DIRECTORS: O Mtasa (Chairman), M S Manyumwa (Deputy Chairman), J M Chikura, Dr C U Hokonya, D Hoto*, T Khumalo, W M Marere*, J M Matiza, E K Moyo, I P Z Ndlovu (* Executive Directors)

CHAIRMAN’S STATEMENT

ECONOMIC OVERVIEWThe economic environment during 2013 was characterised by persistent liquidity challenges, declining inflation and modest economic growth. The country’s Gross Domestic Product is estimated to have grown by 3.4% during 2013 with agriculture estimated to have declined by 1.3%. Industrial capacity utilisation dropped to 39.6% in 2013 compared to 44.2% in 2012. Inflation was 0.33% in December 2013 against 2.91% in 2012 on the back of weakening aggregate demand, stable global oil prices and continued depreciation of the South African Rand. Based on the ZimAsset plan, the government expects Gross Domestic Product growth of 6.1% in 2014 driven by the mining and agriculture sectors.

The Botswana economy, where the Group has a reinsurance operation, saw Gross Domestic Product growth rates increase from 4.2% in 2012 to 5.4% in 2013 being led by increased production and higher prices in mining. Interest rates and inflation remained stable while the Botswana Pula depreciated by 14% against the United States Dollar.

ZIMBABWE INSURANCE SECTORIn 2013, the Net Premium Written in the life assurance sector grew by 15% to $258 million from $225 million in 2012 with the sector largely adequately capitalised. The short-term insurance sector had an 8% growth from $194 million in 2012 to $210 million in 2013. The major sources of business for the short term insurance sector were motor and fire insurance.

ZIMBABWE PROPERTY SECTORThe property sector witnessed reduced activity as there was limited long term funding for property develop-ments and mortgage financing. Commercial rental rates were affected by increased levels of voids and high operating cost components. Declining occupancy ratios led to property owners absorbing a greater proportion of the operating costs. GROUP’S PERFORMANCEFinancial highlights for the year ended 31 December 2013:

31-Dec-13 31-Dec-12 Movement US$000 US$000 %

Gross premium income 101,101 88,599 14.1 Total income 113,015 92,660 22.0 Profit for the year after tax 5,978 13,451 (55.6)Profit attributable to shareholders 1,627 9,795 (83.4)Policyholders’ funds 83,970 71,084 18.1 Total assets 205,211 176,303 16.4

Gross Premium Written (GPW) at $101.1 million for the year ended 31 December 2013 was 14% above the prior year figure of $88.6 million on the back of improved performance across the Group with health insurance, life assurance and short-term reinsurance businesses being the major contributors in absolute terms.

Rental income grew by 6.8% from $7.3 million in 2012 to $7.8 million in 2013 driven by an increase in the contribution of turnover-based rental income. The limited overall economic growth constrained the property market leading to low demand for office and conventional industrial space. The property market continues to face challenges with limited property transactions being recorded especially in residential stands and low value properties.

The year-on-year attributable profit declined mainly due to the higher claims ratio for the health insurance business and the adoption of a more prudent approach to technical reserves following the introduction of the actuarial control cycle during the year. As a result, the shareholder risk reserves and incurred but not reported claims provisions increased by $4.4 million (101%) and $1.2million (65%) respectively compared to the prior year. The actuarial control cycle will result in the insurance operations being managed based on actuarially determined parameters in terms of both technical and shareholder risk reserves, which is expected to lead to more efficiency, consistency and financial soundness.

OPERATING BUSINESS UNIT ANALYSISExcept where indicated, the commentary below refers to unconsolidated figures.

Property Pearl PropertiesRental income increased by 2% to $9 million (2012: $8.8 million), due to a marginal increase in rental per square metre and higher turnover based rentals. The average rental per square metre achieved was $8.25 (2012: $8.18) and the annualised rental yield achieved in 2013 was slightly lower at 7.9% (2012: 8.6%) due to slower growth in rentals relative to the appreciation in investment property values. The vacancy rate for the year 2013 was 23.3% (2012: 21.1%), a result of voluntary surrender of space by tenants due to difficult operating conditions in their different industry sectors. Investment properties were revalued by an independent professional valuer and resulted in fair value gains of $8.0 million compared to 2012 fair value gains of $8.9 million. Out of the fair value gains in property recorded in 2013 of $8 million, $6.3 million related to property re-zoning from residential to commercial property.

