociety. NDI brings riends and partners in a common cause. By doingthis NDI partners are blessed, NDI is blessed and shall be blessed evenmore as they continue give to the needy.

Corporate Social Responsibility (CSR) is one o the core values orNICOZDIAMOND and over the years the company has been activein supporting the less privileged in trying times. The company aimsto be a catalyst or long lasting and positive change and become acomplete dynamo of good corporate citizenship.

NDI has the passion to make a tangible di erence in the commu-nities that it operates. Hence it has started extending its reach toschools and would like to build on this by paying or ees or childrenwho would otherwise not be able to proceed with their education.

Recently NICOZDIAMOND launched ChristianSure, a product target-ed at the Church and its congregation and the package also serves aCSR as it gives the church 10% o the premium paid.

Since inception the following have bene ted from NDI, CSR pro-grammes which ranged from school fees, generators, beds, bed lin -en, 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 Fair eld Orphanage in Mutare

NICOZDIAMOND Makinga Di erence ChangingLives

Captain E Moyo of Bumhudzo Old Peoples Home receiving groceries andblankets from Mr A Nduna, NDI Chairman

Handover o Midlands Childrens Home water tanks

Mr A. Nduna, NDI Chairman, handing over bunk beds to Tariro Project Trustee.

CorporateSocialResponsibility

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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 re-ceived bunk beds and cash or clothes or the children; Bum-hudzo in Chitungwiza received blankets and groceries; EmeraldHill School or the Dea received laptops; Midlands ChildrensHome in Gweru received a water tank and groceries. EntembeniOld Peoples home in Bulawayo received TV, radios, chairs, inMasvingo, school for the deaf received laptops and old peopleshome received chairs, clothes and groceries, electric stoves forChinhoyi and textbooks or Mutare.

The main project or 2013 is the Young People Intern Program

where pupils rom Form 4-Form 6 will be gathered (in groups) atNicozDiamond for 2 days for mentorship. The children will bementored by captains o industry with the NDI Managing Direc-tor, Grace Muradzikwa leading the team. The pupils will be giv-en chances to spend a day with the mentor learning what goesin the leaders o fces. The programme which will be sponsoredby NDI will kick o soon a ter examinations and will be startingwith a group o 150 pupils rom Harare.

As a company, NDI has taken part in Charity events dinners,gol and other und raising activities. A team o dedicated sta

has also put a hand in making the CSR program a success. Stacontributed cash, clothing items, shoes, food stuffs and theirtime. Mrs Muradzikwa said, I am often surprised, and alwaysdelighted, by the sense of ownership of real pride that all ofour employees take in our community initiatives.

NDI prides itsel in being a leader in developing means or longlasting and positive social change. Getting CSR right is a journeynot a destination. Leaders ace tough decisions with increasingpressures to improve their bottom line and to be good corporatecitizens. But we must persevere because the fruits of our labourtoday will make or a better tomorrow.

Sympathy or the concern or ones ellows is essential or thecohesion and stability o society.

NICOZDIAMOND staff presenting chairs, groceries and clothes to Mucheke OldPeoples Home.

Gloria Zvaravanhu presenting one of the laptops to Sister Tariro of Emerald HillSchool or the Dea .

CorporateSocial

Responsibility

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INTRODUCTIONNICOZDIAMOND, its subsidiaries and associated companies is com-mitted to good corporate governance and is guided by the Codeo Corporate Practice set out in the Cadbury report o the UnitedKingdom and the King lll report. It is committed to the principlesof transparency, accountability, fairness and integrity in all its deal -ings. Directors and management are required to observe the highestethical standards, ensuring the business practices are conducted in amanner which, in all reasonable circumstances, is beyond reproach.

The company values ethical behavior and rea frms its commitmentto corporate governance principles by complying with all applicablelegislation, regulations and relevant International Financial Report -ing Standards.

The system o corporate governance in place ensures that Directorsand management to whom the running o the company has beenentrusted by shareholders, carry out their responsibilities faithfullyand effectively, placing the interests of the company ahead of theirown. This process is acilitated through the establishment o appro-priate reporting and control structures as detailed below;

BOARD OF DIRECTORSThe Board comprises o eight non- executive Directors and the Man-aging Director. Board meetings are held on a quarterly basis andat such other times as are necessary under the chairmanship o anon-executive Director. All the Directors have unrestricted access tothe advice and services o the Company Secretary. The roles o theChairman and the Managing Director are separately held and aredefned as to ensure a clear division o responsibility. The Board oDirectors has overall responsibility or the companys systems o in-ternal control. These systems are designed to provide reasonable as-surance o the sa eguarding o assets and the reliability o fnancialin ormation.

All Directors are subject to retirement by rotation and re-electionby shareholders once every three years in accordance with the com-panys Articles o Association. The Board as a whole approves theappointments o new Directors.

COMMITTEES OF THE BOARDThe Audit & Risk Management Committee, Nominations Committee,Executive Remuneration Committee, Investments Committee and

the Manpower Committee assist the Board in the discharge o itsresponsibilities. The power, duties and responsibilities of the com -mittees are governed by their respective Charters as approved by theBoard. These committees review matters on behal o the Board andmake recommendations or consideration by the Main Board.

BOARD COMMITTEES

AUDIT AND RISK MANAGEMENT COMMITTEEThe Audit and Risk Management Committee comprises a majority onon executive Directors including its Chairperson. The executives re-sponsible for Corporate Services , Operations, Internal Audit as wellas the External Audit partner attend meetings of the Audit and RiskManagement Committee by invitation. The committee meets at leastfour times a year. The Head of Internal Audit and the External AuditPartner have unrestricted access to the Chairman o the committee.

The Audit and Risk Management Committee monitors internal con-trol policies and procedures designed to sa eguard company assetsand to maintain the integrity o fnancial reporting. Among thespeci c responsibilities set out in its Charter, the Audit and Risk man-agement Committee reviews all published accounts o the company;reviews the scope and the independence o the internal and exter-nal audits; monitors and assesses the systems or internal compliance

CorporateGovernance

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and control and advises on the appointment, performance and remu -neration o external auditors

EXECUTIVE REMUNERATION COMMITTEEThe committee is constituted by three Directors all o whom arenon-executives, including the Chairperson of the Board. The com -mittee meets at least twice a year. The committee is responsible orensuring that senior executives are competitively remunerated inline with their contribution to the companys operating and fnancial

performance, at levels which take into account industry and marketbench marks as well as a ordability and sustainability.

INVESTMENTS COMMITTEEThis committee is constituted with strong representation o non-ex-ecutive Directors and is chaired by a non executive Director. Meetingsare held once in every two months. The committee is responsible orthe ormulation o the Investment Policy o the company and review-ing investment strategy or compliance with such policy.

MANPOWER COMMITTEEThe Manpower Committee comprises a majority o non-executive di-rectors. The committee meets at least our times a year.

The committee is responsible or the companys Human ResourcesPolicy issues and terms and conditions o service. The company con-tinues to subscribe to a compensation philosophy, which ensures thatit attracts and retains skilled personnel. Sta compensation levelsand manpower development proposals made by the committee are

presented to the Board or approval.

NOMINATIONS COMMITTEEThe committee consists o non executive directors. The committeemeets as the committee deems t but however, meets at least onceeach year. The committee has a role o identi ying and making rec-ommendations to the Board on the appointment o any executiveand non executive Directors. The committee also reviews and evalu-ates the per ormance and e ectiveness o the Board.

