nicozdiamond insurance company 2014 annual report

Corporate InformationAUDITORS

Ernst & Young Chartered Accountants ( Zimbabwe)

Angwa City

Cnr Julius Nyerere/Kwame Nkrumah Avenue

P.O Box 62, Harare

LEGAL PRACTITIONERS

Dube, Manikai & Hwacha

Commercial Law Chambers

6th Floor, Goldbridge Eastgate Complex

Sam Nujoma Street, Harare

BANKERS

Stanbic Bank

7th Floor

Stanbic Centre

59 Samora Machel Avenue, Harare

First Banking Corporation

5th Floor

FBC Centre

45 Nelson Mandela Avenue, Harare

SHARE TRANSFER SECRETARIES

ZB Transfer Secretaries (Pvt) Ltd

Ground Floor, ZB Centre

59 Kwame Nkrumah Avenue

P O Box 2540, Harare

Contents

Page

Corporate Values 2

Product Overview 3 - 4

Distribution 5

Corporate Social Responsibility 6 - 7

Corporate Governance 8 - 11

Directorate 12 - 14

Management 15

Chairman’s Statement 17 - 19

Managing Director’s Report 20 - 22

Report of the Directors 23 - 25

Independent Auditors’ Report 26

Financial Statements 27 - 94

Analysis of Shareholders 95

Notices to Shareholders 96 - 98

Proxy Form 99

2 0 1 4 A n n u a l R e p o r tN I C O Z D I A M O N D

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2 0 1 4 A n n u a l R e p o r t2 0 1 4 A n n u a l R e p o r t N I C O Z D I A M O N DN I C O Z D I A M O N D

Insurance Centre, 30 Samora Machel Avenue, P.O. Box 1256, Harare, Zimbabwe. Tel: 704911/4, 251008 Fax: 700083, 704143

facebook.com/nicozdiamond

Professionalism - To be a trustworthy, competent, respectful,

considerate and acting with integrity

Accountability - Have authority, responsibility, ownership, and meet

stakeholders expectations and transparency

Teamwork - Have shared purpose to achieve common goals

Innovation - Doing something differently, adding value and being cost

effective, continuous improvement and new ideas

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

superior quality.

To be a highly visible and preferred provider of innovative risk

solutions in our chosen markets.

To provide superior risk solutions underpinned by a highly competent,

innovative and dedicated team for the benefit of all stakeholders.

Our Vision

Our Mission

Our Values

Corporate Values

2


Product Overview

NICOZDIAMOND offers a wide range of short term insurance covers under

the following classes of business as follows:

Personal Insurance

• Homeowners–coveringtheprivatedwellingandalloutbuildings,

pool pumps, gates and walls

• Householderinsurance–movablescoveringcontentsoftheprivate

dwelling house

• Motorvehicleinsuranceformotorvehicleswithacarryingcapacity

of up to 2 tons, used for private purposes

• All Risks Insurance offering worldwide cover for specified

valuable items such as jewellery, cameras, mobile phones sporting

equipment, cycles. Spectacles and laptops which are normally

carried on the person

Business Combined Insurance

This policy caters for the specific needs of the small to medium sized

commercial and industrial business types.

Thepoliciesaretailor-madetosuitthespecificrequirementsofthebusiness.

Thereisawiderangeofproductsthatareavailabletocoverthesesizesof

business as well as the larger corporates.

Commercial Insurance- Assets Policy

This policy caters for the varying needs of Corporate-type businesses.

Underwritten on an Asset based policy wording incorporating buildings,

office contents, stock in trade etc. against fire, consequential loss and

most types of crime related risks such as burglary and theft of money, and

accidental damage type of risks.

The broader classes listed below are further split into numerous insurance

products providing cover against most insurable risks. As the scope of

insurance is so broad, those covers which have broad similarities are

grouped together. The different types of insurance covers would include;

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Policy type Cover provided

Fireandalliedperils lossordamagetobuildings,contentsandstock-in-tradecausedbyfireandalliedperilsexplosions,

earthquakes, aircraft, non- political riots and malicious damage

Consequentialloss lossofgrossprofitasaresultofreductioninturnoverfollowinglosscoveredunderthefirepolicy

Accountsreceivable Onoutstandingdebitbalanceswhichcannotbetracedfollowingalossbyfire

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

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

Glass Breakageofexternalandinternalfixedglass

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

Businessallrisks Worldwidecoverforspecifiedsmallvaluableitems

Accidental damage Accidental damage to property at premises

Motor Insurance - Private and light delivery vehicles, commercial trucks and special type cars, cycles busses and trailers against

passenger liability own including third party and damage and liability to third parties

Engineering Insurance Machinery breakdown and resultant deterioration of stock, plant and erection all risks, contactors all risks

and resultant liabilities

Marine and Aviation Insurance Damage to hull and liability to passengers carried therein Loss or damage to cargo

Fidelity Guarantee Loss due to dishonesty or fraud by employees

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

GolfersInsurance policycoversrisksassociatedwithgolfingtobothamateursandprofessionalsalike

Travel Insurance Traveling emergencies such as: Emergency medical expenses, journey cancellations, loss of luggage.

Liabilities–General,Employers. Legalliabilitytothirdpartiesandtoemployeesfordeathorinjuryresultinginincapacitationorprofessional

PropertyOwners,Tenants, negligenceresultinginfinancialloss

Professional and directors

andofficers

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

Product Overview(continued)

4

NicozDiamond Schemes

ChristianSure

A unique scheme for the Christian community where the company reimburses

10% of the premium paid to assist with church projects.

StaffSure

A packaged product offering for staff with premiums being paid through a

stop order deduction facility

Chengeto House Owners Scheme

House Owners insurance especially designed for the low income dwellers in

the high density suburbs offering affordable premiums and payments plans.

SME packages

Specialinsuranceplansforthesmalltomediumsizedenterprises


First Insurance Company Limited (FICO) - Uganda

ThisUgandanfirmisaNICOZDIAMONDsubsidiarywherethecompany

also has a management and technical services agreement. The results of

the Company are consolidated into the group results.

United General Insurance Company Limited (UGI) - Malawi

NICOZDIAMOND has a management and technical services contract

with the company. The company is the second largest short-term

insurance company in Malawi. NICOZDIAMOND acquired a 49% stake

in the company in January 2015.

Diamond Seguros - Mozambique

NICOZDIAMOND has a shareholding and a management contract in

this newly established entity which commenced trading in March 2014.

The results are included under associates.

Diamond General Insurance Limited (formerly Cavmont) - Zambia

NICOZDIAMOND has a shareholding and management contract in this

company which is a fast growing and recognised brand in the Zambian

market. The investment is equity accounted for.

Distribution

NICOZDIAMONDhaspresenceinthefollowingmarkets:Zimbabwe,Uganda,Zambia,MozambiqueandMalawi.

BRANCH NETWORK

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

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

CHINHOYI263 Commercial StreetP.O. Box 305Tel: (067) 22186, 22269Fax: (067) 22062

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

MASVINGO1st Floor ZIMRE BuildingHughes St.P.O. Box 306Tel: (039) 263929, 263937Fax: (039) 263937

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NicozDiamond has for many years been deeply committed

to Corporate Social responsibility by reaching out to the less

privileged. The Company is extremely proud of the societal impact

of its CSR programmewhich has provided financial andmoral

support to the communities in which it operates. The company

has made various donations to schools in rural areas, children’s

and old peoples’ homes, Universities and female prisoners in

manyProvincesoftheCountry.NicozDiamond’scommitmentto

making a positive contribution in the communities it serves helps

inspire trust in the company’s brand, develop strong relationships

with stakeholders, and create long-term value for society and its

business.

The company’s main projects for 2014 which include the Youth

Mentorship Programme, support for Cancer Survivors and

disabled school pupils are consistent with its commitment to

resolving the most pervasive issues of our time. The relationships

andpartnershipsNicozDiamondisbuildingthroughitsCorporate

Social Responsibility projects and fundraising dinners multiply

efforts to make the world a better place.

NicozDiamondhelditsAnnualCharityWinterBallunderthetheme

“Touching lives, moving hearts on 25th July at Rainbow Towers

Hotel and raised in excess of $60,000 for its CSR programme. The

generosity of the company’s various stakeholders has provided

the financial and moral backing needed to continue its social

responsibility mission. With their faithful contributions over the

years, they have demonstrated their profound commitment to the

initiatives.

Corporate Social Responsibility

Donations handed over to Mucheke Old People’s Home

Ranga Verenga handing over donation of Garden tools and food stuffs to Entembeni Old people’s home

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Moving HeartsTouching Lives,


Corporate Social Responsibility(continued)

The following Homes and Organizations benefited from the 2014

CSR programme through donation of various needs such as Cash ,

Laptops , Garden tools, stoves, refrigerators, generators, beds, bed

linen, food stuffs, furniture, clothing items and building materials.

• Youthmentorshipprogramme

• CancerAwarenessSurvivorsTrust

• HenryMurraySchoolfortheDeaf

• EntembeniOldPeople’sHome

• MuchekeOldPeople’sHome

• GoodShepherdHome

• FairfieldOrphanage

• MidlandsChildren’sHome

• TagwiraPrimarySchool

• BumhudzoOldpeople’sHome

• TariroYouthProject

Getting CSR right is a journey not a destination. NDI prides itself in

being a leader in developing means for long lasting and positive social

change.

Faith Mariwi, Gweru Branch Manager handing over donation of school shoes to Midlands Children’s Home.

NicozDiamond Team enjoying lunch with Midlands children’s home after handing over donation.

Concilia Musarara and Godwishes Chiheya handing over computers to Students of Henry Murray School for the deaf

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Corporate Governance

OVERVIEW OF SYSTEM OF GOVERNANCE

NICOZDIAMOND and its associated companies is committed to good

corporate governance and is guided the King reports. It is committed

to the principles of transparency, accountability, fairness and integrity in

all its dealings. Directors and management are required to observe the

highest ethical standards, ensuring the business practices are conducted

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

The company values ethical behavior and reaffirms its commitment to

corporate governance principles by complying with all applicable legislation,

regulations and relevant International Financial Reporting Standards.

The system of corporate governance in place ensures that Directors and

management to whom the running of the company has been entrusted by

shareholders, carry out their responsibilities faithfully and effectively, placing

the interests of the company ahead of their own. This process is facilitated

through the establishment of appropriate reporting and control structures

as detailed below;

BUSINESS ETHICS

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

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

dealing, honesty and integrity in the conduct of its business. The Code of

Ethics has been reviewed and approved by the board, communicated and

distributed to all employees across all levels in the company. Any incidences

of unethical practice are reported to the Internal Audit department through

an anonymous platform. The company also started subscribing to Delloite

Tip Offs Anonymous in 2015.

BOARD & MANAGEMENT ETHICS

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

Management to lead by example in observing personal ethical practices.

As such, all Directors and key management are required to declare interests

which might be deemed in conflict with their appointment or contract with

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

year by any third party in which any director or key management had an

interest.

RELATED PARTY TRANSACTIONS

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

management have confirmed that, to the best of their knowledge, the

informationdisclosed in the company’s annual financial statements fairly

representstheirshareholdinginthecompany,bothbeneficialandindirect,

interest in share options of the company and the compensation earned

fromthecompanyforthefinancialyear.Inaddition,thedirectorsandkey

managementhaveconfirmedthatallinterestshavebeendeclared

INSIDER TRADING

Nodirector,officeroremployeemaydealeitherdirectlyorindirectlyinthe

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

regardingitsbusinessoraffairs.Inaddition,nodirector,officeroremployee

may trade in the company’s shares during closed periods. Closed periods

are from the end of the interim and annual reporting periods to the

announcementoffinancialandoperatingresultsfortherespectiveperiods,

and while the company is under a cautionary announcement.