Life BusinessFirst Mutual Life Assurance CompanyGross Premium Written closed the year at $28.1 million, being 26% higher than the prior year figure of $22.3 million. Employee benefits premium of $15.3 million was 21% higher compared to the previous year’s premium of $12.6 million due to single premium income and new business written during the year. Individual life premiums increased to $12.8 million (2012: $10.1 million) due to an increase in uptake of products, particularly funeral products.

FMRE Life & HealthGross Premium Written grew by 10% to $1.96 million (2012: $1.78 million) with health business contribut-ing 66% of the gross premium written whilst Group life contributed 27% and individual life business contributed 7%. Regional business contributed $940,000 (2012: $186,000) to gross premium, with the business continuously seeking ways to further increase the gross premium written from the region in 2014.

Medical BusinessFML Health Care CompanyFML Health Care Company premium income grew by 19% to $43.1 million (2012: $36.3 million). The growth is attributable to a 36% increase in membership from 79,242 at the beginning of the year to 107,796 members at year end. The average revenue per member dropped from $40 to $38 as some members downgraded their membership plans due to liquidity challenges. The claims ratio rose from 68% in 2012 to 80% in 2013, contributing to the reduction in operating profit from $6.4 million to $1.9 million in 2013.

The Company will continue to seek new business through providing quality service, demonstrated claims paying ability, wellness campaigns, innovative products and affordable pricing to its members.

Short-term Insurance BusinessesTristarInsurance CompanyGross Premium Written decreased by 25% in 2013 to $6.8 million (2012: $9.0 million) as the company adjusted its operations from its legacy issues. The motor class continued to be the most significant contribu-tor in terms of gross premium (62%), followed by fire (16%) and accident (9%).

The Company has adopted strategies to grow its business through strengthening broker relations, enhancing service delivery and providing relevant risk management advice.

FMRE Property & Casualty (Zimbabwe)The business experienced a 14% growth in gross premium written to $20.1 million (2012: $17.6 million) as major cedants renewed their confidence in the company. The major growth contributors were the increased fire and farming business, with treaty business contributing 42% (2011: 42%). This growth was achieved despite cedants raising their retention limits.

FMRE Property & Casualty (Botswana)The business witnessed a 78% jump to $2.7 million in gross premium written (2012: $1.5 million) following the recapitalisation of the business in December 2012. The casualty, engineering, motor and fire classes were the largest contributors to gross premium. Local business accounted for 60% of the total gross premium whilst non Botswana business contributed 40%. The annual growth was a result of growing market confidence and increased marketing efforts, resulting in more acceptance in the local market.

LICENCINGThe Group successfully applied for an investment management license and the new business will start operations in the second quarter of 2014. Regulatory approval was also granted to merge the two reinsurance businesses operating in Zimbabwe, under a composite license. The synergies to be realised from such an arrangement will lead to a stronger reinsurance balance sheet that can attract more business from both local and regional insurance operations.

NAME CHANGEAt the Annual General Meeting held on 4 June 2013, a resolution was passed to change the name of Africa First Renaissance Corporation Limited to First Mutual Holdings Limited.

HUMAN CAPITAL DEVELOPMENTThe Group is going through an organisational transformation that is expected to result in optimum operating structures aimed at enhancing operational effectiveness and efficiency.

DIRECTORATEMr Innocent Chagonda resigned from his position as Non-Executive Director and Chairman of the Board with effect from 4 June 2013, the day I was appointed Chairman. On behalf of the Board, I would like to extend my sincere thanks to Mr Chagonda for his invaluable contribution to the Group.

DIVIDENDHaving taken due regard of the Group’s cash flow requirements, the Board of Directors recommends a dividend of 0.1 cents per share to be paid on or about 30 May 2014 to shareholders registered in the books of the Company as at 2 May 2014. The transfer books and register of members will be closed from 3 May to 6 May 2014, inclusive.