CorporateGovernance

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NON- EXECUTIVEMr. Albert J Nduna (Chairman)Mrs. Thembiwe C Mazingi (Vice Chairperson)Mr. Harold A R BijouxMr. Paul BrienMr. James KaridzaMrs. Rachel P. KuparaMr. Barnabas MatongeraMr. George T. Mutendadzamera

EXECUTIVESMrs. Grace Muradzikwa (Managing Director)

COMPANY SECRETARYMrs. Gloria Zvaravanhu

BOARD COMMITTEES

AUDIT AND RISK MANAGEMENT COMMITTEEMrs. Rachel P Kupara (Chairperson)Mr. Paul BrienMr. James KaridzaMr. George T. MutendadzameraMrs. Grace Muradzikwa- Executive

MANPOWER COMMITTEEMrs. Thembiwe C Mazingi (Chairperson)Mr. Barnabas MatongeraMrs. Grace Muradzikwa - Executive

EXECUTIVE REMUNERATION COMMITTEEMr. Albert Joel Nduna (Chairman)Mrs. Thembiwe Chikosi MazingiMr. Barnabas Matongera

INVESTMENTS COMMITTEEMr. James Karidza (Chairman)Mr. Paul BrienMr Barnabas MatongeraMrs. Grace Muradzikwa (Executive)

NOMINATIONS COMMITTEEMr. Albert Joel Nduna (Chairman)Mrs. Thembiwe Chikosi MazingiMr. Barnabas Matongera

Directorate

Mr. Albert J Nduna(Chairman)

Mrs. Rachel P. Kupara Mr. James Karidza Mr. Paul Brien Mr. Barnabas Matongera Mr. Harold A R Bijoux

Mrs. Grace Muradzikwa(Managing Director)

Mrs. Thembiwe C Mazingi(Vice Chairperson)

Mr. George T. Mutendadzamera

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Executive Management1 Mrs. Grace Muradzikwa Managing Director2 Mrs. Gloria Zvaravanhu General Manager (Corporate Services)3 Mr. Noel Manika General Manager (Operations)

Senior Management1 Ms. Cathrine Musakwa Head Strategic Business Unit2 Mr. Caleb Mtabvuri Head Strategic Business Unit

3 Mr. Nicholas Sayi Head Bulawayo Unit4 Mrs. Joyce Nousenga Head Technical Services5 Mrs. Rebecca Moyo Head Finance6 Mr. Joseph Mashika Head Treasury7 Mrs. Agnes Mtotela Head Human Resources8 Mr. Vusani Mapuke Head IT9 Ms. Odiline Kava Head Marketing10 Mr. Christopher Tapererwa Business Analyst11 Mr. Garikai Mhondera Branch Controller Mutare12 Mrs. Concilia Musarara Branch Controller Masvingo13 Mr. Osborne Nyereyemhuka Branch Controller Chinhoyi14 Mr. God rey Matambo Branch Controller Gweru

Management

Mrs. Gloria ZvaravanhuGeneral Manager (Corporate Services)

Mrs. Grace Muradzikwa(Managing Director)

Mr. Noel ManikaGeneral Manager (Operations)

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INTRODUCTIONI present to you my report or the NICOZDIAMOND group o compa-nies or the year ended 31 December 2012.

BUSINESS ENVIRONMENTThe insurance sector in Zimbabwe remained highly competitive,though the year saw a frming in rates or some classes o business.Given the subdued economic activity, the issue of affordability saw theinsurance take up rate happening at a slower pace than had been an-ticipated.

Liquidity challenges in the economy affected the collectability of pre -miums putting pressure on underwriters to accept extended paymentterms. This depressed unds availed or new investments and resultant-ly investment returns.

An increase in the frequency and severity of claims continues to berecorded across the industry, particularly for the motor and re classes.

The property market trends are behaving contrary to other sectors asproperty values continue to appreciate towards regional parity levels.

There was downward pressure on money market interest rates whilstgood recovery was recorded on the Zimbabwe Stock Exchange tradedequities during the latter part of the year.

FINANCIAL PERFORMANCE OVERVIEWIn 2012, the group sustained the pro tability trend that started in2011 from both insurance underwriting and investments. Overall, thegroup made a pro t after tax of $2,43 million for the year 2012, agrowth o 45% on 2011.

The group statement o fnancial position grew by 13.7% and 9.3%or the company. The capital at $8.9 million or 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 gen-erated positive cash rom operations o $0.9 million rom a negativeposition in the prior year. The surplus cash rom operations was appliedmainly towards purchase o new investments and dividend payment.

Reinsurance was higher in 2012 due to strategic review o treaty pro-grammes to cushion the company ollowing the bad claims experienceof 2011. The overall claims experience, however, turned out to bemuch better than prior year as evidenced by the groups gross claimswhich declined by 6%.

While the Uganda operation made an underwriting loss of $259,242having suffered a bad claims cycle, Zimbabwe on the other hand madean underwriting pro t of $367,039. This resulted in an overall under -writing pro t of $107,797.

Investments per ormance or the year was encouraging as the invest-ment returns improved by 49,8% to $1,97 million. The property com-panies made good operating profts with Thirty Samora Machel con-tributing 45% of the investment income, NICOZDIAMOND 48% whilstFICO and Marabou contributed the balance o 7%. The work done onthe buildings saw an increase in their valuation averaging 23% romthe 2011 values.

It is also encouraging to note that 58% of the $1,97 million investmentincome was realised whilst the balance was unrealised gains resultingfrom property and equities revaluations.

ChairmansStatement

Mr. Albert J Nduna (Chairman)

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Overall, the group madea proft a ter tax o $2,43

million or the year 2012, agrowth o 45% on 2011.


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The Associates of the company, Clover Leaf Panel Beaters and FidelityFuneral Assurance (Pvt) Ltd contributed $399,270 to group pro ts, anincrease o 37% rom prior period.

REGIONAL OPERATIONSThe group continues with its endeavours to diversi y income streamsby expanding into the region and presence was maintained in Zam-bia, Uganda and Malawi.

ISO CERTIFICATION

After the re-certi cation audits carried out at the end of 2012, thecompany has been recommended or re-certifcation on ISO Stan-dard, ISO 9001:2008. SOCIAL RESPONSIBILITYThe group has maintained its signifcance in upli ting the lives o theunderprivileged in the various communities it operates through a va-riety o initiatives.

CLAIMS PAYING ABILITY RATINGThe company still carries a strong claims paying ability rating (A-)which was rated by Global Credit Rating Company o South A rica(GCR).

DIRECTORATEMrs Rachel P. Kupara was nominated to the Board in August 2012and her appointment will be considered by the shareholders at thenext Annual General Meeting o the company. In terms o article 77of the Companys Articles of Association, Mr James Karidza retires byrotation and being eligible, offers himself for re-election at the nextAnnual General Meeting o the Company.

DIVIDENDThe Directors propose a fnal dividend o 0.064 cents per share or2012. This is an improvement o 39% on that declared or 2011 andis in line with the overall improvement in proftability o the group.

OUTLOOKThe company is optimistic about the continued recovery o the Zim-babwean economy and the inherent opportunities or the insuranceindustry in the future and is well placed in terms of capital, to exploitthese opportunities that the recovery will present.

In Uganda, the plans to recapitalize FICO are at an advanced stageand this move will make FICO more competitive and strategically po-sition it to acquire signi cant new business.

The investments made in re urbishments o the property port olio inZimbabwe are also expected to reward better returns into the uture.

APPRECIATIONOn behal o the Board and shareholders I would like to extend mysincere appreciation to our valued clients, business providers, regu -lators, management and staff and all other stakeholders, for theircontinued support and commitment in the year.

Albert J NdunaCHAIRMAN20 March 2013

ChairmansStatement

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MANAGING DIRECTORS REPORT

It is with pleasure that I give an overview o thegroups per ormance or the year 2012.

Overall the per ormance o the group was soundwith all key per ormance ratios raining on track.