MECHANISMS FOR COMMUNICATION WITH STAKEHOLDERS

The company has a formal platform for engaging and communicating with

stakeholders. The systems include formal meetings with investors, annual

general meeting, press announcements on interim and year-end results,

analyst and media presentations, company website and annual reporting

to shareholders.

ENTERPRISE RISK MANAGEMENT

The company has fully embraced Enterprise risk management and has put

in place an enterprise risk management policy that is supported by the

Board through the Audit and Risk management committee. There is an

executive risk management committee that is tasked with implementation

of the policy and reports to the Audit and Risk management committee on

a quarterly basis.

The company management has designed and implemented a risk

management framework and has committed the company to a process of

risk management that is aligned to King III and to the company’s corporate

governance responsibilities. This commitment is reflected in management’s

continued attention to the importance of effective risk management in

ensuring that business objectives and strategies are met and that continued,

sustained growth and profitability is achieved. The framework, which

incorporates the risk management policy, strategy and plan, aims to ensure

that risk management processes are embedded in critical business activities

and functions, and that risks are undertaken in an informed manner and

pro-actively managed in accordance with the business risk appetite.

This includes identifying and taking advantage of opportunities as well

as mitigating adverse impacts of risk. The approach to risk management

includes being able to identify, describe and analyze risks at all levels

throughout the organisation, with mitigating actions being implemented

at theappropriatepointof activity. The very significant,high impact risk

areas and the related mitigating action plans are monitored at executive

level. Risks and mitigating actions are given relevant visibility at various

appropriate forums throughout the organisation.

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Corporate Governance(continued)

The company has documented its approach towards Information and

Communication Technology (ICT) in the ICT Information Security Policy.

The document covers all policies relating to ICT and guides staff on usage

of the company ICT facilities. The document also covers physical and

environmental security, communications and operations as well as access

control. The Company also has a Disaster recovery plan which contains

appropriate business continuity plans and identified resources that will

ensure the implementation of recovery procedures, if a disaster occurs.

ACCOUNTABILITY AND INTERNAL CONTROL

The directors are required by the Companies Act to maintain records and

preparefinancialstatements,whichfairlypresentthestateofaffairsofthe

companyasattheendofthefinancialyearandtheresultsofitsoperations

for that year, in conformity with International Financial Reporting Standards.

The financial statements are the responsibility of the directors and it is

the responsibility of the independent external auditors to report thereon.

Systems of internal control are implemented to reduce the risk of error,

loss or failure to achieve corporate objectives in a cost effective manner.

These controls include the proper delegation of responsibilities within a

clearlydefinedframeworkofprudentandeffectiveaccountingprocedures

and adequate segregation of duties. They are monitored throughout the

company and all employees are required to maintain the highest ethical

standards in ensuring that the company’s business practices are conducted

in an appropriate manner, which is above reproach.

The company’s internal audit function operates independently in all operations

to appraise and evaluate the effectiveness of the operational activities and

the attendant business risks. Where necessary, recommendations are made

for improvements in the systems of internal control and accounting practice

based on internal audit plans and reports which take cognisance of relative

degrees of risk of each function or aspect of business.

BOARD OF DIRECTORS

The Board rules and procedures are governed by a Board Charter. The roles

of the Chairman and the Managing Director are separately held and are

definedsoastoensureacleardivisionofresponsibility.Boardmeetingsare

held on a quarterly basis and at such other times as are necessary under the

chairmanship of a non-executive Director.

All the Directors have unrestricted access to the advice and services of the

Company Secretary. The Board of Directors has overall responsibility for

the company’s systems of internal control. These systems are designed

to provide reasonable assurance of the safeguarding of assets and the

reliabilityoffinancialinformation.

Board Composition

The Board has a unitary board structure, which at 10 March 2015 comprised

seven non-executives and one executive director, drawn from a broad

spectrum of the business community. Of the seven Non-Executive Directors,

fourare independent.Of theeightDirectors, threeare femalewhilefive

are male.

In accordance with the company’s articles of association, directors are

required to retire by rotation at intervals of three years. Directors retiring by

rotation who avail themselves may be re-elected at the AGM at which they

retire.NewdirectorsmayonlyholdofficeuntilthenextAGM,atwhichthey

will be required to retire and offer themselves for election.

Board Expertise

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

experience, and bring independent judgment to board deliberations and

decisions, with no one individual or group having unfettered powers of

decision-making. Board members possess skills that include Insurance

Legal, Regulatory and compliance, Accounting and Financial Management,

Investments, Audit, Risk management and Human Resources Management.

The main responsibility of the Board is to support good corporate

governance, strategy formulation and guide policy implementation. Board

members are allocated to serve on committees of the Board in their areas

of strategic strength and expertise. During the year, no changes were made

to the Board structure.

Board Induction

On appointment, new directors have the benefit of induction activities

aimed at broadening their understanding of the company and markets

within which it operates. The Company Secretary ensures that directors

receive accurate, timely and clear information.

Board Evaluation

With effect from 2013, the Board implemented a formal self-evaluation

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

the Board. This process will now be conducted annually, and will become

an integral element of the board’s activities to review and improve its

performance continually.

Board Committee Structures and Responsibility

The committees of the Board review matters on behalf of the Board and

make recommendations for consideration by the Board .The power, duties

and responsibilities of the committee are governed by their respective

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Charters as approved by the Board and they work closely with key management in discharging their duties.

The committees are the Audit & Risk Management Committee, Nominations Committee, Executive Remuneration Committee, Investments Committee and

the Manpower Committee. In 2014 there was an Adhoc ICT Board committee commissioned to oversee a system replacement project.

The committee composition and key roles are tabulated below;

Committee Composition Roles and Responsibilities

Audit & Risk Management Mrs. RP Kupara (Chair) The Audit and Risk Management Committee monitors internal control policies and

(Meets once a quarter) (3 non-Executive Directors procedures designed to safeguard company assets and to maintain the integrity

andManagingDirector) offinancialreporting.AmongthespecificresponsibilitiessetoutinitsCharter,

the Audit and Risk management Committee reviews all published accounts of the

company; reviews the scope and the independence of the internal and external

audits; monitors and assesses the systems for internal compliance and control and

advises on the appointment, performance and remuneration of external auditors.

Investments

(Meetsonceaquarter) Mr.JKaridza(Chair) ThecommitteeisresponsiblefortheformulationoftheInvestmentPolicyofthe

(3 non-Executive Directors company and reviewing investment strategy for compliance with such policy.

and Managing Director)

Manpower Committee

(Meetsonceaquarter) Mrs.TCMazingi(Chair) Thecommitteeisresponsibleforthecompany’sHumanResourcesPolicyissues

(2 non-Executive Directors and terms and conditions of service. The company continues to subscribe

and Managing Director) to a compensation philosophy, which ensures that it attracts and retains skilled

personnel. Staff compensation levels and manpower development proposals made

by the committee are presented to the Board for approval.

Executive Remuneration

(Meets as and when required Mr. Albert Nduna (Chair) The committee is responsible for ensuring that senior executives are competitively

butatleastonceayear) (3non-ExecutiveDirectors) remuneratedlinewiththeircontributiontothecompany’soperatingandfinancial

performance, at levels which take into account industry and market bench marks as

well as affordability and sustainability.

Nominations

(Meets as and when required

but at least once a year) Mr. Albert Nduna (Chair) The committee has a role of identifying and making recommendations to the Board

(3 non-Executive Directors) on the appointment of any executive and non-executive Directors. The committee

also reviews and evaluates the performance and effectiveness of the Board

ICT Board committee

(Adhoc) Mr. Paul Brien (Chair) The committee was established to assist the Board with oversight on the

(3 non-Executive Directors System replacement project

and Managing Director)

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BOARD AND EXECUTIVE MANAGEMENT REMUNERATION

Executive Remuneration

The remuneration of senior management is determined by taking into

consideration market comparisons and an assessment of performance

related to the achievement of documented measurable performance

targets. Strategic and business objectives, which are reviewed periodically,

as well as a general assessment of performance, are taken into account. The

remuneration structure at senior management level consists of guaranteed

pay, variable pay in the form of performance and bonus scheme and long

term incentives in the form of employee share option scheme.

Basic Salary

The basic salaries of executive management are subject to annual review

by the Executive remuneration committee and the Board and are set with

reference to relevant external market data as well as the assessment of

individual performance. All salary reviews of executive management are

approved by the executive remuneration committee.

Incentive Bonus Scheme

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

where bonus parameters are set in relation to the achievement of company

objectives per the Balanced Scorecard for the year.

Share Option Scheme

The objective of the share incentive schemes is to strengthen the alignment

of shareholder and employees’ interests. Under the share option scheme, all

permanent employees of the company are awarded share options based

on their grade in the organisation, their individual performance in the year

and the years served in the organisation. The allocation criterion is applied

equally across both management and staff and all permanent staff who

have been with the company for at least one year at the time of granting

are eligible per the scheme rules.

Non-Executive Directors’ Remuneration

Non-executive directors receive fees for their services as directors on the

companyBoardandBoard committees,on thebasisof afixedquarterly

retainer fee and a sitting fee. Directors’ fees are recommended by the

Remuneration committee taking into considering market data, considered

by the Board, and proposed to the shareholders for approval at each AGM. 11

Standing from left : Bruce Campbell, Barnabas Matongera, Albert Joel Nduna (Chairman), James Karidza, Paul Brien

Sitting from left : Rachel Pfungwa Kupara, Grace Muradzikwa (Managing Director), Thembiwe Chikosi Mazingi (Deputy Chairperson)

Directorate


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Directorate(continued)

Director Profiles

Albert Joel Nduna – Non Executive Chairman

B.Acc. (University of Lancaster), MBA (Bradford University)

Albert holds a degree in Accounting and Finance from the University of

Lancaster (UK) and a Masters in Business Administration from Bradford

University (UK). He has vast experience gained from local, regional and

international companies. Albert is the Group Chief Executive of ZimRe

Holdings Limited, a listed company on the Zimbabwe Stock Exchange. He

is a director of several companies in Zimbabwe,Malawi,Mozambique,

South Africa and Uganda. Albert has received First Achievers Award by

Business Tribune, 1st Runner Up Manager of the Decade and Insurance

Industry Life Time Achievement awarded by the Insurance Institute of

Zimbabwe. He is the current Vice President of the Federation of Afro-

Asian Insurers and Reinsurers and the past president of the Rotary Club of

Hunyani and Harare, Federation of Afro-Asian Insurers and Reinsurers and

African Insurance Organisation.

Grace Muradzikwa – Managing Director

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

Grace holds a Masters in Business Administration and Bachelor of

Administration degree from the University of Zimbabwe. In addition,

she is an Associate of the Insurance Institute of South Africa (AIISA) and

Fellow of the Insurance Institute of South Africa (FIISA). She also holds

an IPM Diploma in Personnel Management. She has been at the helm

ofNicozDiamond formany years and has over 2 decades of insurance

experience spanning all facets of Short-term Insurance and Reinsurance.