CONSOLIDATED STATEMENT OF CASH FLOWS 31-Dec-13 31-Dec-12 FOR THE YEAR ENDED 31 DECEMBER 2013 US$ US$ Profit before taxation 9,558,961 17,966,160

Non-cash and separately disclosable items 5,433,208 (5,127,513)

Operating cash flows before working capital changes 14,992,169 12,838,647

Working capital changes (11,385,614) (2,891,961) Cash generated from operations 3,606,555 9,946,686 Interest paid (71,460) - Net interest received 2,358,323 2,211,873 Taxation paid (2,111,867) (1,002,831)Net cash flows from operating activities 3,781,551 11,155,728 Net cash utilised on investing activities (10,159,902) (2,187,103) Net cash generated on financing activities 538,776 6,613,537 Net (decrease)/increase in cash and cash equivalents (5,839,575) 15,582,162 Movement in cash and cash equivalents At beginning of the year 24,199,255 8,617,094 Net (decrease)/increase for the year (5,839,575) 15,582,162 At end of the year 18,359,680 24,199,256 Disclosed as Cash at bank 4,567,052 8,007,779 Short-term investments 13,792,628 16,191,476 18,359,680 24,199,255

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2013

1 Corporate Information First Mutual Holdings Limited (the Group) is a limited liability company incorporated and domiciled in Zimbabwe, whose shares are publicly traded on the Zimbabwe Stock Exchange. The principal activities of the company and its subsidiaries (the Group) are life assurance, general insurance, health insurance, reinsurance, property management and development and actuarial consultancy.

The Group has a 19.92% interest in Rainbow Tourism Group Limited, which is involved in the tourism and leisure industry.

The consolidated financial statements of the Group for the year ended 31 December 2013 were authorised for issue in accordance with a resolution of the directors at a meeting held on 21March 2014.

2 Statement of Compliance The consolidated financial statements of the Group have been prepared in accordance with

International Financial Reporting Standards (IFRS), the Zimbabwe Stock Exchange Act (Chapter 24:18) and the Companies Act (Chapter 24:03).

2.1 New and Amended Standards and Interpretations During the year several standards and amendments to standards became effective, most of them

with an effective date of 1 January 2013. Below is a discussion of the nature and impact of those standards or amendments that the Group considers to be relevant.

IFRS 10 Consolidated Financial Statements and IAS 27 Separate Financial Statements IFRS 10 establishes a single control model that applies to all entities including special purpose

entities. The changes introduced by IFRS 10 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 analyses performed, IFRS 10 did not have any impact on the currently held investments of the Group.

IFRS 12 Disclosure of Interests in Other Entities IFRS 12 sets out the requirements for disclosures relating to an entity’s interests in subsidiaries, joint

arrangements, associates and structured entities. The requirements in IFRS 12 are more comprehensive than the previously existing disclosure requirements for subsidiaries. For example, where a subsidiary is controlled with less than a majority of voting rights. The Group has no subsidiaries with material non-controlling interests and does not have unconsolidated structured entities. IFRS 12 disclosures where required have been disclosed in the notes to the financial statements.

IFRS 13 Fair Value Measurement IFRS 13 establishes a single source of guidance under IFRS for all fair value measurements. IFRS 13

does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under IFRS.

IFRS 13 defines fair value as an exit price. As a result of the guidance in IFRS 13, the Group

re-assessed its policies for measuring fair values, in particular, its valuation inputs such as non-performance risk for fair value measurement of liabilities. IFRS 13 also requires additional disclosures.

Application of IFRS 13 has not materially impacted the fair value measurements of the Group. Additional disclosures where required, are provided in the individual notes relating to the assets and liabilities whose fair values were determined.

IAS 1 Presentation of Items of Other Comprehensive Income – Amendments to IAS 1 The amendments to IAS 1 introduce a grouping of items presented in other comprehensive income.

Items that will be reclassified (‘recycled’) to profit or loss at a future point in time (e.g., net loss or gain on AFS financial assets) have to be presented separately from items that will not be reclassified (e.g., revaluation of land and buildings). The amendments affect presentation only and have no impact on the Group’s financial position or performance.

IAS 1 Clarification of the Requirement for Comparative Information (Amendment) These amendments clarify the difference between voluntary additional comparative information and

the minimum required comparative information. An entity must include comparative information in the related notes to the financial statements when it voluntarily provides comparative information beyond the minimum required comparative period.

The amendments clarify that the opening statement of financial position (as at 1 January 2012 in the case of the Group), presented as a result of retrospective restatement or reclassification of items in financial statements does not have to be accompanied by comparative information in the related notes. As a result, the Group has not included comparative information in respect of the opening statement of financial position as at 1 January 2012. The amendment will affect future periods if an opening statement of financial position is provided.