GENERAL BUSINESS OVERVIEW

The group registered a growth o 45% in proftabil-ity or the year compared to 2011. The growth waslargely driven by the investment income across allunits within the group.

Insurance entities recorded mild growth in termso gross premiums ollowing a purifcation o thebook. For Zimbabwe, the short term insurance in-dustry is characterised by many players competing

or a relatively small stagnant market and this re-sulted in downward pressure on rates. Market re-tentions remained low as a result o limited capital

or most players in the industry. This might howeverchange in the short term ollowing the upward re-view of minimum capital requirements.

An increase in the number and magnitude o claimswas noted across the industry, particularly for themotor, re and farming classes. For the companyhowever, the claims experience was better thanthat o 2011 on the back o improved underwritingand enhanced risk management.

Though liquidity constraints persisted in the econo -my, the company saw an improvement in premiumcollections. A lot however, remains to be done atthe macro and micro level to ensure that this areais maximised.

Expense ratios in the industry remain high as thegross premiums being written are not yet at levels

commensurate with the market structures and withthe size of the economy. There is still a lot of po-tential as shown by the low insurance penetrationlevels.

In Uganda, the performance of the entity contin -ues to be affected by capital constraints. However,subsequent to year end, signi cant progress hasbeen made to address the perennial capital issues.Growth opportunities are seen or the entity in the

uture.

The Property entities in Zimbabwe per ormed wellin line with market trends. Property values contin-ue to appreciate towards regional parity levels. Themeasures to enhance the properties employed in2012, paid off in terms of increase in rental incomesas well as capital appreciation o the buildings.The market remains characterised by low occupan-cy ratios particularly in Central Business Districts(CBD), as companies move out to alternatively

ManagingDirectors Report

Mrs Grace Muradzikwa (Managing Director)

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Managing

Directors Report(continued) cheaper accommodation outside the CBD. The group however con-tinued to enjoy good occupancy ratios during the year.

FINANCIAL PERFORMANCE

Group technical per ormance

The table below highlights the Groups technical per ormance in2012 compared to 2011:

Mild improvements were registered on most areas but the decline inNet Premium (as a result o the higher retentions) and an increase inexpenses caused the decline in underwriting proft or the year. Re-tentions were conservatively designed to be lower, through the 2012treaty programs, in response to the bad claims experience of 2011.

Key Technical Ratios

The graph below shows the key technical ratios o the Group or 2012compared to 2011.

Retention ratioThe retentions were lower in 2012 compared to that o prior year asa result of the conservative reinsurance program for NicozDiamondin 2012 in response to the 2011 bad claims experience.

Claims ratioThe net claims ratio showed a good improvement at 48%. It is ex-pected that the Groups loss ratios will be maintained in the 45-55%region. This will be achieved through more stringent underwriting aswell as reinsurance management.

Expenses ratioThe expenses ratio to NPW at 41% deteriorated from that of 2011driven by the reduced NPW which is attributed to the higher rein-surance in 2012.

Unit Per ormance

The graph below shows the unit contribution to the group per or-mance

NicozDiamond was the biggest contributor to Group pro ts at 58%,a growth in contribution o 28% compared to prior. The entity re-corded 133% growth in proftability backed by underwriting proft

growth o 117% and investment income growth o 61%. FICOs con-tribution declined because o the loss in 2012. The Property compa-nies (Thirty Samora Machel and Marabou) contributed 48% to theGroup profts. 63% o their contributions were rom properties capi-tal appreciation while the balance was operating proft rom leasing.The associate companies, Clover Leaf Panel Beaters and Fidelity Fu-neral Assurance, contributed 17% to Group pro ts.

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Managing

Directors Report(continued) BUSINESS CLASS PERFORMANCE

Motor maintained its position as the biggest class followed by Fire,Accident, Engineering and Marine, respectively. The slight reductionin the contribution o the Motor class is mainly attributed to the re-covery o the other classes. This is a positive development as it reduc-es concentration risk.

INVESTMENT CLASS PERFORMANCE

The Properties segment o the port olio contributed the most to in-vestment income. About 46% o the income rom properties is oper-ating income rom the rent earning properties whilst the balance isunrealized fair value adjustments.

The income from the money market, though still sizeable, is showinga decline as a result o the downward pressures on investment ratescharacterizing the market.

The quoted equities class still gave negative returns to the companythough the amounts are lower than those o prior year. The companycontinues to hold on to loss making counters until such a time thatmeaningful recovery is recorded. All the losses are unrealized.

Unquoted equities did not perform well compared to prior year assome o the investments were a ected by signifcant debtors provi-sioning amidst the persisting liquidity challenges.

KEY INVESTOR RATIOS

Dec-12 Dec-11 GrowthBasic EPS 0.43 0.29 48%Share Price 1.4 3 -53%NAVps 2.34 2.22 5%ROCE (%) - 14 10 40%DIVps 0.064 cents 0.046 cents 39%

All the key ratios showed a growth on 2011 re ecting the groupsgrowth in proftability. The share price per ormance or 2012 did notmirror the Groups improved per ormance. It is anticipated that themarket price will correct in line with the Groups undamentals.

REGIONAL OPERATIONSIn addition to Uganda, Zambia and Malawi, the group is still scouting

or opportunities in the region. The pace o regional penetration ini-tiatives is being a ected by the regulatory approval processes in therespective countries, which generally take long.

OUTLOOKThe outlook for 2013 is encouraging. We remain focused on drivingsustainable proftability and a strong balance sheet while seekingvalue adding services to our clients. This requires us to place customerservice at the centre o all we do.

The operations in Zimbabwe remain optimistic that recovery will con-tinue to be witnessed on the economic ront and that the plannedelections o 2013 will bring orth a more enabling political and oper-ating environment. The company has exciting products and I strongly

believe our product lines have good uture prospects in a growingZimbabwean economy.

The opportunities that Uganda presents remained untapped by FICObut the changes in the shareholding and capital structures in 2013are envisaged to better place the company in the market place to tapinto these opportunists..

APPRECIATIONOn behalf of management and staff, I wish to thank the sharehold -ers, Directors, and all other stakeholders for the support extended tothe company in 2012.

I also wish to thank the sta in the Group or the increased e ortsput in 2012 to make sure the Group progresses orward.

G. MuradzikwaManaging Director20 March 2013

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Report of theDirectors

Your Directors have pleasure in presenting their report together withthe audited fnancial statements or the year ended 31 December2012.

1. SHARE CAPITALOrdinary shares Number 2012 Number 2011Total shares in Issue 565 858 859 559 510 159Un-issued 34 141 141 40 489 841Authorized 600 000 000 600 000 000

Ordinary shares Number 2012 Number 2011Opening Issued shares 559 510 159 559 510 159Scrip Dividend 6 348 700 -Closing Issued Shares 565 858 859 559 510 159

As at 31 December 2012, 34 141 141 (2011-40 489 841) shareswere under the control o the Directors.

2. RESULTS FOR THE YEAR ENDED 31 DECEMBER 2012

The results or the year are as set out in the accompanying fnan-cial statements, a summary of which is stated below;

Summary o Group Results 2012 (US$) 2011 (US$)

Gross Premium Written 24,782,769 23,546,519Operating Pro t 1,526,752 1,342,203Pro t before Taxation 2,453,851 1,594,378Pro t After Taxation 2,426,481 1,669,039

3. RESERVESThe movements in the reserves are set out in the accompanyingfnancial statements.

4. DIRECTORATEDuring the year, Mr. Gladman Sabarauta resigned from the

Board. The Board thanks him or his contributions during the pe-riod that he served on the Board. To replace him on the Board,Mrs. Rachel Kupara is being proposed or election to the Boardat the next AGM.

Mr. James Karidza retires by rotation and being eligible, in termsof the Article 77 of the companys articles of association, offershimsel or re-election at the next AGM.