Grace holds directorships in various local and regional companies and is

amemberofdifferentprofessionalaffiliations.Shehas receivedawards

such as Zimbabwe National Chamber of Commerce Business Woman of

the Year, 2009 IOD Director of the Year 2013 Megafest Leadership Award

and 2014 Megafast Award.

Thembiwe Chikosi Mazingi – Non-Executive Vice Chairperson

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

Thembiwe holds a Masters in Business Administration (MBA), Bachelor of

Laws and Bachelor of Law degrees from the University of Zimbabwe. She

is also a holder of Advanced Corporate Law and Securities Law, Advanced

ProgrammeinValue-AddedTaxandPost-graduateCertificateinAdvanced

Taxation, all from UNISA. Thembiwe is registered as a legal Practitioner of

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

aLegalPractitioner inprivatepracticeandcurrentlypartner in lawfirm,

Coghlan, Welsh & Guest. Her assignments include providing legal services

and advice in the law of property, conveyance and notarial practice, trusts,

estate planning, taxation, commercial law, corporate compliance and

regulatory issues. Thembiwe is a member of the Law Society of Zimbabwe

and is also non-executive director for National Tyre Services, African

Century Leasing Company and Ariston Holdings. She is also a past board

member of Zimbabwe Allied Banking Group, Zimbabwe Electricity Supply

Authority and Fidelity Asset Management.

Barnabas Matongera – Non-Executive Director

LLB, LLM, PDL, ACIS

Barnabas holds a Master of Laws and Bachelor of Laws degree from the

University of South Africa. He is also a holder of a Postgraduate Diploma

in Law-Conciliation and Arbitration, from the University of Zimbabwe.

Barnabas is an Associate of the Institute of Chartered Secretaries and

Administrators in Zimbabwe. He has over 16 years experience in the

social protection industry. Apart from holding directorship in one other

company, he is currently an Executive Director with the National Social

Security Authority.

Rachel Pfungwa Kupara – Non-Executive Director

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

Rachel Pfungwa Kupara is a Chartered Accountant (Zimbabwe) who

holds a Masters in Business Administration (MBA) from the University of

Bradford, England. She obtained an Accountancy degree at the University

of Zimbabwe and did her articles of clerkship at Ernst & Young Zimbabwe.

Her work experience spans over 31 years in Audit, Insurance, Banking and

Agriculture. She has held various Finance Director and Managing Director

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

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

Air Zimbabwe, Zimbabwe Open University and Ariston Holdings. Currently,

otherthanservingontheNicozDiamondBoard,sheisalsoanonExecutive

Director for Celebration Health, National Gallery of Zimbabwe, Tongaat

Hulett Limited(SA) and Zimbabwe International Film Festival Trust.

Paul Brien – Non-Executive Director

B.Acc. (University of Exeter - UK)

Paul Brien holds a Bachelor of Accountancy and Finance degree with

honours from the University of Exeter (UK). He joined African Banking

Corporation as an investment analyst and quickly rose to become a

portfolio manager. Thereafter he has been Chief Investment Director

for two other Asset Management Companies, last serving CBZ Asset

Management T/A Datvest. He is on a number of boards and committees

including retail, manufacturing and investment promotion. He is married

to Kirsty and has two sons. He enjoys spending his free time travelling

with his family.2 0 1 4 A n n u a l R e p o r tN I C O Z D I A M O N D

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Directorate(continued)

NON- EXECUTIVE

Mr. Albert J Nduna (Chairman)

Mrs.ThembiweCMazingi(Vice Chairperson)

Mr. Paul Brien

Mr.JamesKaridza

Mrs. Rachel P. Kupara

Mr. Barnabas Matongera

Mr Bruce Campbell

EXECUTIVES

Mrs.GraceMuradzikwa(Managing Director)

COMPANY SECRETARY

Mrs. Gloria Zvaravanhu

BOARD COMMITTEES

AUDIT AND RISK MANAGEMENT COMMITTEE

Mrs. Rachel P Kupara (Chairperson)

Mr. Paul Brien

Mr.JamesKaridza

Mrs.GraceMuradzikwa-Executive

MANPOWER COMMITTEE

Mrs.ThembiweCMazingi(Chairperson)


Mrs.GraceMuradzikwa-Executive

EXECUTIVE REMUNERATION COMMITTEE

Mr. Albert Joel Nduna (Chairman)

Mrs.ThembiweChikosiMazingi


INVESTMENTS COMMITTEE

Mr.JamesKaridza (Chairman)

Mr. Paul Brien

Mr Barnabas Matongera

Mrs.GraceMuradzikwa (Executive)

NOMINATIONS COMMITTEE

Mr. Albert Joel Nduna (Chairman)

Mrs.ThembiweChikosiMazingi


ICT COMMITTEE

Mr Paul R Brien (Chairman)

MrJKaridza

MrsThembiweChikosiMazingi

MrsGraceMuradzikwa(Executive)

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Bruce Campbell – Non-Executive Director

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

BruceCampbellisaqualifiedandseasonedinsurerwhoisaFellowofthe

Chartered Insurance Institute of London and also holds an Associateship

from the same institute. He holds a Master of Business Leadership from

UNISA and has a Bachelor of Arts Degree from Natal University. He has

beenChiefExecutiveOfficerofMutualandFederal InsuranceCompany

in South Africa for ten years between 1998 and 2007 and oversaw the

successful acquisition and integration of the Protea Insurance Company

and Commercial Union. He has also been chairman and Chief Executive

Officer of the Alexander Forbes Group between 2007 and 2010.He

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

insurance company Zimbabwe as Board chair and also as a Director of

Mutual Federal in Namibia and the South African Insurance Association

Board. He is currently an independent Director of Santam South Africa and

sits on several other non- insurance Boards.

James Karidza – Non-Executive Director

BAcc (UZ), CA (Z)

JamesisaqualifiedCharteredAccountantandaholderofaBachelorof

Accountancy degree from the University of Zimbabwe. He did his articles

ofclerkshipwithKPMG.Hehasservedas theChiefFinanceOfficer for

Cimas Medical Aid Society, Group Finance Director for Migdale Holdings

(Private) Limited and Group Finance Director for SMM Holdings (Private)

Limited. James has been on a number of Boards of Zimbabwean and

foreign companies including manufacturing, banking, mining and services

operations where he chaired various board committees. He is a keen

golfer and enjoys farming.


Management

Ms. Cathrine Musakwa Head Strategic Business Unit

Mr. Tinashe Masvaya Head Strategic Business Unit

Mr. Nicholas Sayi Head Bulawayo Unit

Mrs. Joyce Nousenga Head Technical Services

Mrs. Rebecca Moyo Head Finance

Mr. Elisha Makwarimba Acting Head Treasury

Mrs. Agnes Mtotela Head Human Resources

Mr. Vusani Mapuke Head IT

Ms. Odiline Kava Head Marketing

Mr. Christopher Tapererwa Business Analyst

Mr. Jabulani Mbengo Head Internal Audit

Mr.WitnessChimboza BranchControllerMutare

Mrs. Concilia Zivanai Branch Controller Masvingo

Mr. Osborne Nyereyemhuka Branch Controller Chinhoyi

Ms Faith Mariwi Branch Controller Gweru

Executive Management

Management

Ms. Gugulethu Ngwenya

General Manager (Special Projects)

Mrs. Gloria ZvaravanhuGeneral Manager

(Corporate Services)

Mrs. Grace Muradzikwa

(Managing Director)

Mr. Noel Manika

General Manager (Operations)

15


16

Chairman’s Statement

INTRODUCTION

It is my pleasure to present to you my report for the NICOZDIAMOND

Group of Companies for the year ended 31 December 2014.

OPERATIONS OVERVIEW

The operating environment remained challenging owing to continued

liquidity constraints and low capacity utilisation resulting in subdued

economic performance for the year.

The short term insurance sector in Zimbabwe recorded minimal growth

in the year as this sector generally follows the fortunes of the economy.

Thestrongandsecureindustryplayersbenefitedfromtheincreasein

security consciousness of the insuring public who moved their business

to more secure companies.

Various measures were also introduced by the Insurance regulator in

the year, a welcome move as the implementation of these measures will

strengthenandimprovemarketconfidenceinthesector.

Premium collections remained a challenge with increased

pressure on the industry to extend payment terms to

clients. This continued to halter the capacity of

insurance companies to mobilize savings and

playamoresignificantroleinthefundingof

national projects.

Notwithstanding the above factors, the

companywasable to significantly improve

its profitability from operations through

prudent underwriting, good claims handling

and expenses management, despite its

revenue growth being marginal.

Property values remained fairly stagnant

compared to 2013 due to the diminished

activity in the property sector affected by

The growth in operating profits was driven mainly by the

insurance underwriting result that grew by 45% from $892k

in 2013 to $1.3m in 2014. 2 0 1 4 A n n u a l R e p o r tN I C O Z D I A M O N D

17

liquidity and economic performance. The market was also characterised

by increased voids and downward review of rentals to align to market

conditions. This is despite the fact that rentals and property values in

Zimbabwe are still lower than regional averages.

The occupancies of the Group’s properties were above market average

not withstanding the fact that there was high tenant turnover. Liquidity

constraints continued to affect rental collections.

Regional operations’ performance continued to be influenced by the levels

of capital at their disposal.

FINANCIAL PERFORMANCE OVERVIEW

The Group performed relatively well despite the aforementioned challenges

with overall profitability at $1,1 million for the year. Whilst there was

growth in operating profit of 17%, investment performance as well as

the contribution of associates declined, resulting in a reduction in overall

profitabilityby52%fromthatof2013.

The growth in operating profits was driven mainly by the insurance

underwriting result that grew by 45% from $892k in 2013 to $1.3m in

2014.

Investments performance for the year was weighed down by impairments

of investments whose recoverability was viewed to be doubtful as at 31

December 2014. There were also impairments on some unquoted equities

and unrealised losses on the quoted equities portfolio.

Thedomestic insurancebusiness contributed88% toprofitbefore share

of associates, followed by the property companies which contributed 11%

and the Uganda operation contributed 1%.

The associate companies contributed negatively and took away 28% from

theGroup’sprofit.DiamondSeguros, thenewoperation inMozambique

wasaccountedforasanassociateforthefirsttimeintheyearandrecorded

a loss as expected. Though the performance of other associates, Fidelity

Funeral Services and Clover Leaf Panel Beaters were improved, they also

had to be impaired in the year to align to their Net Asset Values in line with

accounting standards.

The Group generated positive cash from operations of $2 million which was

a growth of 43% compared to prior year, emanating from the strong focus

on management of cash flow and expenditure.

The Group balance sheet grew by 4% and the Company’s capital at $10.8

million was well above the minimum statutory capital requirement for short

term insurance companies of $1,5million. FICO was also in compliance with

the minimum capital requirements for the Uganda market at 31 December

2014.

REGIONAL OPERATIONS

The Company maintained its equity investments in First Insurance Company

(FICO) of Uganda and Diamond General Insurance (DGI) of Zambia and

followed its recapitalisation rights in both entities during the year. The

management and technical services contract with United General Insurance

of Malawi (UGI) also remained in place during the period and the entity

recordedimprovedprofitability.Thecompanyboughta49%stakeinUGI

with effect from 1 January 2015.

DiamondSegurosMozambiqueperformedasexpectedforanewoperation

and managed to meet the revenue targets for the nine months of trading.

Though the company posted a loss which negatively affected the Group

profitability,thiswasin-linewithexpectationsforthefirstyearoftrading.