IAS 19 (Revised) Employee Benefits IAS 19 (Revised 2011) changes, amongst other things, the accounting for defined benefit plans.

Some of the key changes that are applicable to the Group include the following:

• Termination benefits will be recognised at the earlier of when the offer of termination cannot be withdrawn, or when the related restructuring costs are recognised under IAS 37 –Provisions, Contingent Liabilities and Contigent Assets.

• The distinction between short-term and other long-term employee benefits will be based on expected timing of settlement rather than the employee’s entitlement to the benefits.

None of the above changes affected the measurement of assets or liabilities of the Group.

3 Reporting Period and Currency The reporting period is 1 January 2013 to 31 December 2013. The financial statements are presented

in United States dollars being the functional and reporting currency of the primary economic environment in which the Group operates.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 DECEMBER 2013

Non Total Non Share Share distributable Retained equity for controlling Total capital premium reserves earnings parent interest equity US$ US$ US$ US$ US$ US$ US$ As at 31 December 2011 217,124 - 600,068 1,526,090 2,343,282 48,597,931 50,941,213 Issued share capital 163,077 8,469,330 - - 8,632,407 - 8,632,407 Share issue expenses - (511,412) - - (511,412) - (511,412)Acquisition of interest in subsidiary - - - 563,362 563,362 (797,373) (243,011)Policyholder gain on acquisition of Pearl shares - - - (4,361,333) (4,361,333) (2,817,423) (7,178,756)Dividend paid - - - - - (374,813) (374,813)Acquisition of non-controlling interest - - - 156,218 156,218 (1,054,852) (898,634)Other comprehensive loss - - (395,897) - (395,897) (219,358) (615,255)Profit for the year - - - 9,795,098 9,795,098 3,655,942 13,451,040 As at 31 December 2012 380,201 7,957,918 204,171 7,679,435 16,221,725 46,990,054 63,211,779 Transfer to solvency reserve - - 59,596 (59,596) - - - Other comprehensive income - - 2,059,473 - 2,059,473 2,036,683 4,096,156 Profit for the year - - - 1,627,429 1,627,429 4,351,020 5,978,449 As at 31 December 2013 380,201 7,957,918 2,323,240 9,247,268 19,908,627 53,377,757 73,286,384

OUTLOOK Increased business confidence and an improvement in the liquidity situation in the market are essential to ensure a stable operating environment, which will improve the economic recovery of the country.

Going forward the Group will improve risk management through enforcing the actuarial control cycle, active management of trade receivables and continuously reviewing the product portfolio to keep the products relevant and affordable. The Group will continue with its stringent risk assessment approach for money market investments with deposits being placed with stable banking counterparties and equity investments being made into entities that are considered resilient.

APPRECIATIONOn behalf of the Board, I would like to extend my gratitude to fellow Board members, the Regulators (Insurance and Pensions Commission, Securities and Exchange Commission of Zimbabwe, Zimbabwe Stock Exchange and the Reserve Bank of Zimbabwe), Clients, Partners and other Stakeholders for their role whilst interacting with the Group. In addition, my appreciation goes to all Group employees and subsidiary board members for their commitment in steering the Group during the past year.__________________________Oliver MtasaChairman

21 March 2014

Audited Abridged Financial StatementsFor the Year Ended 31 December 2013

First Mutual Park | 100 Borrowdale Road | Borrowdale | Harare | Zimbabwe | P.O. Box BW178 | Borrowdale | Harare | Zimbabwe

Tel: +263 4 886 000-17 | Fax: +263 4 886 041 | Email:info@firstmutualholdings.com | www.firstmutualholdings.com

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2013 31-Dec-13 31-Dec-12 ASSETS Note US$ US$ Intangible assets 460,733 653,237 Property, vehicles and equipment 5 12,059,640 21,468,596 Investment properties 6 115,562,001 93,315,999 Financial instruments - Available for sale investments 7.1 10,302 622,760 - Financial assets at fair value through profit and loss 7.2 25,563,655 16,332,557 Held to maturity investments 8 3,998,587 659,250 Investment in associate 9 7,014,047 6,811,351 Inventory 10 1,494,812 323,118 Deferred acquisition costs 786,322 582,773 Tax asset 665,718 - Insurance receivables 11 7,542,502 6,795,081 Rental receivables 12 720,002 321,824 Other receivables 13 10,973,347 4,217,271 Cash and cash equivalents 14 18,359,680 24,199,255 TOTAL ASSETS 205,211,348 176,303,072