5. DIRECTORS INTERESTSAs at 31 December 2012, the Directors held the following direct

and indirect interests in the shares o the company:

Name 2012 2011Grace Muradzikwa 36 694 455 36 622 779Albert Joel Nduna 80,051 78 827

Total 36 774 506 36 701 606

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

6. DIVIDENDThe Directors have recommended a fnal dividend o 0.064centsper share or the year ended 31 December 2012. The dividendwill be paid to shareholders registered in the books o the com-

pany at close o business on 19th o April 2013. The dividend willbe payable on or about 20 May 2013. Taxes will be deductible asapplicable.

7. AUDITORSShareholders will be requested to approve the remuneration of

the Auditors or the fnancial year ended 31 December 2012 atthe Annual General Meeting and appoint Auditors or the year2013.

8. DIRECTORS FEESDirectors ees have been reviewed in line with market trendsduring the year and are pegged at an average o those paid toDirectors of similar sized companies. A resolution will be passedat the annual general meeting to approve Directors ees or thecompany totaling $78,561 in respect of the year under review.

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Report of theDirectors (continued)

19

9. DIRECTORS RESPONSIBILITY STATEMENT

The Directors of the Company are responsible for the maintenance of adequate accounting records, and the preparation of nancial state -ments or each fnancial period that gives a true and air view o the state o a airs o the Company and the Group at the end o the fnancialperiod and of the results and cash ows for the period.

They are also required to select appropriate accounting policies, to safeguard the assets of the Company and the Group and to make rea -sonable 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 asto the reliability of the nancial statements, and to safeguard, verify and maintain accountability of assets, and to prevent and detect materialmisstatements and losses. These systems are implemented and monitored by suitably trained personnel with an appropriate segregation oauthority and duties. Nothing has come to the attention o the directors to indicate that any material breakdown in the unctioning o thesecontrols, procedures and systems has occurred during the period under review.

The fnancial statements have been prepared on a going concern basis since the Directors have every reason to believe that the Company andthe Group have adequate resources to continue in operation for the foreseeable future. The nancial statements have been prepared in fullcompliance with all Financial Reporting Standards and the Companies Act (Chapter 24:03).

The nancial statements have been audited by the groups external auditors, Ernst &Young, who have been given unrestricted access to allnancial records and related data, including minutes of all meetings of the Board of Directors and Committees of the Board. The Directors

confrm that all representations made to the independent auditors during the audit were valid and appropriate.

The nancial statements for the year ended 31 December 2012, were approved by the Board of Directors on 20 March 2013 and are signedon their behal by:

. MR A.J NDUNA MRS. G MURADZIKWACHAIRMAN MANAGING DIRECTOR


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Group Group Company CompanyNote 2012 2011 2012 2011

$ $ $ $Revenue Gross premium - non life 24,782,769 23,546,519 22,720,823 21,243,430Premium 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 13,406,903Unearned premium provision (39,098) (683,563) 91,795 (810,733)Earned premium 14,114,009 14,148,737 12,730,069 12,596,170Brokerage commission and fees 2,408,633 1,954,733 2,241,535 1,844,384

Investment income 8.1 1,320,348 1,128,713 597,112 546,263Other 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 bene ts 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 pro t 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)Pro t before share of pro t of associates 2,054,581 1,303,495 1,198,083 467,728 Share of associates pro t 8.7 399,270 290,883 - - Pro t before tax 2,453,851 1,594,378 1,198,083 467,728 Taxation 8.8 (27,370) 74,661 3,436 13,714 Pro t or the period 2,426,481 1,669,039 1,201,519 481,442

Proft or the period attributable to:Equity holders of the parent 2,446,907 1,632,567 1,201,519 481,442Non-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 or 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 1,201,519 481,442Non-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 0.05Diluted earnings per share (cents) 6 0.43 0.29 0.13 0.05

Consolidated Statement of

Comprehensive Income FOR THE YEAR ENDED 31 DECEMBER 2012

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Note Group Group Company Company2012 2011 2012 2011

$ $ $ $ASSETS

Non-current assets 11,151,873 9,003,372 4,937,954 4,427,179Property and equipment 9 1,194,168 1,105,733 1,027,531 937,688Investment properties 10 8,013,253 6,677,444 1,865,958 1,668,390Deferred 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 11.1 268,242 222,777 193,780 183,795Investment at fair value through pro t and loss 11.3 507,745 294,366 507,745 294,366Investment in subsidiary 23 - - 1,279,930 1,279,930Statutory deposit 13 75,364 71,715 - - Current assets 13,838,213 12,976,364 12,327,674 11,363,914Insurance receivables 12 6,318,241 6,778,611 5,088,786 5,890,706Inventories 4.22 48,557 47,344 48,557 47,344Deferred acquisition costs 5(c) 650,336 624,483 553,789 572,150Current tax receivable 21 47,800 - 65,824 65,824Related party receivables 28 410,675 203,978 769,938 288,151Other receivables and prepayments 12.1 336,631 305,032 176,026 191,453Short-term investments 11.2 1,716,384 3,591,886 1,424,980 2,988,814Cash 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 LIABILITIESEquity attributable to owners o the parent 14,367,634 12,088,770 8,952,658 7,897,077Share capital 14 2,828,995 2,797,251 2,828,995 2,797,251Share premium 14 3,278,793 3,183,563 3,278,793 3,183,563Retained earnings 8,146,837 5,998,847 2,844,870 1,916,263Foreign 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 3,844Long term loan 17 243,786 24,654 232,491 -

Current liabilities 9,827,622 9,351,802 8,080,071 7,890,172Insurance payables 16 2,750,291 2,373,530 2,204,395 2,005,740Related party payables 28 311,672 319,282 311,672 319,282Other payables and accruals 16 1,267,912 980,176 1,011,616 869,380Current 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 fnancial statements were approved and authorised or publication by the Board o Directors on 20 March 2013 and signed on its behalby:

Chairman ...................................................

Director ......................................................

Date 20 March 2013

Consolidated Statement

of Financial Position AS AT 31 DECEMBER 2012

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Cash fows rom operating activities Group Group Company CompanyNote 2012 2011 2012 2011

Cash receipts rom customers 19 27,592,549 24,059,801 25,279,281 21,199,620Cash 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 fows rom 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 710,994 696,191 609,129 642,014Purchase 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 22,129Proceeds from disposal of investments 4,092,595 1,846,938 3,352,553 1,653,439Net cash generated from investing activities 1,984,914 881,478 1,960,315 1,241,735 Cash fows rom nancing 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 nancing activities 80,152 24,654 (163,537) - Net increase in cash and cash equivalents 2,951,039 268,163 2,880,302 691,810Cash and cash equivalents at beginning o year 1,425,030 1,082,540 1,319,472 627,662E ects o 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


of Cash ows FOR THE YEAR ENDED 31 DECEMBER 2012

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Foreigncurrency Non-

Share Share Retained Capital translation Other controllingcapital premium earnings reserves reserves reserves Total interests Total equity

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

Balance at 1 January 2011 2,797,251 3,183,563 2,094,193 24,018 (112,022) 2,574,497 10,561,500 278,241 10,839,741Transfer from distributable reserve - - 2,341,731 - - (2,341,731) - - -Equity adjustment - - (20,154) - - (10,832) (30,986) 53,825 22,839Excess of loss - - (19,865) - - - (19,865) (11,636) (31,501)Total comprehensive income or the year - - 1,632,567 - (54,446) - 1,578,121 4,578 1,582,699(Loss)/Pro t after tax for the period - - 1,632,567 - - - 1,632,567 36,472 1,669,039