INDEPENDENT RATING AND CERTIFICATION

The company currently enjoys an A- rating for claims paying ability by

Global Credit Rating (“GCR”) of South Africa, the highest rating currently

enjoyed in the short term insurance sector in Zimbabwe.

The company also maintained its certification on ISO Standard, ISO

9001:2008.

SOCIAL RESPONSIBILITY

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

charity dinner proceeds were duly distributed to the various charitable

organisations.

DIRECTORATE

In terms of article 77 of the Company’s Articles of Association, Mr Albert J

Nduna, Mr Paul R Brien and Mrs Rachel P Kupara retire by rotation and all

being eligible; offer themselves for re-election at the next Annual General

Meeting of the Company.

DIVIDEND

In linewith thedrop inGroupprofitability, theDirectorsareproposinga

finaldividendof0.05centspersharefor2014.

OUTLOOK

Whilst growth prospects for the economy and the insurance sector in

particularremainsubdued,thecompanyplansto improveonprofitability

through products and distribution channel innovations and by also exploiting

Chairman’s Statement(continued)

18


Chairman’s Statement(continued)

information technology. Prudent underwriting and expenses management

will also continue to be focus areas.

The proceeds from the sale of Diamond Villas will be used to improve

liquidity and unlock investment income, a process that has started in earnest

in 2015.

In Uganda, the business was recapitalised at the end of 2014. Shareholders

haveagreedtocontinuetofindwaystofurthercapitalisethebusinessto

competitive levels.

The acquisition of a stake in the Malawi entity will also improve Group

profitabilityinthefuture.

APPRECIATION

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

sincere appreciation to our valued clients who continue to put their faith

and confidence in us.Gratitude is also extended to our valued business

providers, regulators, management and staff and all other stakeholders, for

their continued support.

Albert J Nduna

CHAIRMAN

10 March 2015


A Super-Brand, Diamond Standard Insurer

2014 Short-term Insurance Sector Superbrand of the year.2014 2nd Runner-up ICSAZ Excellence in Corporate Governance.

19


Managing Director’s Report

PERFORMANCE OVERVIEW

The NICOZDIAMOND Group of Companies performed reasonably

wellin2014.TheGroupmanagedtopostprofitsandcontinuesto

exhibitastrongupwardtrendonoperatingprofitsince2009.The

improvementinoperatingprofitiswelcomeasitensureslongterm

sustainability of the business.

Affordability of insurance premiums continued to be a major

issue for most policyholders. The resultant effect of this was a

downgrading of covers by the insureds, with motor being the

most affected class. Tight Liquidity also persisted during the period

under review leading to negotiation of lengthy payment plans on

insurance premiums as well as requests for shorter period policies.

These are some of the factors that contributed to reduced Gross

premiums Written in 2014 as compared to 2013.

During the period, policyholders continued to display “flight to

quality” tendencies as they sought to be insured by secure insurance

companies. The company was well positioned to capitalise on this

due to its continued endorsement by GCR on its claims paying

ability.TheA-ratingboostedclients’confidenceinthecompany.

20

It is pleasing to note that the Group recorded an improvement in cash generated from operations

of 43% due to stringent collections and cash management.


Managing Director’s Report(continued)

The performance highlights per unit are shown in the table below

Theunderwritingprofitabilitygrewby44%from$892,000to$1.3million,

howevertheGrouprecordedProfitafterTax(PAT)of$1.1million,adecline

of 52% compared to prior period. The strengthening of the core business

profitabilitywasdespite the increasedpricebasedcompetitionwitnessed

in the market which unfortunately led to a decline in the top line for the

company.Efficiencieswereobtained in theareasofclaimsmanagement,

expenses management and reinsurance management.

Investment performance was weaker in the year, this is coming from a

historicalpositionwhereitpreviouslycontributedthemosttoprofitsinthe

early years post dollarisation . The associates contributed negatively to group

profitabilitywith60%ofthelosscomingfromthenewassociate,Diamond

SegurosofMozambique.Thiswasinlinewithperformanceexpectationsof

itsfirstyearoftrading.Theotherassociates,FidelityFuneralandCloverLeaf

Panel Beaters posted improved performance in 2014 though impairments

had to be absorbed by the business on their carrying amounts in line with

accounting standards.

FirstInsuranceCompanyofUganda(FICO)postedamarginaloverallprofit

for the period despite registering an underwriting loss position. More

needs to be done around this operation as the company continues to lack

competitive capital to attract business in the market.

A lukewarm performance was registered by the property company in line

with market trends but was further exacerbated by depressed occupancy

levels and high rental default rates characterising the market.

It is pleasing to note that the Group recorded an improvement in cash

generated from operations of 43% due to stringent collections and cash

management.

TECHNICAL PERFORMANCE REVIEW

The graph below shows the key technical ratios of the Group for 2014

compared to 2013.

Retention ratio

The retention ratio of 61% was consistent with that of 2013 and

management continues to actively seek to increase utilization of the

company’scapitalbaseandminimizereinsurancecosts.

Claims ratio

The claims ratio was at 45% for 2014, an improvement from 47% of prior

year and comfortably below the international benchmark of 60%. Claims

costs were being managed more actively by stringent management of

claims through supply chain management.

Expenses ratio

The expenses ratio to NPW was at 39%, a decline from 37% recorded

in 2013 unfortunately affected by debtors’ impairments. Exclusive of

impairments, the ratio had improved to 35%

BUSINESS CLASS PERFORMANCE

21


Managing Director’s Report(continued)

The motor class remained the largest contributor to GPW followed by the

fire class, conforming to local industry and regional trends. The Fire and

Engineeringclassesaremirroringthelowindustrycapacityutilizationbeing

experienced currently in Zimbabwe.

INVESTMENT CLASS PERFORMANCE

Investment performance was depressed compared to 2013 due to a number

of factors. The money market was affected by the general decline in average

rates obtained from the market leaving fewer options for the company as

it sought more secure counterparties. The quoted equities were affected by

the general performance of the Zimbabwe Stock Exchange which saw the

industrial index decline by 19% in the year. There were minimal property

revaluations in the year compared to 2013 and there were also impairments

made on doubtful non performing investments.

KEY INVESTOR RATIOS

FY2014 FY2013 Growth

Basic EPS (cents) 0.20 0.40 -50%

Share Price (cents) 1.3 1.4 -7%

NAVps (cents) 3.0 2.9 3%

ROCE (%) 7 17 -59%

DIVps (cents) 0.05 0.064 -22%

All the key ratios were a reflection of the reduced profitability in 2014

comparedto2013.TheNicozDiamondsharepriceat1.3centswastrading

at a discount of 57% to the net asset value of the Group.

OUTLOOK

The domestic insurer witnessed a good start to the year 2015 with Gross

Premiums recording growth from prior year. The contribution from the new

investment in Malawi which was acquired in January 2015 is expected to

significantly improvegroupprofitabilitygoingforward.Theassociatesare

also expected to register improved performance in the year as Diamond

Seguros entrenches itself in the Mozambique market. Fidelity Funeral

services is also poised to improve performance on the backdrop of the

enhancements done to the business in 2015.

Investment income is expected to improve as the Diamond villas cluster

units are sold in 2015, with a resultant positive effect on liquidity.

The focus areas for the company are ensuring sustainable profitable

growth through being responsive to market needs by crafting products

that meet customers’ changing demands. The company also endeavours

to deliver excellent service to customers. To be able to achieve this, a team

of competent and inspired personnel are critical and developing such

competencies is vital for the Group.

APPRECIATION

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

Directors, and all other stakeholders for the support extended to the

company in 2014.

G. Muradzikwa

Managing Director

10 March 2015

22


Report of the Directors

TheDirectorspresenttheirreporttogetherwiththeauditedfinancialstatementsfortheyearended31December2014.

1. SHARE CAPITAL

Ordinary shares Number 2014 Number 2013

Total shares in Issue 566 764 773 566 764 773

Un-issued 33 235 227 33 235 227

Authorized 600000000 600000000

Opening Issued shares 566 764 773 565 858 859

Scrip Dividend - 905 914

Closing Issued Shares 566 764 773 566 764 773

As at 31 December 2014, 33 235 227 (2013-33 235 227) shares were under the control of the directors.

2. RESULTS FOR THE YEAR ENDED 31 DECEMBER 2014

Theresultsfortheyearareassetoutintheaccompanyingfinancialstatements,asummaryofwhichisstatedbelow;

Summary of Group Results

2014 (US$) 2013 (US$)

Gross Premium Written 28,728,141 30,018,341

OperatingProfit 2,311,518 1,974,568

ProfitbeforeTaxation 1,185,699 2,914,012

ProfitAfterTax 1,139,146 2,311,508

3. RESERVES

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

Statements of Changes in Equity and in the Notes to the Financial Statements.

4. PROPERTY AND EQUIPMENT

Capital Expenditure for the year ended 31 December 2014 amounted to $124,685.

5. DIVIDEND

TheDirectors have recommended a final dividend of 0.05 cents per share for the year ended 31December 2014. The dividendwill be paid to

shareholders registered in the books of the company at close of business on 10th of April 2015. The dividend will be payable on or about 16 May 2015.

Taxes will be deductible as applicable.

6. DIRECTORATE

Mr Albert J Nduna, Mr Paul R Brien and Mrs Rachel P Kupara retire by rotation and all being eligible; offer themselves for re-election at the next Annual

General Meeting of the Company.

23


Report of the Directors(continued)

7. DIRECTORS’ INTERESTS

NoDirectorhad,duringtheyear,anymaterialinterestinanycontractofsignificanceinrelationtotheGroup’sbusinesses.TheBeneficialinterestsof

the Directors in the shares of the Company (both direct and indirect holdings) as at 31 December 2014 are shown in table below.

Name 2014 2014

Bruce Campbell 56,643,597 36,121,148

GraceMuradzikwa 37,755,019 37,755,019

Albert Joel Nduna 83,598 83,598

Total 94,482,214 73,959,765

As at 10 March 2015, the position remained the same.

GraceMuradzikwa,beinganexecutiveDirectorofthecompany,hadshareoptionsamountingto1,058,400sharesatagrantpriceof1.35centsper

share allocated to her during the year and which are exercisable over a 3 year period in line with the share option scheme. Total share options granted

toGraceMuradzikwaamountedto2,258,400asat31December2014asdepictedintablebelow;

Issue date Number of shares Grant price

7 March 2013 1,200,000 1.10 cents

4 March 2014 1,058,400 1.35 cents

Total 2,258,400

8. DIRECTORS FEES

Directors’feeshavebeenreviewedinlinewithmarkettrendsduringtheyearandarepeggedatanaverageofthosepaidtoDirectorsofsimilarsized

companies. A resolution will be passed at the Annual General Meeting to approve Directors fees totaling $79,340 in respect of the year under review.

9. BOARD ATTENDANCE

The table below shows Board member attendance to Board and committee meetings in 2014

Name of Director MAIN BOARD ARMCO INVECO MANCO NOM EXEC REM ICT

AJ Nduna 4/4 1/1 1/1

TCMazingi 4/4 4/4 1/1 1/1 1/1

PR Brien 3/4 4/4 5/5 1/1

B Campbell 4/4

JKaridza 4/4 4/4 5/5 1/1

RP Kupara 4/4 4/4

B Matongera 4/4 3/5 3/4 1/1 1/1

GMuradzikwa 4/4 4/4 5/5 4/4 1/1 1/1

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

Rem-Executive Remuneration Committee

10. AUDITORS

ShareholderswillberequestedtoapprovetheremunerationoftheAuditorsforthefinancialyearended31December2014amountingto$68,250at

the Annual General Meeting and to appoint Auditors for the year 2015.