EQUITY AND LIABILITIES Equity attributable to equity holders of the parent Share capital 380,201 380,201 Share premium 7,957,918 7,957,918 Non-distributable reserves 2,323,240 204,171 Retained profit 9,247,268 7,679,435 Total ordinary shareholders' equity 19,908,627 16,221,725

Non-controlling interests 53,377,757 46,990,055

Long term liabilities Policyholders' funds 15 83,969,506 71,083,634 Shareholder risk reserves 16 8,806,663 4,373,604 Deferred tax liability 15,012,542 11,555,600 Borrowings 538,776 - 108,327,487 87,012,838 Current Liabilities Income tax liability 226,713 1,383,709 Trade and other payables 17 13,579,950 15,710,936 Unearned premium reserve 4,191,181 3,202,918 Insurance payables 18 5,599,633 5,780,891 23,597,477 26,078,454 Total Liabilities 131,924,964 113,091,292 TOTAL EQUITY & LIABILITIES 205,211,348 176,303,072

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEFOR THE YEAR ENDED 31 DECEMBER 2013 Note 31-Dec-13 31-Dec-12 US$ US$ INCOME Gross premium 101,100,981 88,598,583 Retrocessions (10,610,371) (13,597,621)Net premium income 19 90,490,610 75,000,962 Movement in unearned premium reserve (1,056,221) (573,543)Net premium earned 89,434,389 74,427,419 Rental income 7,778,465 7,295,560 Fair value gains – investment property 8,096,037 7,672,536 Investment income 20 6,389,182 2,335,493 Other income 21 1,316,763 929,349 Total income 113,014,836 92,660,357 EXPENDITURE Claims 22 (49,790,515) (37,562,936)Commissions (6,359,782) (4,612,093)Change in policyholder funds 15 (12,885,872) (14,068,389)Change in shareholder risk reserves 16 (4,433,059) 12,391,063 Expenses of management (26,635,464) (25,944,251)Acquisition expenses (1,797,058) (1,558,175)Property expenses (1,685,361) (2,009,890)Finance costs (71,460) - Total Expenditure (103,658,571) (73,364,671) Profit before share of profit/(loss) of associate 9,356,265 19,295,686 Share of profit/(loss) of associate 202,696 (1,329,526) Profit before taxation 23 9,558,961 17,966,160 Taxation charge (3,580,512) (4,515,120)Profit for the year 5,978,449 13,451,040

Other comprehensive income/(losses) Available for sale reserve reclassified to profit or loss - (205,114)Exchange differences on translating foreign operations (223,742) (105,119)Fair value gain/(loss) – available for sale investments 3,384 (310,607)Revaluation of land and buildings 5,813,533 - Deferred tax effect (1,497,019) 5,585 4,096,156 (615,255)

Total comprehensive income for the year, net of tax 10,074,605 12,835,785

Profit attributable to: Equity holders of the parent 1,627,429 9,795,098 Non-controlling interest 4,351,020 3,655,942 Profit for the year 5,978,449 13,451,040

Comprehensive income attributable to: Equity holders of the parent 3,686,902 9,399,201 Non-controlling interest 6,387,703 3,436,584 Total comprehensive income for the year 10,074,605 12,835,785

Basic earnings/(loss) per share (US cents) 0.43 4.43 Diluted earnings/(loss) per share (US cents) 0.43 4.43 Weighted average number of shares in issue – basic 380,200,758 221,115,164 – diluted 380,200,758 221,115,164

25 Commitments and contingent liabilities

25.1 Commitments

25.1.1 Authorised but not contracted for:

There were no commitments authorised but not contracted for as at year end.

25.1.2 Authorised and contracted for:

The Group, through its subsidiary, Pearl Properties (2006) Limited is committed to utilising funds raised at the Initial Public Offer for the construction of the Kamfinsa Cluster Housing Development. The funds that are still to be utilised in respect of this commitment amount to $415,460 (2012: $622,760).