Other comprehensive income net of taxes - - - - (54,446) - (54,446) (31,894) (86,340)Transfer to other reserves - - (29,047) - - 29,047 - - -Trans er to capital reserves - - (578) 578 - - - - -Balance as at 31 December 2011 2,797,251 3,183,563 5,998,847 24,596 (166,468) 250,981 12,088,770 325,008 12,413,778

Total comprehensive income or the year - - 2,446,907 - (22,105) - 2,424,802 (33,375) 2,391,427Pro t/(Loss) after tax for the period - - 2,446,907 - - - 2,446,907 (20,426) 2,426,481Other comprehensive income net of taxes - - - - (22,105) - (22,105) (12,949) (35,054)Scrip dividend issued 31,744 95,230 (126,974) - - - - - -Transfer to other reserves - - (26,005) - - 26,005 - - -Cash dividend paid - - (145,938) - - - (145,938) - (145,9Balance as at 31 December 2012 2,828,995 3,278,793 8,146,837 24,596 (188,573) 276,986 14,367,634 291,633 14,659,267

Foreign Currency Non-

Share Share Retained Capital Translation Other controllingcapital 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 - 7,415,635Total comprehensive income or the year - - 481,442 - - - 481,442 - 481,442Pro t after tax for the period - - 481,442 - - - 481,442 - 481,442Other comprehensive income net o 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 or the year - - 1,201,519 - - - 1,201,519 - 1,201,519Pro t after tax for the period - - 1,201,519 - - - 1,201,519 - 1,201,519Other comprehensive income net o 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

NotesCapital reserves This pertains to First Insurance Company o Uganda (FICO) and is a statutory trans er done annually rom retained earnings to capital re-serves when there is a proft. There was no trans er to capital reserves in 2012.

Other reserves Other reserves are made up o :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 pro ts, which ever is greater, or any such other amount as theCommissioner may decide be accumulated until it reaches the minimum paid-up capital or 50% of the net premiums, which ever is thegreater. During the year an amount of $26,005 was transferred to the reserve account. Foreign currency translation reserve This arose rom translation o assets and liabilities o oreign operations into US dollars at the date o exchange prevailing at the reportingdate and their statement o comprehensive income at exchange rate prevailing at the date o the transactions.

Retained earningsThe retained earnings o companies within the Group are as ollows:

2012 2011

NicozDiamond 2,844,870 1,916,263First Insurance Company (984,695) (888,159)Thirty Samora Machel 5,013,215 4,136,902Marabou 14,343 9,691Consolidation adjustments 1,259,104 824,150

8,146,837 5,998,847


of Changes in Equity FOR THE YEAR ENDED 31 DECEMBER 2012

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1 CORPORATE INFORMATIONNICOZDIAMOND Insurance Limited (the company) is a limitedcompany incorporated in Zimbabwe whose shares are pub-licly traded on the Zimbabwe Stock Exchange. The principalactivities o the company and that o its subsidiaries is theprovision o short term insurance solutions.

The registered of ce of the Company is: Insurance Centre,2nd Floor 30 Samora Machel Avenue, Harare. The consolidat-ed fnancial statements o NICOZDIAMOND Insurance Limited

or the period ended 31 December 2012 were authorised orissue in accordance with a resolution passed by the Directorson 20 March 2013.

2 REPORTING CURRENCYThe fnancial statements are presented in United States Dol-lars (USD or US$) which is the companys unctional and pre-sentation currency and values are rounded to the nearest dol-lar.

3 BASIS OF PREPARATION3.1 Statement o Compliance

The consolidated fnancial statements have been prepared inaccordance with International Financial Reporting Standards,(IFRS), as issued by the international accounting standardsBoard (IASB). The consolidated fnancial statements havebeen prepared on a historical cost basis, except for invest-ment properties, nancial assets and liabilities that have beenmeasure at air value.

As permitted by IFRS4 Insurance Contracts, the Group contin-ues to apply the existing accounting policies that were ap-plied prior to the adoption o IFRS.

3.2 GOING CONCERNThe Companys business activities, together with the factors

likely to affect its future development, performance and pos -tion are set out in the Managing Directors Report on pag-es 15 to17 The nancial position of the company, its cash

ow, liquidity position and borrowing facilities are described

on pages 21 to 66. In addition notes 23 and 24 to the fnan-cial statements include the companys objectives, policies andprocesses or managing its capital: its fnancial risk manage-ment objectives and its exposures to credit risk and liquidityrisk.

The company has considerable fnancial resources togetherwith a diverse insurance book across di erent geographicareas. As a consequence, the directors believe that the com-pany is well placed to manage its business risks success ullydespite the current uncertain economic outlook.

The directors have a reasonable expectation that the com-pany has adequate resources to continue in operational exis -tence or the oreseable uture. Thus they continue to adoptthe going concern basis o accounting in preparing the annu-al fnancial statements.

3.3 Basis o ConsolidationThe consolidated fnancial statements comprise the fnancialstatements o the Group and its subsidiaries as at 31 Decem-

ber 2012. Subsidiaries are consolidated rom the date o ac-quisition, being the date on which the Group obtains control,and continue to be consolidated until the date when suchcontrol ceases. The fnancial statements o the subsidiar-ies are prepared or the same reporting period as the par-ent company, using consistent accounting policies. All intragroup balances, transactions, unrealised gains or loses result -ing rom intra-group transactions and dividends are eliminat-ed in ull.

Total comprehensive income within a subsidiary are attribut-ed to the non-controlling interest even i it results in a defcitbalance.

A change in the ownership interest of a subsidiary, withoutloss of control, is accounted for as an equity transactions. Ifthe Group losses control over a subsidiary it:

Derocognises the assets (including goodwill) and liabilities o the subsidiary

Derocognises the carrying amount of any non-controllinginterest

Derecognises the cumulative translation differences recorded in equity

Recognises the fair value of the consideration received Recognises the fair value of any investment retained

Recognises any surplus or de cit in pro t or loss

Reclassi es the parents share of components previously

recognised in other comprehensive income to proft orloss or retained earnings, as appropriate.

Investment in subsidiaries at company level is carried at cost.

3.4 Statement o changes in accounting policies and disclosuresThe accounting policies adopted are consistent with those othe previous nancial year, except for the following amend -ments to IFRS e ective as o 1 January 2012:

IAS 12 Income Taxes (Amendment) Deferred Taxes: Recoveryo Underlying AssetsIFRS 1 First-Time Adoption o International Financial Report-ing Standards (Amendment) SevereHyperin ation and Removal of Fixed Dates for First-TimeAdoptersIFRS 7 Financial Instruments: Disclosures (Amendments)IFRS 7 Financial Instruments : Disclosures Enhanced Derecog-nition Disclosure Requirements The adoption o the standards or interpretations is describedbelow:

IAS 12 Income Taxes (Amendment) De erred Taxes: Recov-ery o Underlying Assets

The amendment clarifed the determination o de erred taxon investment property measured at air value and introduc-es a rebuttable presumption that de erred tax on investmentproperty measured using the air value model in IAS 40should be determined on the basis that its carrying amount

Notes to the

Financial Statements31 DECEMBER 2012

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will be recovered through sale. It includes the requirementthat de erred tax on non-depreciable assets that are mea-sured using the revaluation model in IAS 16 should alwaysbe measured on a sale basis. The amendment is e ective orannual periods beginning on or a ter 1 January 2012 and hasbeen no effect on the Groups nancial position, performanceor its disclosures.

IFRS 1 First-Time Adoption o International Financial Report-ing Standards (Amendment) Severe

Hyperin ation and Removal of Fixed Dates for First-TimeAdoptersThe IASB provided guidance on how an entity should resumepresenting IFRS fnancial statements when its unctional cur-rency ceases to be subject to hyperin ation. The amendmentis e ective or annual periods beginning on or a ter 1 July2011. The amendment had no impact to the Group.