24


Report of the Directors(continued)

11. DIRECTORS RESPONSIBILITY FOR FINANCIAL REPORTING

TheDirectorsoftheCompanyareresponsibleforthemaintenanceofadequateaccountingrecords,andthepreparationoffinancialstatementsfor

eachfinancialperiodthatgivesatrueandfairviewofthestateofaffairsoftheCompanyandtheGroupattheendofthefinancialperiodandofthe

results and cash flows for the period.

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

prudent judgments and estimates. Accounting policies, which follow International Financial Reporting Standards, have been consistently applied.

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

reliabilityofthefinancialstatements,andtosafeguard,verifyandmaintainaccountabilityofassets,andtopreventanddetectmaterialmisstatements

and losses. They systems are implemented and monitored by suitably trained personnel with an appropriate segregation of authority and duties.

Nothing has come to the attention of the directors to indicate that any material breakdown in the functioning of these controls, procedures and systems

has occurred during the period under review.

ThefinancialstatementshavebeenpreparedonagoingconcernbasissincetheDirectorshaveeveryreasontobelievethattheCompanyandtheGroup

haveadequateresourcestocontinueinoperationfortheforeseeablefuture.Thefinancialstatementshavebeenpreparedinfullcompliancewithall

Financial Reporting Standards and the Companies Act (Chapter 24:03).

Thefinancialstatementshavebeenauditedbythegroup’sexternalauditors,Ernst&Young,whohavebeengivenunrestrictedaccesstoallfinancial

recordsandrelateddata, includingminutesofallmeetingsoftheBoardofDirectorsandCommitteesoftheBoard.TheDirectorsconfirmthatall

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

Thefinancialstatementsfortheyearended31December2014,wereapprovedbytheBoardofDirectorson10March2015andaresignedontheir

behalf by:

MR A.J NDUNA MRS. G MURADZIKWA

CHAIRMAN MANAGING DIRECTOR

25


26


Financial

Statements 27


Group Group Company Company

Note 2014 2013 2014 2013

$ $ $ $

Revenue

Gross premium 28,728,141 30,018,341 27,163,709 28,063,442

Premium ceded (11,121,342) (11,706,940) (10,795,504) (11,317,660)

Net premium written 17,606,799 18,311,401 16,368,205 16,745,782

Movement in the unearned premium provision 158,917 (1,403,083) 73,271 (1,442,573)

Earned premium 17,765,716 16,908,318 16,441,476 15,303,209

Brokerage commission and fees 2,308,825 2,553,691 2,208,783 2,434,862

Investment income 8.1 1,464,494 1,417,921 664,754 690,008

Other income 8.2 30,800 23,850 89,478 91,478

Total revenue 21,569,835 20,903,780 19,404,491 18,519,557

Total expenses (19,258,317) (18,929,212) (17,393,745) (16,910,649)

Netbenefitsandclaims 8.3 (7,928,776) (7,900,800) (7,605,161) (7,423,318)

Commission and acquisition expenses (3,986,657) (4,344,791) (3,638,593) (4,041,810)

Operating and administrative expenses 8.4 (7,342,884) (6,683,621) (6,149,991) (5,445,521)

Operating profit 2,311,518 1,974,568 2,010,746 1,608,908

Other (losses)/gain 8.5 (613,561) 1,302,787 (635,058) (114,404)

Finance costs (39,986) (66,654) (2,157) (11,606)

Profitbeforeshareofprofitofassociates 1,657,971 3,210,701 1,373,531 1,482,898

Share of associates losses 8.6 (472,272) (296,689) - -

Profitbeforetax 1,185,699 2,914,012 1,373,531 1,482,898

Taxation (expense)/credit 8.7 (46,553) (602,504) 50,247 (380,587)

Profit for the year 1,139,146 2,311,508 1,423,778 1,102,311

Profit for the period attributable to:

Equity holders of the parent 1,131,081 2,250,046 1,423,778 1,102,311

Non-controlling interests 8,065 61,462 - -

1,139,146 2,311,508 1,423,778 1,102,311

Earnings per share (in cents):

Basic earnings per share (cents) 6 0.20 0.40 0.25 0.19

Diluted earnings per share (cents) 6 0.19 0.39 0.24 0.19

Statements of Profit or Loss

FOR THE YEAR ENDED 31 DECEMBER 2014

28


Statements of other Comprehensive Income FOR THE YEAR ENDED 31 DECEMBER 2014

Group Group Company Company Note 2014 2013 2014 2013 US$ US$ US$ US$ Profit for the year 1,139,146 2,311,508 1,423,778 1,102,311 Other comprehensive income: Othercomprehensiveincometobereclassifiedtoprofit or loss in subsequent periods: Exchange difference on translation of foreign operations 8.8 (103,337) 47,202 - - Income tax effect - - - - Other comprehensive income for the period net of tax (103,337) 47,202 - - Total comprehensive income for the year 1,035,809 2,358,710 1,423,778 1,102,311 Total comprehensive income attributable to: Equity holders of the parent 1,075,734 2,275,327 1,423,778 1,102,311 Non-controlling interests (39,925) 83,383 - - 1,035,809 2,358,710 1,423,778 1,102,311 29


Group Group Company Company Note 2014 2013 2014 2013 US$ US$ US$ US$ ASSETS Non-current assets 11,845,033 13,261,737 4,894,080 5,773,835Property and equipment 9 864,185 1,062,175 707,786 872,113Investment properties 10 9,159,080 9,703,843 1,660,000 2,323,487Investment in associates 8.6 489,384 961,656 363,010 363,010Investment in unquoted equities 11.1 567,736 591,240 312,353 343,111Investment held to maturity 11.3 300,000 400,000 300,000 400,000 Investment in subsidiary 12 - - 1,270,236 1,079,930Other non-current assets 11.5 280,695 392,184 280,695 392,184 Deferred tax asset 13.1 31,818 70,722 - - Statutory deposit 14 152,135 79,917 - - Current assets 18,991,506 16,507,077 16,738,519 14,606,126Insurance receivables 15 7,014,492 7,657,964 5,538,797 6,528,806Inventories 16 2,953,745 40,792 2,953,745 40,792Deferred acquisition costs 17 914,759 949,012 827,639 842,305Current tax receivable 18 - - - 65,824 Related party receivables 19.2 200,311 271,498 556,946 430,493 Other receivables and prepayments 15.1 1,233,496 773,280 1,052,151 570,031Short-term investments 11.2 1,734,647 1,809,135 937,374 1,392,767Cash and cash equivalents 20 4,940,056 5,005,396 4,871,867 4,735,108 TOTAL ASSETS 30,836,539 29,768,814 21,632,599 20,379,961 EQUITY AND LIABILITIES Equity attributable to owners of the parent 17,070,125 16,323,287 10,822,503 9,727,621 Share capital 21 2,833,525 2,833,525 2,833,525 2,833,525 Share premium 21 3,291,039 3,291,039 3,291,039 3,291,039 Retained earnings 10,745,548 10,007,889 4,628,588 3,579,939Foreign currency translation reserve (218,639) (163,292) - - Capital reserve 30,394 28,859 - - Other reserves 388,258 325,267 69,351 23,118 Non-controlling interest 799,247 549,438 - - Total equity 17,869,372 16,872,725 10,822,503 9,727,621 Non-current liabilities 487,774 840,003 176,592 529,794 Deferred tax liability 13.2 392,635 691,204 81,453 380,995Long term loans 22.1 95,139 148,799 95,139 148,799 Current liabilities 12,479,393 12,056,086 10,633,504 10,122,546 Insurance payables 23 1,833,309 2,310,646 1,409,863 1,889,486Short-term loans 22.1 53,660 44,508 53,660 44,508 Related party payables 19.2 10,503 26,542 - 26,542Other payables and accruals 23 2,334,999 1,757,653 1,796,912 1,252,979Current tax payable 18 210,070 6,849 159,963 - Insurance provisions 24 8,036,852 7,909,888 7,213,106 6,909,031 Total Liabilities 12,967,167 12,896,089 10,810,096 10,652,340 TOTAL EQUITY AND LIABILITIES 30,836,539 29,768,814 21,632,599 20,379,961

ThefinancialstatementswereapprovedandauthorisedforpublicationbytheBoardofDirectorson10March2015andsignedonitsbehalfby: Chairman: Director:

Date: 10 March 2015

Statements of Financial Position AS AT 31 DECEMBER 2014

30


Statements of Cashflows FOR THE YEAR ENDED 31 DECEMBER 2014

Group Group Company CompanyCash flows from operating activities Note 2014 2013 2014 2013 US$ US$ US$ US$

Cash receipts from customers 25 31,759,680 29,334,513 30,498,783 27,043,878

Cash paid to suppliers and employees 26 (29,586,722) (27,811,006) (27,703,372) (25,791,525)

Cash generated from operations 2,172,958 1,523,507 2,795,411 1,252,353

Finance costs (39,986) (66,654) (2,157) (11,606)

Income tax paid 18 (109,122) (45,431) (23,705) -

Net cash generated from operating activities 2,023,850 1,411,422 2,769,549 1,240,747

Cash flows from investing activities

Purchase of property and equipment (124,685) (437,604) (117,091) (375,979)

Purchase of investments (5,121,998) (6,554,375) (4,836,395) (6,291,427)

Acquisition and development of investment properties 10 (176,368) (406,850) - (258,489)

Investment in property development 16.1 (2,230,135) - (2,230,135) -

Investment income 592,510 750,943 537,051 628,395

Disposal of investments 5,093,808 6,100,850 4,405,653 5,864,989

Proceeds from disposal of property and equipment 1,162 116,748 1,162 116,748

Net cash (utilised in)/generated from investing activities (1,965,706) (430,288) (2,239,755) (315,763)

Cash flows from financing activities

Dividend paid (348,527) (350,466) (348,527) (350,466)

Issue of shares - First Insurance Company of Uganda 289,734 68,842 - -

Repayment of loan 22.3 (44,508) (50,905) (44,508) (39,184)

Net cash (utilised in) generated from financing activities (103,301) (332,529) (393,035) (389,650)

Net (decrease)/increase in cash and cash equivalents (45,157) 648,605 136,759 535,334

Cash and cash equivalents at beginning of year 5,005,396 4,309,589 4,735,108 4,199,774

Effects of exchange rate changes on cash and cash equivalents (20,183) 47,202 - -

Cash and cash equivalents as at 31 December 2014 20 4,940,056 5,005,396 4,871,867 4,735,108

31


Statements of Changes in Equity FOR THE YEAR ENDED 31 DECEMBER 2014

Foreign currency Non- Share Share Retained Capital translation Other controlling Total Notes capital premium earnings reserves reserves reserves Total interests equityGroup US$ US$ US$ US$ US$ US$ US$ US$ US$

Balance at 1 January 2013 2,828,995 3,278,793 8,146,837 24,596 (188,573) 276,986 14,367,634 291,633 14,659,267

Total comprehensive income for the year - - 2,250,046 - 25,281 - 2,275,327 83,383 2,358,710

Profit after tax for the year - - 2,250,046 - - - 2,250,046 61,462 2,311,508

Other comprehensive income net of taxes - - - - 25,281 - 25,281 21,921 47,202

Scrip dividend issued 4,530 12,246 (16,776) - - - - - -

Cash dividend paid - - (350,466) - - - (350,466) - (350,466)