26 Events after the reporting date

26.1 Licences The Group received regulatory approval, subsequent to year end, to merge the two reinsurance businesses operating from Zimbabwe, under a

composite licence. The synergies to be realised from such an arrangement will lead to a stronger balance sheet that can attract more business from both local and regional insurance operations.

Subsequent to year end, the Group was granted a licence to operate an asset management company.

26.2 Acquisition of land The Group through Pearl Properties (2006) Limited acquired on the 9th of January 2014 land measuring 24.0664 hectares being the remainder of Lot

57 of Mount Pleasant, situated in the District of Salisbury Deed of transfer number 3251/88 at a cost of $9.6 million excluding transfer fees. The acquisition was funded through a combination of internal cash flows and a five (5) year loan secured from a local financial institution. Transfer fees and rate charges of $0.519 million were funded from internal cash flows.

The acquisition costs of the land are broken down as follows:

Date Source of Funds US$ 30-Dec-13 Internal Cash flows 4,100,000 9-Jan-14 External Borrowing 5,500,000 Total Acquisition Price 9,600,000 Transfer fees [Including Rates] Internal Cash flows 519,246 Total Cost 10,119,246

The $4,100,000 from internal cash flows paid on the 30th of December 2013 was accounted for under prepayments [see Note 13]

The loan facility sourced from a local financial institution will be administered under the following terms;

Facility Amount US$5,500,000.00

Tenure 5 Years

Security Immovable property, title 0004163/2007, being Stand 18259 Harare Township of Stand 14908 Salisbury Township called First Mutual Park in the name of First Mutual Park (Private) Limited registered and stamped to cover $6,500,000.00

Interest Rate Base Rate minus 3% p.a. [Base Rate at drawdown – 13% p.a.]

Fees Commitment fee of 1.00% Arrangement fee of 1.00% Management fee 0.5% p.a.

DIRECTORS: O Mtasa (Chairman), M S Manyumwa (Deputy Chairman), J M Chikura, Dr C U Hokonya, D Hoto*, T Khumalo, W M Marere*, J M Matiza, E K Moyo, I P Z Ndlovu (* Executive Directors)

24 SEGMENTAL RESULTS AND ANALYSIS

Short Property Gross Consolidation Total Life term Medical & Other Figures Entries Consolidated US$ US$ US$ US$ US$ US$ US$As at 31 December 2013Net premium earned 29,769,884 17,060,573 42,877,789 - 89,708,246 (273,857) 89,434,389

Rental income - - - 9,012,479 9,012,479 (1,234,014) 7,778,465

Investment income 8,740,896 (177,311) 531,016 6,089,665 15,184,266 (699,047) 14,485,219

Other income 183,565 164,545 232,971 10,871,354 11,452,435 (10,135,672) 1,316,763

Total Income 38,694,345 17,047,807 43,641,776 25,973,498 125,357,426 (12,342,590) 113,014,836 Total expenses (21,988,420) (16,962,507) (41,753,923) (10,296,374) (91,001,224) (12,657,347) (103,658,571)Non current assets 95,483,870 4,505,255 2,137,324 147,302,111 249,428,561 (84,088,285) 165,340,276

Current assets 12,225,794 15,789,687 7,874,881 12,568,198 48,458,560 (8,587,486) 39,871,073

Non current liabilities 93,275,501 208,729 - 15,982,901 109,467,131 (1,139,644) 108,327,487

Current liabilities 4,166,883 10,979,950 9,033,597 7,126,967 31,307,397 (7,709,920) 23,597,477

Cashflows from operating activities 5,519,141 (968,185) 2,144,264 (589,497) 6,105,723 (2,324,172) 3,781,551

Cashflows utilised on investing activities (7,727,940) (440,833) 67,374 (1,154,396) (9,255,795) (904,107) (10,159,902)Cash utilised in financing activities - - - (417,331) (417,331) 956,107 538,776

As at 31 December 2012

Net premium earned 23,997,039 14,422,150 36,256,796 - 74,675,985 (248,566) 74,427,419

Rental income - - - 8,830,138 8,830,138 (1,534,578) 7,295,560

Investment income 2,304,484 (384,393) (487,387) 35,520,325 36,953,029 (26,945,000) 10,008,029 Other income 189,737 331,648 118,998 6,001,228 6,641,611 (5,712,262) 929,349

Total Income 26,491,260 14,369,405 35,888,407 50,351,691 127,100,763 (34,440,406) 92,660,357