IFRS 7 Financial Instruments: Disclosures EnhanceDerecognition Disclosure RequirementsThe amendment requires additional disclosure about nan -cial assets that have been trans erred but not derecognised toenable the user o the Groups fnancial statements to under-stand the relationship with those assets that have not beenderecognised and their associated liabilities. In addition, theamendment requires disclosures about the entitys continu -ing involvement in derecognised assets to enable the usersto evaluate the nature of, and risks associated with, such in-volvement. The amendment is e ective or annual periodsbeginning on or a ter 1 July 2011. The Group does not have

any assets with these characteristics so there has been no e -ect on the presentation o its fnancial statements.

3.4.1 Standards issued but not yet e ectiveStandards issued but not yet e ective up to the date o is-suance o the Groups fnancial statements are listed below.This listing is of standards and interpretations issued, whichthe Group reasonably expects to be applicable at a uturedate. The Group intends to adopt those standards when theybecome e ective. The Group expects that adoption o thesestandards, amendments and interpretations in most cases not

to have any signifcant impact on the Groups fnancial posi-tion or per ormance in the period o initial application butadditional disclosures will be required. In cases where it willhave an impact the Group is still assessing the possible im-pact.

IAS 1 Presentation o Items o Other Comprehensive Income Amendments to IAS 1 The amendments to IAS 1 change the grouping o items pre-sented in other comprehensive income (OCI). Items that couldbe reclassifed (or recycled) to proft or loss at a uture pointin time (for example, actuarial gains and losses on de nedbeneft plans and revaluation o land and buildings) wouldbe presented separately rom items that will never be re-classi ed (for example, net gain on hedge of net investment,exchange differences on translation of foreign operations,net movement on cash ow hedges and net loss or gain onavailable- or-sale fnancial assets). The amendment a ectspresentation only and has no impact on the Groups fnancialposition or per ormance.

IAS 19 Employee Benefts (Revised) The IASB has issued numerous amendments to IAS 19. Theserange rom undamental changes such as removing the corri-dor mechanism and the concept o expected returns on planassets to simple clarifcations and re-wording. The Groupmade a voluntary change in accounting policy to recogniseactuarial gains and losses in other comprehensive income inthe current period. However, the amended standard will im -pact the net beneft expense as the expected return on planassets will be calculated using the same interest rate as ap-

plied or the purpose o discounting the beneft obligation.The amendment becomes e ective or annual periods begin-ning on or a ter 1 January 2013. The Group is currently assess-ing the ull impact o the amendments.

IAS 28 Investments in Associates and Joint Ventures (as re-vised in 2011)As a consequence of the new IFRS 11 Joint Arrangements, and

IFRS 12 Disclosure of Interests in Other Entities,IAS 28 Investments in Associates, has been renamed IAS 28 In-vestments in Associates and Joint Ventures, and describes theapplication of the equity method to investments in joint ven-tures in addition to associates. The revised standard becomese ective or annual periods beginning on or a ter 1 January2013.

IAS 32 O setting Financial Assets and Financial Liabilities Amendments to IAS 32These amendments clarify the meaning of currently has alegally en orceable right to set-o . The amendments alsoclari y the application o the IAS 32 o setting criteria tosettlement systems (such as central clearing house systems)which apply gross settlement mechanisms that are not simul-taneous. These amendments are not expected to impact theGroups fnancial position or per ormance and become e -

ective or annual periods beginning on or a ter 1 January2014.

IFRS 1 Government Loans Amendments to IFRS 1These amendments require rst-time adopters to apply therequirements of IAS 20 Accounting for Government Grants

and Disclosure of Government Assistance, prospectively togovernment loans existing at the date o transition to IFRS.Entities may choose to apply the requirements of IFRS 9 (or IAS39, as applicable) and IAS 20 to government loans retrospec-tively i the in ormation needed to do so had been obtainedat the time o initially accounting or that loan. The exceptionwould give frst-time adopters relie rom retrospective mea-surement o government loans with a below-market rate ointerest. The amendment is e ective or annual periods on ora ter 1 January 2013. The amendment has no impact on theGroup.

IFRS 7 Disclosures O setting Financial Assets and Financial Liabilities Amendments to IFRS 7 These amendments require an entity to disclose information

about rights to set-off and related arrangements (e.g., collat -eral agreements). The disclosures would provide users within ormation that is use ul in evaluating the e ect o nettingarrangements on an entitys fnancial position. The new dis-closures are required for all recognised nancial instrumentsthat are set o in accordance with IAS 32 Financial Instru-ments: Presentation. The disclosures also apply to recognised

Notes to the

Financial Statements31 DECEMBER 2012 (continued)

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fnancial instruments that are subject to an en orceable mas-ter netting arrangement or similar agreement, irrespectiveo whether they are set o in accordance with IAS 32. Theseamendments will not impact the Groups fnancial position orper ormance and become e ective or annual p e r i o d sbeginning on or a ter 1 January 2013.

IFRS 9 Financial Instruments: Classifcation and Measure-ment IFRS 9, as issued, re ects the rst phase of the IASBs work on

the replacement o IAS 39 and applies to classifcation andmeasurement o fnancial assets and fnancial liabilities as de-fned in IAS 39. The standard was initially e ective or annualperiods beginning on or after 1 January 2013, but Amend-ments to IFRS 9 Mandatory Effective Date of IFRS 9 and Transi-tion Disclosures, issued in December 2011, moved the manda-tory effective date to 1 January 2015. In subsequent phases,the IASB will address hedge accounting and impairment ofnancial assets. The adoption o the frst phase o IFRS 9 willhave an e ect on the classifcation and measurement o theGroups nancial assets, but will not have an impact on classi-fcation and measurements o fnancial liabilities. The Groupwill quantify the effect in conjunction with the other phases,when the fnal standard including all phases is issued.

IFRS 10 Consolidated Financial Statements, IAS 27 SeparateFinancial StatementsIFRS 10 replaces the portion o IAS 27 Consolidated and Sep-arate Financial Statements that addresses the accounting orconsolidated fnancial statements. It also addresses the issuesraised in SIC-12 Consolidation Special Purpose Entities.

IFRS 10 establishes a single control model that applies to allentities including special purpose entities. The changes intro-duced by IFRS 10 will require management to exercise signif-icant judgement to determine which entities are controlledand therefore are required to be consolidated by a parent,compared with the requirements that were in IAS 27. Basedon the preliminary analyses performed, IFRS 10 is not expect-ed to have any impact on the currently held investments othe Group. This standard becomes e ective or annual peri-ods beginning on or a ter 1 January 2013.

IFRS 11 Joint ArrangementsIFRS 11 replaces IAS 31 Interests in Joint Ventures and SIC-13Jointly-controlled Entities Non-monetary Contributions byVenturers. IFRS 11 removes the option to account or jointlycontrolled entities (JCEs) using proportionate consolidation.Instead, JCEs that meet the de nition of a joint venture mustbe accounted for using the equity method. IFRS 12 Disclosure o Interests in Other EntitiesIFRS 12 includes all o the disclosures that were previously inIAS 27 related to consolidated nancial statements, as wellas all o the disclosures that were previously included in IAS31 and IAS 28. These disclosures relate to an entitys interestsin subsidiaries, joint arrangements, associates and structuredentities. A number of new disclosures are also required, buthas no impact on the Groups fnancial position or per or-mance. This standard becomes e ective or annual periodsbeginning on or a ter 1 January 2013. These amendments willnot impact the Groups fnancial position or per ormance andbecome e ective or annual periods beginning on or a ter 1January 2013.