Disposal of interest in subsidiary 12 - - 7,674 - - - 7,674 (7,674) -

Issue of shares - - - - - - - 182,096 182,096

Share options - - - - - 23,118 23,118 - 23,118

Transfer to other reserves - - (25,163) - - 25,163 - - -

Transfer to capital reserves - - (4,263) 4,263 - - - - -

Balance at 31 December 2013 2,833,525 3,291,039 10,007,889 28,859 (163,292) 325,267 16,323,287 549,438 16,872,725

Total comprehensive income for the year - - 1,131,081 - (55,347) - 1,075,734 (39,925) 1,035,809

Profit after tax for the year - - 1,131,081 - - - 1,131,081 8,065 1,139,146

Other comprehensive income net of taxes - - - - (55,347) - (55,347) (47,990) (103,337)

Issue of shares - - - - - - - 289,734 289,734

Share options - - - - - 46,233 46,233 - 46,233

Transfer to capital reserve - - (1,535) 1,535 - - - - -

Transfer to other reserves - - (16,758) - - 16,758 - - -

Cash dividend paid - - (375,129) - - - (375,129) - (375,129)

Balance at 31 December 2014 2,833,525 3,291,039 10,745,548 30,394 (218,639) 388,258 17,070,125 799,247 17,869,372

Foreign currency Non- Share Share Retained Capital translation Other controlling Total Notes capital premium earnings reserves reserves reserves Total interests equityCompany US$ US$ US$ US$ US$ US$ US$ US$

US$

Balance at 1 January 2013 2,828,995 3,278,793 2,844,870 - - - 8,952,658 - 8,952,658

Total comprehensive income for the year - - 1,102,311 - - - 1,102,311 - 1,102,311

Profit after tax for the year - - 1,102,311 - - - 1,102,311 - 1,102,311

Scrip dividend issue 4,530 12,246 (16,776) - - - - - -

Share options - - - - - 23,118 23,118 - 23,118

Cash dividend - - (350,466) - - - (350,466) - (350,466)

Balance at 31 December 2013 2,833,525 3,291,039 3,579,939 - - 23,118 9,727,621 - 9,727,621

Total comprehensive income for the year - - 1,423,778 - - - 1,423,778 - 1,423,778

Profit after tax for the year - - 1,423,778 - - - 1,423,778 - 1,423,778

Other comprehensive income net of taxes - - - - - - - - -

Share options - - - - - 46,233 46,233 - 46,233

Cash dividend - - (375,129) - - - (375,129) - (375,129)

Balance at 31 December 2014 2,833,525 3,291,039 4,628,588 - - 69,351 10,822,503 - 10,822,503

32


Statements of Changes in EquityFOR THE YEAR ENDED 31 DECEMBER 2014 (continued)

Notes

Capital reserves

This pertains to First Insurance Company of Uganda (FICO) and is a statutory transfer done annually from retained earnings to capital reserves

whenthereisaprofit.This reserve isonlyavailable fordistributionat liquidation. Asat31December2014,US$1,535wastransferedtothe

Capital Reserve.

Other reserves

Other reserves are made up of:

i) Contingency reserve of $318,907 (2013 - $302,149), relates to FICO. The Insurance Act of Uganda requires that a contingency reserve, which

shallnotbelessthan2%ofthegrosspremiumor15%ofthenetprofits,whicheverisgreater,oranysuchotheramountastheCommissioner

may decide be accumulated until it reaches the minimum paid-up capital or 50% of the net premiums, which ever is the greater. During the year

an amount of $16,758 was transferred to the reserve account. This reserve is only available for distribution at liquidation.

ii)Shareoptionreservesof$69,351($23,118-2013).ThisrelatestotheNicozDiamondInsurancestaffshareoptionschemeandisaprovision

for the share option costs to the company as theybecome available for exercising. Details of the share option scheme are shown under note

21.3.

Foreign currency translation reserve

This arose from translation of assets and liabilities of foreign operations (FICO) into US dollars at the rate of exchange prevailing at the reporting

dateandtheirstatementofprofitorlossatexchangerateprevailingatthedateofthetransactions.

33

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Notes to the Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2014

1 CORPORATE INFORMATION

NICOZDIAMOND Insurance Limited (the company) is a limited

liability company incorporated in Zimbabwe whose shares are

publicly traded on the Zimbabwe Stock Exchange. The principal

activities of the company and that of its subsidiaries is the provision

of short term insurance solutions and property investments.

The registered office of the Company is: Insurance Centre, 2nd

Floor, 30 Samora Machel Avenue, Harare. The consolidated

financial statements of NICOZDIAMOND Insurance Limited for

the year ended 31 December 2014 were authorised for issue in

accordance with a resolution passed by the Directors on 10 March

2015.

2 REPORTING CURRENCY

The consolidated financial statements are presented in United

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

presentation currency and values are rounded to the nearest dollar.

3 BASIS OF PREPARATION

3.1 Statement of Compliance

The consolidated financial statements have been prepared in

accordance with International Financial Reporting Standards, (IFRS),

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

The consolidated financial statements have been prepared on a

historical cost basis, except for investment properties, and those

financialassetsandliabilitiesthathavebeenmeasuredatfairvalue.

The consolidated financial statements provide comparative

information in respect of the previous period.

3.2 Going Concern

The Company’s business activities, together with the factors

likely to affect its future development, performance and position

are set out in the Managing Director’s Report on pages 20 to

22.Thefinancialpositionof thecompany, its cashflow, liquidity

position and borrowing facilities are set out on pages 27 to 94. In

additionnote27tothefinancialstatementsincludethecompany’s

objectives, policies and processes for managing its capital: its

financialriskmanagementobjectivesanditsexposurestocreditrisk

andliquidityrisk.Thecompanyhasconsiderablefinancialresources

together with a diverse insurance book across different sectors and

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

company is well placed to manage its business risks successfully

despite the challenging economic outlook.

The directors have a reasonable expectation that the company has

adequate resources to continue in operational existence for the

foreseeable future. Thus they continue to adopt the going concern

basisofaccountinginpreparingtheannualfinancialstatements.

3.3 Basis of Consolidation

The consolidated financial statements comprise the financial

statements of the Company and its subsidiaries as at 31 December

2014 and comparative figures. Control is achieved when the

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34


Notes to the Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2014 (continued)

Company is exposed or has rights, to variable returns from its

involvement with the investee and has the ability to affect those

returns through its power over the investee. Subsidiaries are

consolidated from the date of acquisition, being the date on which

the Group obtains control, and continue to be consolidated until

the date when such control ceases. The financial statements of

the subsidiaries are prepared for the same reporting period as the

parent company, using consistent accounting policies. All intra

group balances, transactions, unrealised gains or losses resulting

from intra-group transactions and dividends are eliminated in full.

Total comprehensive income within a subsidiary is attributed to the

non-controllinginterestevenifitresultsinadeficitbalance.

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

of control, is accounted for as an equity transaction. If the Group

losses control over a subsidiary it:

- Derecognises the assets (including goodwill) and liabilities

of the subsidiary

- Derecognises the carrying amount of any non-controlling

interest

- Derecognises the cumulative translation differences

recorded in equity

- Recognises the fair value of the consideration received

- Recognises the fair value of any investment retained

- Recognisesanysurplusordeficitinprofitorloss

- Reclassifiestheparent’sshareofcomponentspreviously

recognisedinothercomprehensiveincometoprofitor

loss or retained earnings, as appropriate.

Investment in subsidiaries at company level is carried at cost.

3.4 Statement of changes in accounting policies and disclosures

The accounting policies adopted are consistent with those of the

previous financial year, except for the following amendments to

IFRS effective as of 1 January 2014:

• InvestmentEntities–AmendmentstoIFRS10

Consolidated Financial Statements, IFRS 12 Disclosure of

Interests in Other Entities and IAS 27 Separate Financial

Statements

• OffsettingFinancialAssetsandFinancialLiabilities—

Amendments to IAS 32 Financial Instruments: Presentation

• RecoverableAmountDisclosuresforNon-FinancialAssets

—AmendmentstoIAS36ImpairmentofAssets

• NovationofDerivativesandContinuationofHedge

Accounting—AmendmentstoIAS39Financial

Instruments: Recognition and Measurement

The adoption of the standards or interpretations is described below:

Investment Entities (Amendments to IFRS 10, IFRS 12 and

IAS 27)

These amendments have no impact on the Group, since none of

theentitiesintheGroupqualifiestobeaninvestmententityunder

IFRS 10.

Offsetting Financial Assets and Financial Liabilities -

Amendments to IAS 32.

These amendments have no impact on the Group, since none of

the entities in the Group has any offsetting arrangements.

Novation of Derivatives and Continuation of Hedge

Accounting – Amendments to IAS 39

These amendments have no impact on the Group as the Group has

no derivatives in place.

Recoverable Amount Disclosures for Non-Financial Assets —

Amendments to IAS 36 Impairment of Assets

These amendments have no impact on the Group as the Group has

not novated its derivatives during the current or prior periods.

Annual Improvements 2010-2012 Cycle

In the 2010-2012 annual improvements cycle, the IASB issued

seven amendments to six standards, which included an amendment

to IFRS 13 Fair Value Measurement. The amendment to IFRS 13 is

effective immediately and, thus, for periods beginning on or after 1

January2014,anditclarifiesintheBasisforConclusionsthatshort-

term receivables and payables with no stated interest rates can be

measured at invoice amounts when the effect of discounting is

immaterial. This amendment to IFRS 13 has not affected the Group

as the Group was already carrying the short term receivable and

payables at invoice amounts in the prior periods.

35


4 Summary of significant accounting policies

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

are consistent with those of the previous financial year except

where stated.

4.1 Business Combinations

Business combinations are accounted for using the acquisition

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

of the consideration transferred, measured at acquisition date

fair value and the amount of any non-controlling interest in the

acquiree. For each business combination, the Group has an option

to measure any non-controlling interests in the acquiree either at

fair value or at the non-controlling interest’s proportionate share of

theacquiree’sidentifiablenetassets.

When the Group acquires a business, it assesses the financial

assets and liabilities assumed for appropriate classification and

designation in accordance with the contractual terms, economic

circumstances and pertinent conditions at acquisition date. This

includes the separation of embedded derivatives in host contracts

bytheacquiree.Noreclassificationofinsurancecontractsisrequired

for business combination.

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

aggregate of the consideration transferred and the amount

recognised for non-controlling interest and any previous interest

held, over the net identifiable assets acquired and liabilities

assumed.

Fair values for non-life insurance contracts are derived by calculating

the present value of claims reserves. If this consideration is lower

than fair value of the net assets of the subsidiary acquired, the

difference is recognised inprofitor loss.After initial recognition,

goodwill is measured at cost less any accumulated impairment

losses. For the purpose of impairment testing, goodwill acquired in a

business combination is allocated to an appropriate cash generating

unitthatisexpectedtobenefitfromthecombination,irrespective

of whether other assets or liabilities of the acquiree are assigned

to those units. Where goodwill forms part of a cash-generating

unit and part of the operations within that unit is disposed of, the

goodwill associated with the operation disposed of is included

in the carrying amount of the operation when determining the

gain or loss on disposal of the operation. Goodwill disposed of in

this circumstance is measured based on the relative values of the

operation disposed of and the portion of the cash generating unit

retained.