Total expenses (16,078,501) (15,348,445) (33,800,860) (12,598,449) (77,826,255) 4,461,584 (73,364,671)Non current assets 86,306,936 4,781,544 2,051,402 139,011,583 234,151,465 (91,704,942) 142,446,523

Current assets 15,588,963 15,607,956 5,820,227 8,380,730 45,397,876 (9,541,327) 35,856,549

Non current liabilities 79,882,488 78,619 (1,281,777) 13,654,864 92,334,194 (5,321,356) 87,012,838 Current liabilities 5,473,139 11,242,060 8,045,335 9,785,411 34,545,945 (8,467,491) 26,078,454

Cash flows from operating activities 3,213,459 (1,614,919) 2,144,263 (10,097,643) (6,354,840) 17,510,569 11,155,728

Cash flows utilised on investing activities (3,047,685) 4,207,047 (6,145,389) (3,576,046) (8,562,073) 6,374,970 (2,187,103)Cash utilised in financing activities 1,486,368 3,330,417 - 8,149,131 12,965,916 (6,352,379) 6,613,537

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)AS AT 31 DECEMBER 2013

4 Audit opinion The Group external auditors, Ernst & Young Chartered Accountants Zimbabwe have expressed an unqualified opinion on the Group’s financial statements.

The signed Annual Report is available for inspection at the company’s registered office.

5 Property, vehicles and equipment

Office Motor Office Land & Equipment Vehicles Furniture Buildings Total US$ US$ US$ US$ US$Cost At 1 January 2012 1,702,969 3,591,099 539,353 18,874,896 24,708,317 Additions 448,318 1,887,330 16,469 27,436 2,379,553 Disposals (111,423) (933,634) (50,343) - (1,095,400)Impairment losses - (2,696) - - (2,696)At 31 December 2012 2,039,864 4,542,099 505,479 18,902,332 25,989,774 Additions 166,033 904,300 58,382 64,350 1,193,065 Disposals (11,911) (621,092) (6,139) (320,001) (959,143)Revaluation - - - 5,126,823 5,126,823 Transfer to property investments - - - (14,400,000) (14,400,000)At 31 December 2013 2,193,986 4,825,307 557,722 9,373,504 16,950,519 Accumulated depreciation At 1 January 2012 554,734 1,617,513 227,277 1,104,550 3,504,074 Charge for the year 29,107 774,724 53,395 215,631 1,372,857 Depreciation on disposals (6,260) (348,603) (890) - (355,753)At 31 December 2012 877,581 2,043,634 279,782 1,320,181 4,521,178 Charge for the year 375,293 850,715 60,814 313,227 1,600,049 Depreciation on disposals (6,685) (508,857) (2,495) (25,600) (543,637) (686,710) (686,710)At 31 December 2013 1,246,189 2,385,492 338,101 921,098 4,890,880 Carrying amount At 31 December 2012 1,162,283 2,498,465 225,697 17,582,151 21,468,596

At 31 December 2013 947,797 2,439,815 219,621 8,452,406 12,059,640

6 Investment properties 31-Dec-13 31-Dec-12 US$ US$

Balance at 1 January 93,315,999 84,137,515 Reclassifications from/(to) property, plant and equipment 14,400,000 - Improvements to existing properties 229,965 1,505,948 Reclassification to inventory (480,000) - Fair value gains/(losses) 8,096,037 7,672,536 Balance at 31 December 115,562,001 93,315,999

7.1 Available-for-sale investments At 1 January 622,760 1,181,283 Purchases - - Disposals (615,842) (247,916) Fair value gains/(losses) 3,384 (310,607) Total available-for-sale investments at fair value 10,302 622,760 7.2 Financial assets at fair value through profit and loss Fair value At 1 January 16,332,557 15,147,043 Purchases 12,241,941 8,721,027 Disposals (6,185,374) (5,166,063) Fair value gains/loss 3,174,531 (2,369,450) Total financial assets at fair value through profit or loss 25,563,655 16,332,557

8 Held to maturity investments At 1 January 659,250 - Purchases 4,250,000 659,250 Redemptions (910,663) - 3,998,587 659,250