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IFRS 13 Fair Value Measurement IFRS 13 establishes a single source o guidance under IFRS orall air value measurements. IFRS 13 does not change when anentity is required to use fair value, but rather provides guid-ance on how to measure air value under IFRS when air valueis required or permitted. The Group is currently assessing theimpact that this standard will have on the fnancial positionand performance, but based on the preliminary analyses, nomaterial impact is expected. This standard becomes e ective

or annual periods beginning on or a ter 1 January 2013.

3.4.2 Annual Improvements May 2012These improvements will not have an impact on the Group,but include:

IAS 1 Presentation o Financial Statements This improvement clarifes the di erence between volun-tary additional comparative in ormation and the minimumrequired comparative information. Generally, the minimumrequired comparative information is the previous period. IAS 16 Property Plant and Equipment This improvement clarifes that major spare parts and servic-ing equipment that meet the de nition of property, plantand equipment are not inventory. IAS 32 Financial Instruments, Presentation This improvement clarifes that income taxes arising rom dis-tributions to equity holders are accounted for in accordancewith IAS 12 Income Taxes.

IAS 34 Interim Financial ReportingThe amendment aligns the disclosure requirements for totalsegment assets with total segment liabilities in i n t e r i mfnancial statements. This clarifcation also ensures that inter-im disclosures are aligned with annual disclosures.These im-provements are e ective or annual periods beginning on ora ter 1 January 2013.

4 Summary o signi cant accounting policiesThe ollowing is a summary o the Group accounting poli-

cies which are consistant with those o the previous fnancialyear.

4.1 Business combinationBusiness Combinations are accounted for using the acquisi -tion method. The cost of an acquisition is measured as the ag-gregate of the consideration transferred, measured at acqui -sition date air value and the amount o any non-controllinginterest in the acquiree. For each business combination, theGroup has an option to measure any non-controlling interestsin the acquiree either at fair value or at the non-controllinginterests proportionate share of the acqurees identi ablenet assets.

When the Group acquires a business, it assesses the nancialassets and liabilities assumed or appropriate classifcationand designation in accordance with the contractual terms,economic circumstances and pertinent conditions at acquisi -tion date. This includes the separation o embedded deriva-tives in host contracts by the acquiree. No reclassi cation ofinsurance contracts is required for business combination.

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2 0 1 2 A n n u a l R e p o r t

Goodwill is initially measured at cost, being the excess of the

aggregate o the consideration trans erred and the amountrecognised or non-controlling interest over the net identif-able assets acquired and liabilities assumed. If the value ofthe net assets acquired is in excess of the aggregate consider-ation transferred, the gain is recognised in pro t or loss. Fair values or non-li e insurance contracts are derived bycalculating the present value o claims reserves. I this con-

sideration is lower than air value o the net assets o thesubsidiary acquired, the difference is recognised in pro t orloss. After initial recognition, goodwill is measured at costless any accumulated impairment losses. For the purpose oimpairment testing, goodwill acquired in a business combi -nation is allocated to an appropriate cash generating unitthat is expected to bene t from the combination, irrespec -tive of whether other assets or liabilities of the acquireeare assigned to those units. Where goodwill forms part of acash-generating unit and part o the operations within thatunit is disposed of, the goodwill associated with the oper-ation disposed o is included in the carrying amount o theoperation when determining the gain or loss on disposal othe operation. Goodwill disposed o in this circumstance ismeasured based on the relative values o the operation oand the portion o the cash generating unit retained.

4.2 Impairment o non-fnancial assetsThe Group assesses at each reporting date whether there isan indication that an asset may be impaired. I any such in-dication exists, the Group estimates the assets recoverableamount. An assets recoverable amount is the higher o its

fair value less costs to sell and its value in use. When thecarrying amount of an asset exceeds its recoverable amount,the asset is considered impaired and is written down to itsrecoverable amount.

In assessing value in use, the estimated future cash ows arediscounted to their present value using a pre-tax discountrate that re ects current market assessments of the time val -ue o money and the risks specifc to the asset. In determin-ing fair value less costs to sell, recent market transactions are

taken into account, if available. An impairment loss is recognised as an expense immediate-ly, unless the relevant asset is carried at a revalued amount,in which case the impairment loss is treated as a revaluationdecrease. Where an impairment loss subsequently reverses,the carrying amount o the asset (cash generating unit) is in-creased to the revised estimate of its recoverable amount, butso that the increased carrying amount does not exceed thecarrying amount that would have been determined had noimpairment loss been recognised or the asset (cash-gener-ating unit) in prior years. A reversal o an impairment loss isrecognised as income immediately, unless the relevant asset iscarried at a revalued amount, in which case the impairmentloss is treated as a revaluation increase.

4.3 Borrowing costs Borrowing costs directly attributable to the acquisition, con -

struction or production o an asset that necessarily takes asubstantial period o time to get ready or its intended use orsale are capitalized as part of the cost of the respective assets.

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All other borrowing costs are expensed in the period in whichthey occur. Borrowing costs consist o interest and other coststhat an entity incurs in connection with the borrowing o

unds.

4.4 Investment in AssociatesThe Groups investments in its associates are accounted orusing the equity method. An associate is an entity in whichthe Group has signi cant in uence and which is neither asubsidiary nor joint venture.

Under the equity method the investment in the associateis carried in the statement o fnancial position at cost pluspost-acquisition changes in the Groups share of net assets ofthe associate. Any changes in the Groups share o profts arerecorded in proft and loss. Goodwill relating to an associateis included in the carrying amount o the investment and isneither amortised nor individually tested or impairment.

The statement of comprehensive income re ects the share ofthe results o operations o the associates. This is proft at-tributable to equity holders of the associates and thereforeis proft a ter tax. Proft or losses resulting rom transactionsbetween the Group and the associates are eliminated to theextent o the interest in the associates.

The fnancial statements o the associates are prepared orthe same reporting period as the Group.Investments in associates at Company level are carried atcost. After application of the equity method, the Group de -termines whether it is necessary to recognise an additionalimpairment loss on the Groups investment in associates. TheGroup determines at each reporting date, whether there isany objective evidence that the investment in the associate isimpaired. If this is the case, the Group calculates the amounto impairment as the di erence between the recoverableamount o the associate and its carrying value and recognisesthe amount in the share o proft o an associate in the in-come statement.

Upon loss of signi cant in uence over the associate, the

Group measures and recognises any remaining investment atits air value. Any di erence between the carrying amount othe associate upon loss of signi cant in uence and the fairvalue o the remaining investment and proceeds rom dispos-al is recognised in proft or loss.

4.5 Financial assets Initial recognition and measurement Financial assets within the scope o IAS39 are classifed as f-nancial assets at fair value through pro t or loss, loans andreceivables. The Group determines the classifcation o its f-nancial assets at initial acquisation. All fnancial assets are recognised initially at air value plustransaction costs, except in the case of nancial assets record-ed at air value through proft or loss.

The Groups fnancial assets include cash and long-term de-posits, and other receivables, loans and other receivables,quoted and unquoted nancial instruments and investmentsat air value through proft and loss.

Fair Value o nancial assetsThe air value o investments that are actively traded in or-ganised fnancial markets is determined by re erence to aquoted market bid prices at the close of business on the re-porting date, without any deduction for transaction costs. For all other fnancial instruments not traded in an activemarket, the fair value is determined by using the net assetvalue. As in thecurrent economic environment, this was con-cluded to be a re ection of fair value. Subsequent Measurement The subsequent measurement of nancial assets depends ontheir classifcation as described below:Financial assets at air value through proft and loss

Financial assets at air value through proft and loss are thosefnancial assets held or trading or fnancial assets designatedas such upon initial recognition.

Financial assets are classifed as held or trading i they are ac-quired for the purpose of selling in the near term. Derivatives,including separated imbedded derivatives are also classifedas held or trading unless they are designated as e ectivehedging instruments or a fnancial guarantee contract.