4.2 Impairment of non-financial assets

The Group assesses at each reporting date whether there is an

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

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

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

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

exceeds its recoverable amount, the asset is considered impaired

and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are

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

reflects current market assessments of the time value of money and

therisksspecifictotheasset.Indeterminingfairvaluelesscoststo

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

An impairment loss is recognised as an expense immediately, unless

the relevant asset is carried at a revalued amount, in which case the

impairment reversal is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying

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

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

carrying amount does not exceed the carrying amount that would

have been determined had no impairment loss been recognised

for the asset (cash-generating unit) in prior years. A reversal of an

impairment loss is recognised as income immediately, unless the

relevant asset is carried at a revalued amount, in which case the

impairment reversal is treated as a revaluation increase.

4.3 Investment in Associates

An associate is an entity over which the Group has significant

influence. Significant influence is thepower toparticipate in the

financialandoperatingpolicydecisionsoftheinvestee,butisnot

control or joint control over those policies.


36


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

the equity method.

Under the equity method the investment in the associate is carried

inthestatementoffinancialpositionatcostpluspost-acquisition

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

changesintheGroup’sshareofprofitsarerecordedinprofitorloss.

Goodwill relating to an associate is included in the carrying amount

of the investment and is neither amortised nor individually tested

for impairment.

Thestatementofprofitor lossreflectstheshareoftheresultsof

operations of the associates. This is profit or loss attributable to

equityholdersoftheassociatesandthereforeisprofitorlossafter

tax. Any change in other comprehensive income of the associate

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

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

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

the statement of changes in equity. Unrealised gains and losses

resulting from transactions between the Group and the associates

are eliminated to the extent of the interest in the associates.

Thefinancialstatementsoftheassociatesarepreparedforthesame

reporting period as the Group.

Investments in associates at Company level are carried at cost.

After application of the equity method, the Group determines

whether it is necessary to recognise an additional impairment loss

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

at each reporting date, whether there is any objective evidence

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

the Group calculates the amount of impairment as the difference

between the recoverable amount of the associate and its carrying

value and recognises the amount in the ‘share of profit of an

associate’inprofitorloss.

Upon loss of significant influence over the associate, the Group

measures and recognises any remaining investment at its fair value.

Any difference between the carrying amount of the associate upon

loss of significant influence and the fair value of the remaining

investment andproceeds fromdisposal is recognised in profit or

loss.

4.4 Fair Value Measurement

TheGroupmeasuresfinancial instruments, suchas investment in

equitiesandnon-financialassetssuchas investmentpropertiesat

fair value at each reporting date.

Fair value is the price that would be received to sell an asset or

paid to transfer a liability in an orderly transaction between market

participants at the measurement date. The fair value measurement

is based on the presumption that the transaction to sell the asset or

transfer the liability takes place either:

- In the principal market for the asset or liability, or

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

market for the asset or liability. The principal or the most

advantageous market must be accessible to by the Group.

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

assumptions that market participants would use when pricing

the asset or liability assuming that market participants act in their

economic best interest.

Afairvaluemeasurementofnon-financialassettakesintoaccount

a market participant’s ability to generate economic benefits by

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

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

use.

The Group uses valuation techniques that are appropriate in the

circumstancesandforwhichsufficientdataareavailabletomeasure

fair value, maximising the use of relevant observable inputs and

minimising the use of unobservable units.

All assets and liabilities for which fair value is measured or disclosed

in the financial statements are categorised within the fair value

hierarchy, described as follows, based on the lowest level input that

issignificanttothefairvaluemeasurementasawhole:

Level 1 - quoted (unadjusted) market prices active markets for

identical assets or liabilities

Level 2 - Valuation techniques for which the lowest level input that

issignificanttotheirfairvaluemeasurementisdirectlyorindirectly

observable

Level 3 - Valuation techniques for which the lowest level input that

issignificanttothefairvaluemeasurementisunobservable


37


4.5 Current versus non-current classification

The Group presents assets and liabilities in the statement of

financial position based on current/non-current classification. An

asset is current when it is:

- Expected to be realised or intended to be sold or consumed in

a normal operating cycle

- Held primarily for the purpose of trading

- Expected to be realised within twelve months after the

reporting period, or

- Cash or cash equivalent unless restricted from being exchanged

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

reporting period

Allotherassetsareclassifiedasnon-current.

A liability is current when:

- It is expected to be settled in normal operating cycle

- It is held primarily for the purpose of trading

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

period, or

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

liability for at least twelve months after the reporting period

TheGroupclassifiesallotherliabilitiesasnon-current.

Deferredtaxassetsandliabilitiesareclassifiedasnon-currentassets

and liabilities.

4.6 Financial assets

Initial recognition and measurement

FinancialassetswithinthescopeofIAS39areclassifiedas:

- financialassetsatfairvaluethroughprofitorlossand

- loans and receivables.

- Held-to-maturity investments

- Available-for-salefinancialinvestments

All financial assets are recognised initially at fair value plus

transactioncosts,exceptinthecaseoffinancialassetsrecordedat

fairvaluethroughprofitorloss.

TheGroup’sfinancialassetsincludecashandshort-termdeposits,

and other receivables, loans and other receivables, quoted and

unquotedfinancialinstruments,statutorydepositsandinvestments

atfairvaluethroughprofitorloss.

Subsequent Measurement

For purposes of subsequent measurement, financial assets are

classifiedinfourcategories:

- Financialassetsatfairvaluethroughprofitorloss

- Loans and receivables

- Held-to-maturity investments

- Available-for-salefinancialinvestments

Fair Value of financial assets

The fair value of investments that are actively traded in organised

financialmarketsisdeterminedbyreferencetoaquotedmarketbid

prices at the close of business on the reporting date, without any

deduction for transaction costs.

Forallotherfinancial instrumentsnottradedinanactivemarket,

the fair value is determined by using the Discounted cashflow

method.

Financialassetsatfairvaluethroughprofitorloss

Financialassetsatfairvaluethroughprofitorlossarethosefinancial

assetsheldfortradingorfinancialassetsdesignatedassuchupon

initial recognition.

Financialassetsareclassifiedasheldfortradingiftheyareacquired

for the purpose of selling in the near term. Derivatives, including

separated imbedded derivatives are also classified as held for

trading unless they are designated as effective hedging instruments

orafinancialguaranteecontract.

These investments are initially recorded at fair value. Subsequent to

initial recognition, these investments are measured at fair value. Fair

value adjustments and realised gains and losses are recognised in

profitorloss.


38


Loans and other receivables

Thesearenon-derivativefinancialassetswithfixedordeterminable

payments that are not quoted in an active market. These

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

the consideration paid for the acquisition of the investment. All

transaction costs directly attributable to the acquisition are also

included in the cost of the investment. After initial measurement,

loans and receivables are measured at amortised cost using the

effective interest rate method (EIR) less impairment.

Gainsandlossesarerecognisedinprofitorlosswheninvestments

are derecognised or impaired as well as through the amortisation

process.

Held-to-maturity investments

Non-derivativefinancialassetswithfixedordeterminablepayments

and fixedmaturities are classified as held tomaturity when the

Group has the positive intention and ability to hold them to

maturity. After initial measurement, held to maturity investments

are measured at amortised cost using the EIR, less impairment.

Amortised cost is calculated by taking into account any discount or

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

oftheEIR.TheEIRamortisationisincludedasfinanceincomeinthe

statementofprofitorloss.Thelossesarisingfromimpairmentare

recognised inprofitor lossasfinancecosts.Theheldtomaturity

investments are reflected under note 11.3.

Available for sale financial assets

Available-for-sale financial investments include equity and debt

securities. Equity investments classified as available-for-sale are

thosethatareneitherclassifiedasheldfortradingnordesignated

atfairvaluethroughprofitorloss.Debtsecuritiesinthiscategory

arethosethatareintendedtobeheldforanindefiniteperiodof

time and which may be sold in response to needs for liquidity or in

response to changes in the market conditions.

After initial measurement, available-for-sale financial assets are

subsequently measured at fair value, with unrealised gains or losses

recognised in other comprehensive income in the available-for-

sale reserve (equity) until the investment is derecognised, at which

time the cumulative gain or loss is recognised in other operating

incomewithinprofitorloss,ortheinvestmentisdeterminedtobe

impaired,whenthecumulativelossisreclassifiedfromtheAvailable

forsalereservetoprofitorlossinfinancecosts.

Where the insurer holds more than one investment in the same

securitythattheyaredeemedtobedisposedofonafirst-infirst-out

basis. Interest earned whilst holding available-for-sale investments

is reported as interest income using the EIR. Dividends earned whilst

holding available-for-sale investments are recognised in profit or

loss as ‘Investment income’ when the right of the payment has

been established.

Derecognition of financial assets

Afinancialassetisderecognisedwhen:

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

- The Group has transferred substantially all the risks and rewards

of the asset or

- The Group has transferred control of the asset.

When the Group has transferred its rights to receive cash flows

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

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

rewards of ownership. When it has neither transferred nor

retained substantially all of the risks and rewards of the asset, nor

transferred control of the asset, the Group continues to recognise

the transferred asset to the extent of the Group’s continuing

involvement. In that case the Group also recognises an associated

liability.

The transferred asset and the associated liability are measured on

a basis that reflects the rights and obligation that the Group has

retained.


39


Impairment of financial assets

The Group assesses at each reporting date whether there is any

objectiveevidencethatafinancialassetorgroupoffinancialassets

isimpaired.Afinancialassetorgroupoffinancialassetsisdeemed

to be impaired if one or more loss events that has occurred after the

initial recognition of the asset and that loss event has an impact on

theestimatedfuturecashflowsofthefinancialassetorthegroup

offinancialassetsthatcanbereliablyestimated.

Evidence of impairment may include indications that the debtors

oragroupofdebtorsisexperiencingsignificantfinancialdifficulty,

default or delinquency in interest or principal payments, the

probability that they will enter bankruptcy or other financial

reorganisation.

Forfinancialassets carriedatamortisedcost, if there isobjective

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

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

amount and the present value of estimated future cash flows

(excluding future expected credit losses that have not yet been

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

discountedatthefinancialasset’soriginaleffectiveinterestrate.If

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

any impairment loss is the current EIR.

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

recognised in the statement pf profit or loss. Interest income

(recorded as finance income in the statement of profit or loss)

continues to be accrued on the reduced carrying amount and is

accrued using the rate of interest used to discount the future cash

flows for the purpose of measuring the impairment loss.

Loans together with the associated allowance are written off when

there is no realistic prospect of future recovery and all collateral has

been realised or has been transferred to the Group.

If, in a subsequent year, the amount of the estimated impairment

loss increases or decreases because of an event occurring after the

impairment was recognised, the previously recognised impairment

loss is increased or reduced by adjusting the allowance account. If a

write-offislaterrecovered,therecoveryiscreditedtofinancecosts

inthestatementofprofitorloss.

Available-for-sale financial investments

Foravailable-for-salefinancial investments, theGroupassessesat

each reporting date whether there is objective evidence that an

investment or a group of investments is impaired. In the case of

equityinvestmentsclassifiedasavailable-for-sale,objectiveevidence

wouldincludea‘significant

or prolonged’ decline in the fair value of the investment below its

cost.‘Significant’istobeevaluatedagainsttheoriginalcostofthe

investment and ‘prolonged’ against the period in which the fair

valuehasbeenbelowitsoriginalcost.TheGrouptreats‘significant’

generally as 20% and ‘prolonged’ generally as greater than six

months. Where there is evidence of impairment, the cumulative

loss–measuredasthedifferencebetweentheacquisitioncostand

the current fair value, less any impairment loss on that investment

previouslyrecognizedinprofitorlosspreviously–isremovedfrom

other comprehensive income and recognised in profit or loss.