9 Investment in associate The investments in RTG Limited is as follows: Carrying amount as at 1 January 6,811,351 8,140,877 Share of associate profit/(loss) for the year 202,696 (1,329,526) Carrying amount of investment in associate 7,014,047 6,811,351

10 Inventory Property held for trading 140,150 140,150 Work-in-progress Kamfinsa Cluster Houses 1,152,034 - Capitalised project cost 672,034 - Transfer from investment properties 480,000 - Consumables 202,628 182,968 1,494,812 323,118

11 Insurance receivables Due from policyholders 8,090,337 6,932,961 Due from agents, brokers and intermediaries 363,787 115,141 8,454,124 7,048,102 Provision for credit losses (911,622) (253,021) 7,542,502 6,795,081 12 Rental receivables Rental receivables 1,706,928 1,087,601 Provision for credit losses (986,926) (765,777) 720,002 321,824

13 Other receivables Sundry debtors 3,724,476 1,959,330 Staff debtors 1,400,681 1,134,003 Trust Bank balance reclassified to other receivables 207,399 - Tenant costs recoveries 517,074 975,000 5,849,630 4,068,333 Provision for credit losses – Trust Bank balance (207,399) - Receivables excluding prepayments 5,642,231 4,068,333 Prepayments: Prepayments – land 4,100,000 - Prepayments – other 1,231,116 148,938 Total other receivables 10,973,347 4,217,271

14 Cash and cash equivalents Money market investments 13,792,628 16,191,476 Cash at bank and on hand 4,567,052 8,007,779 18,359,680 24,199,255

15 Policyholders’ Funds31- Dec-13 Balance at 1 January 71,083,634 57,015,245 Policyholder gain on acquisition of Pearl - 7,178,756 Transfer from statement of comprehensive income 12,885,872 6,889,633 Balance at 31 December 83,969,506 71,083,634 16 Shareholder risk reserve Balance at 1 January 4,373,604 16,764,667 Change in shareholder risk reserves 4,433,059 (12,391,063) Balance at 31 December 8,806,663 4,373,604 17 Trade and other payables Trade payables 7,551,788 7,845,640 Payroll and statutory deductions 914,034 1,004,379 Commissions 300,007 227,204 Medical Saving Fund - savings pot 3,842,994 3,613,599 Other 971,127 3,020,114 13,579,950 15,710,936 18 Insurance payables Outstanding claims 2,531,505 3,918,946 Losses incurred but not reported 3,068,128 1,861,945 5,599,633 5,780,891 19 Premium income Life assurance 12,994,528 10,182,781 Medical savings fund 43,847,781 37,690,195 Employee benefits 15,772,235 12,602,544 Short-term insurance 6,651,766 8,986,667 Reinsurance 21,834,671 19,136,396 Gross premium 101,100,981 88,598,583 Less: Reinsurance ceded (10,610,371) (13,597,621) Net premiums 90,490,610 75,000,962

31- Dec-13 31- Dec- 12 US$ US$

20 Investment income Interest income 2,358,323 2,211,873 Net gains on disposal of investments 856,328 2,287,956 Transfer from reserves on disposal of investments - 205,114 Fair value gain/(loss) - equities 3,174,531 (2,369,450) 6,389,182 2,335,493

21 Other income Tenant interest 199,950 159,307 Dividend received 232,510 230,530 Profit on disposal of fixed assets 89,080 47,021 Actuarial income 140,820 46,084 Fee income 654,403 446,407 1,316,763 929,349 22 Claims Medical business 34,452,944 24,510,237 Individual life 5,145,957 3,344,555 Employee benefits 3,524,583 2,277,085 Surrenders/withdrawals - 797,358 Short-term insurance 1,634,712 4,690,137 Reinsurance business 6,656,150 3,826,331 51,414,346 39,445,703 Less: Reinsurance recoveries (1,623,831) (1,882,767) Net claims 49,790,515 37,562,936 23 Profit before tax is shown after charging: Depreciation 1,600,049 1,372,857 Audit fees 334,115 518,878

Audited Abridged Financial StatementsFor the Year Ended 31 December 2013

First Mutual Park | 100 Borrowdale Road | Borrowdale | Harare | Zimbabwe | P.O. Box BW178 | Borrowdale | Harare | Zimbabwe

Tel: +263 4 886 000-17 | Fax: +263 4 886 041 | Email:info@firstmutualholdings.com | www.firstmutualholdings.com

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