These investments are initially recorded at air value. Subse-quent to initial recognition , these investments are measuredat air value. Fair value adjustments and realised gains andlosses are recognised in the proft or loss.

Loans and other receivablesThese are non-derivative fnancial assets with fxed or deter-minable payments that are not quoted in an active market.

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2 0 1 2 A n n u a l R e p o r t

These investments are initially recognised at cost, being thefair value of the consideration paid for the acquisition of theinvestment. All transaction costs directly attributable to theacquisition are also included in the cost of the investment.After initial measurement, loans and receivables are mea -sured at amortised cost using the e ective interest rate meth-od (EIR) less impairment. Gains and losses are recognised in the proft or loss when in-vestments are derecognised or impaired as well as through

the amortisation process.Derecognition o nancial assets A fnancial asset is derecognised when:

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

- The Group has trans erred substantially all the risksand rewards o the asset or the Group has trans erredcontrol o the as set.

Impairment o nancial assetsThe Group assesses at each reporting date whether there isany objective evidence that a fnancial asset or group o f-nancial assets is impaired. A fnancial asset or group o fnan-cial assets is deemed to be impaired if, and only if, there isobjective evidence o impairment as a result o one or moreevents that has occurred a ter the initial recognition o theasset and that loss event has an impact on the estimated u-ture cash ows of the nancial asset or the group of nancialassets that can be reliably estimated.

- For nancial assets carried at amortised cost, if there is objective evidence that an impairment loss has been incurred,the amount o the loss is measured as the di erence be-tween the assets carrying amount and the present valueof estimated future cash ows (excluding future expectedcredit losses that have not yet been incurred). The presentvalue of the estimated future cash ows is discounted atthe fnancial assets original e ective interest rate. I a loan

has a variable interest rate, the discount rate for measuringany impairment loss is the current EIR.

Evidence of impairment may include indications that thedebtors or a group o debtors is experiencing signifcant f-nancial dif culty, default or delinquency in interest or princi-pal payments, the probability that they will enter bankruptcyor other fnancial reorganisation.

Unquoted EquitiesThe unquoted equities are valued using the net asset valua-

tion method at each fnancial reporting date. Impairment isassessed based on the same criteria as fnancial assets carriedat air value through proft or loss. However the amount re-corded or impairment is the cumulative loss measured as thedi erence between the net carrying amount and the current

air value. Any impairment loss is recognised in the proft orloss.

4.6 Financial LiabilitiesInitial recognition and measurement All fnancial liabilities are recognised initially at air valueand, in the case of loans and borrowings, minus directly at-tributable transaction costs.

Financial liabilities include other payables and accruals.

Subsequent Measurement The measurement o fnancial liabilities depends on their clas-

sifcation as ollows:Financial liabilities at air value through pro t or lossFinancial liabilities at air value through proft or loss includes;fnancial liabilities held or trading and fnancial liabilitiesdesignated upon initial recognition as at air value throughproft and loss.

Financial liabilities are classifed as held or trading i they areacquired for the purpose of selling in the near term. Interest bearing loans After initial recognition, interest bearing loans and borrow -ings are subsequently measured at amortised cost using the ef -

ective interest rate method. Gains and losses are recognisedin the proft or loss when the liabilities are derecognised.

Derecognition o nancial liabilitiesA fnancial liability is derecognised when the obligations un-der the liability is discharged or cancelled or expires. Whenan existing fnancial liability is replaced by another rom thesame lender or substantially modi ed, such an exchange ormodifcation is treated as derecognition o the original liabil-ity and the recognition o a new liability. The di erences interms o carrying amounts is recognised in proft or loss.

4.7 ReinsuranceThe Group cedes insurance risk in the normal course o busi-ness or all o its businesses. Reinsurance assets represent bal-ances due rom reinsurance companies. Amounts recoverable

rom reinsurers are estimated in a manner consistent with the

outstanding claims provisions, settled claims associated withthe reinsurer policies and in accordance with the related rein-surance contract. On initial recognition the reinsurance re-ceivables/payables are measured at air value received/paidor receivable/payable. Subsequently reinsurance balances aremeasured at amortised cost using the e ective interest ratemethod.

Reinsurance assets are reviewed or impairment at each re-porting date or more frequently when an indication of im -pairment arises during the reporting year. Impairment occurswhen there is objective evidence as a result o an event thatoccurred a ter initial recognition o the reinsurance asset thatthe group may not receive all outstanding amounts due un-der the terms o the contract and the event has a reliablymeasurable impact on the amounts that the group will re-ceive rom the reinsurer. The impairment loss is recorded inthe proft or loss.

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The group also assumes reinsurance risk in the normal courseo business or non li e insurance contracts where applicable.Premiums and claims are recognised as revenue or expensesin the same manner as they would be i the reinsurance wereconsidered direct business, taking into account the productclassifcation o the reinsured business. Reinsurance liabilitiesrepresent balances due to reinsurance companies. Amountspayable are estimated in a manner consistent with the relatedreinsurance contract.

Premiums and claims are presented on a gross basis or bothceded and assumed reinsurance.

Reinsurance assets or liabilities are derecognised when thecontractual rights are extinguished or expire or when thecontract is trans erred to another party.

Ceded reinsurance arrangements do not relieve the Grouprom its obligation to policyholders.

Gains and losses on buying reinsurance are recognised inpro t or loss immediately, the date of purchase and are notamortised.

4.8 Insurance ReceivableInsurance receivables are recognised when due and measuredon initial recognition at the air value o the consideration re-ceived or receivable. Subsequent to initial recognition, insur -ance receivables are measured at amortised cost, using the ef -

ective interest rate method. The carrying value o insurancereceivables is reviewed or impairment whenever events orcircumstances indicate that the carrying amount may not berecoverable, with the impairment loss recorded in the pro tor loss.

Insurance receivables are derecognised when the derecogni-tion criteria or fnancial assets as described in note 4.6 hasbeen met.

4.9 Cash and cash equivalentsCash and short-term deposits in the statement o fnancial

position comprise cash at banks and on hand and short-termdeposits with a maturity o three months or less.

The short-term investments, with a maturity of three monthsor less are readily convertible to a known amount o cashwith insignifcant risk o change in value.

For the purposes of the consolidated statement of cash ows,cash and cash equivalents consists of cash and short-term de-posits as de ned above, net of outstanding bank overdrafts.

4.10 TaxesCurrent income taxCurrent income tax assets and liabilities or the current pe-riod are measured at the amount expected to be recovered

rom or paid to the taxation authorities. The tax rates andtax laws used to compute the amount are those that are en-acted or substantively enacted by the reporting date in thecountries where the group operates and generates taxableincome. Current income tax assets and liabilities also includeadjustments or tax expected to be payable or recoverable inrespect o previous periods.

Current income tax relating to items recognised directly inequity or other comprehensive income is recognised in equity

or other comprehensive income and not in the proft or loss.Withholding tax on dividend is taxed at source.

Management periodically evaluates positions taken in thetax returns with respect to situations in which applicable taxregulations are subject to interpretation and establishes pro-visions where appropriate.

De erred tax De erred tax is provided using the liability method on tempo-rary di erences at the reporting date between the tax baseso assets and liabilities and their carrying amounts or fnan-cial reporting purposes at the reporting date.

De erred tax liabilities are recognised or all taxable tempo-rary di erences except:

- in respect o taxable temporary di erences associatedwith investments in subsidiaries, associates, and interestsin joint venture, where the timing of the reversal of thetemporary di erences can be controlled and it is proba-ble that the temporary di erences will not reverse in the

oreseeable uture.- when the de erred tax liability arises rom the initial rec-

ognition o goodwill or o

2012 annual report@annual

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