Impairment losses on equity investments are not reversed through

profit or loss; increases in their fair value after impairment are

recognised directly in other comprehensive income.

In the case of debt instruments classified as available-for-sale,

impairment is assessed based on the same criteria as financial

assets carried at amortised cost. However, the amount recorded

for impairment is the cumulative loss measured as the difference

between the amortised cost and the current fair value, less any

impairment loss on that investment previously recognised in the

income statement.

Future interest income continues to be accrued based on the

reduced carrying amount of the asset and is accrued using the

rate of interest used to discount the future cash flows for the

purpose of measuring the impairment loss. The interest income is

recordedaspartoffinance income. If, ina subsequentyear, the

fair value of a debt instrument increases and the increase can be

objectively related to an event occurring after the impairment loss

was recognised in the income statement, the impairment loss is

reversed through the income statement.

4.7 Financial Liabilities

Initial recognition and measurement

All financial liabilities are recognised initially at fair value and, in

the case of loans and borrowings, minus directly attributable


40


transaction costs. Financial liabilities include other payables and

accruals, loan term loans and related party payables.

Subsequent Measurement

The measurement of financial liabilities depends on their

classificationasfollows:

Loans and borrowings

After initial recognition, interest bearing loans and borrowings are

subsequently measured at amortised cost using the effective interest

ratemethod.Gainsandlossesarerecognisedinprofitorlosswhen

the liabilities are derecognised, as well as through the effective

interest rate amortisation process. Amortisation cost is calculated

by taking into account any discount or premium on acquisition and

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

Derecognition of financial liabilities

A financial liability is derecognised when the obligations under

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

financial liability is replaced by another from the same lender or

substantiallymodified,suchanexchangeormodificationistreated

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

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

profitorloss.

Offsetting of financial instruments

Financial assets and financial liabilities are off set and the net

amount is reported in the consolidated statement of financial

position if there is a currently enforceable legal right to offset the

recognised amounts and there is an intention to settle on a net

basis, to realise the assets and settle the liabilities simultaneously.

4.8 Reinsurance

The Group cedes insurance risk in the normal course of business

for all of its businesses. Reinsurance assets represent balances due

from reinsurance companies. Amounts recoverable from reinsurers

are estimated in a manner consistent with the outstanding claims

provisions, settled claims associated with the reinsurer policies and

in accordance with the related reinsurance contract. The reinsurance

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

receivable/payable.

Reinsurance assets are reviewed for impairment at each reporting

date or more frequently when an indication of impairment arises

during the reporting year. Impairment occurs when there is

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

recognition of the reinsurance asset that the Group may not receive

all outstanding amounts due under the terms of the contract and

the event has a reliably measurable impact on the amounts that

the Group will receive from the reinsurer. The impairment loss is

recordedinprofitorloss.


41


The Group also assumes reinsurance risk in the normal course

of business for non-life insurance contracts where applicable.

Premiums and claims are recognised as revenue or expenses in the

same manner as they would be if the reinsurance were considered

direct business, taking into account the product classification of

the reinsured business. Reinsurance liabilities represent balances

due to reinsurance companies. Amounts payable are estimated in a

manner consistent with the related reinsurance contract.

Premiums and claims are presented on a gross basis for both ceded

and assumed reinsurance.

Reinsurance assets or liabilities are derecognised when the

contractual rights are extinguished or expire or when the contract is

transferred to another party.

Ceded reinsurance arrangements do not relieve the Group from its

obligation to policyholders.

Gainsandlossesonbuyingreinsurancearerecognisedinprofitor

loss immediately on the date of purchase and are not amortised.

4.9 Insurance Receivables

Insurance receivables are recognised when due and measured on

initial recognition at the fair value of the consideration received or

receivable. The carrying value of insurance receivables is reviewed

for impairment whenever events or circumstances indicate that the

carrying amount may not be recoverable, with the impairment loss

beingrecordedinprofitorloss.

Insurance receivables are derecognised when the derecognition

criteriaforfinancialassetsasdescribedinnote4.6hasbeenmet.

4.10 Cash and cash equivalents

Cashandshort-termdepositsinthestatementoffinancialposition

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

a maturity of three months or less.

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

arereadilyconvertibletoaknownamountofcashwithinsignificant

risk of change in value.

For the purposes of the consolidated statement of cash flows, cash

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

definedabove,netofoutstandingbankoverdrafts.

4.11 Taxes

Current income tax

Current income tax assets and liabilities for the current period are

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

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

the amount are those that are enacted or substantively enacted

by the reporting date in the countries where the Group operates

and generates taxable income. Current income tax assets and

liabilities also include adjustments for tax expected to be payable or

recoverable in respect of previous periods.

Current income tax relating to items recognised directly in equity

or other comprehensive income is recognised in equity or other

comprehensiveincomeandnotinprofitorloss.

Withholding tax on dividend is taxed at source.

Management periodically evaluates positions taken in the tax

returns with respect to situations in which applicable tax regulations

are subject to interpretation and establishes provisions where

appropriate.

Deferred tax

Deferred tax is provided using the liability method on temporary

differences at the reporting date between the tax bases of assets

and liabilities and their carrying amounts for financial reporting

purposes at the reporting date.

Deferred tax liabilities are recognised for all taxable temporary

differences except:

- In respect of taxable temporary differences associated with

investments in subsidiaries, associates, and interests in joint

venture, where the timing of the reversal of the temporary

differences can be controlled and it is probable that the

temporary differences will not reverse in the foreseeable

future.

- When the deferred tax liability arises from the initial recognition

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


42


a business combination and at the time of the transaction,

affectsneithertheaccountingprofitnortaxableprofitorloss.

Deferred tax assets are recognised for all deductible temporary

differences, carry forward of unused tax credits and unused tax

losses, totheextentthat it isprobablethattaxableprofitwillbe

available against which the deductible temporary differences, and

the carry forward of unused tax credits and unused tax losses can

be utilised except:

- when the deferred tax asset relating to the deductible temporary

difference arises from the initial recognition of an asset or

liability in a transaction that is not a business combination and,

at the time of the transaction, affects neither the accounting

profitnortaxableprofitorloss;and

- in respect of deductible temporary differences associated with

investments in subsidiaries, associates and interests in joint

ventures, deferred tax assets are recognised only to the extent

that it is probable that the temporary differences will reverse

in the foreseeable future and taxable profitwill be available

against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each

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

probablethatsufficienttaxableprofitwillbeavailabletoallowallor

part of the deferred tax asset to be utilised. Unrecognised deferred

tax assets are reassessed at each statement of financial position

date and are recognised to the extent that it has become probable

that future taxable profitwill allow the deferred tax asset to be

recovered.

Deferred tax assets and liabilities are measured at the tax rates that

are expected to apply to the year when the asset is realised or the

liability is settled, based on tax rates (and tax laws) that have been

enacted or substantively enacted at the reporting date.

Deferredtaxrelatingtoitemsrecognisedoutsideprofitor loss is

recognisedoutsideprofitorloss.Deferredtaxitemsarerecognised

in correlation to the underlying transaction either in other

comprehensive income or directly in equity.

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

enforceable right exists to set off current tax assets against current

income tax liabilities and the deferred taxes relate to the same

taxable entity and the same taxation authority.

Value added tax (VAT)

Revenues and expenses subject to VAT are recognised net of the

amount of value added tax except:

- Where the value added tax incurred on purchase of assets or

services is not recoverable from the taxation authority in which

case the VAT is recognised as part of the cost of acquisition of

the asset or as part of the expense item as applicable; and

- Receivables and payables that are stated with the amount of

VAT included.

The net amount of VAT receivable from or payable to the taxation

authority is included as part of receivables or payables in the

statementoffinancialposition.

4.12 Leases

The determination of whether an arrangement is a lease or

contains a lease is based on the substance of the arrangement

at the inception date, and requires an assessment of whether the

fulfilment of arrangement is dependent on the use of a specific

asset or assets, and the arrangement conveys a right to use the

assetevenifthatrightisnotexplicitlyspecifiedinanarrangement.

Group as a lessee

Finance leases, which transfer to the Group substantially all the

risksandbenefits incidental toownershipofthe leased item,are

capitalised at the inception of the lease at the fair value of the

leased property or, if lower, at the present value of the minimum

lease payments. Lease payments are apportioned between the

financechargesandreductionoftheleaseliabilitysoastoachieve

a constant rate of interest on the remaining balance of the liability.

Financechargesarereflectedinprofitorloss.

Capitalised leased assets are depreciated over the shorter of the

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

reasonable certainty that the Group will obtain ownership by the

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

anexpenseinprofitorlossonastraightlinebasisoverthelease

term.


43


Group as a lessor

Leases where the group does not transfer substantially all the risks

andbenefitsofownershipoftheassetareclassifiedasoperating

leases.

Initial direct costs incurred in negotiating an operating lease are

added to the carrying amount of the leased asset and recognised

over the lease term on the same basis as rental income.

4.13 Foreign Currency translation

The Group’s consolidated financial statements are presented in

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

company in the Group determines its own functional currency

and items included in thefinancial statementsofeachentityare

measured using that functional currency.

(i) Transactions and balances

Transactions in foreign currencies are initially recorded by the Group

entities at their respective functional currency spot rates at the date

thetransactionfirstqualifiesforrecognition.

Monetary assets and liabilities denominated in foreign currencies

are translated at the functional currency spot rate of exchange

ruling at the reporting date.

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

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

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

monetary items measured at their fair value in a foreign currency

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

value was determined.

(ii) Group Companies

On consolidation, the assets and liabilities of foreign operations

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

reporting date and their statements of comprehensive income are

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

The exchange differences arising on translation for consolidation

are recognised in other comprehensive income. On disposal of a

foreign operation, the component of other comprehensive income

relatingtothatparticularforeignoperationisrecognisedinprofitor

loss.

4.14 Insurance contract liabilities

Insurance contract liabilities are recognised when contracts are

entered into and premiums are charged. These liabilities are known

as outstanding claim provision, which are based on the estimated

ultimate cost of claims incurred but not settled at the reporting

date, whether reported or not together with related claims

handling costs and reduction for the expected value of salvage

andotherrecoveries.Delayscanbeexperiencedinthenotification

and settlement of certain types of claims, resulting in the ultimate

costnotbeingknownwithcertaintyatthefinancialreportingdate.

Claims incurred but not reported are claims arising out of events

which have occurred by the reporting date but have not been

reported. These are estimated at 5% of net written premium.

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

includes provision of earned premiums, unexpired risk and

inadequate premium levels. The liability is derecognised when

the contract expires, is discharged or cancelled. No provision for

equalisation or catastrophe reserves is recognised. The provision for

unearned premiums represents that portion of premiums received

or receivable that relates to risks that have not yet expired at the

reporting date. The provision is recognised when contracts are

entered into and premiums are charged, and is brought to account

as premium income over the term of the contract in accordance

with the pattern of insurance service provided under the contract.

Liability Adequacy Test

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

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

current best estimates of future contractual cash flows and

claims handling administration costs are used. Any deficiency is

immediatelychargedtoprofitorlossinitiallybywritingoffdeferred

acquisition cost (DAC) and by subsequently establishing a provision

for losses arising from liability adequacy tests (the unexpired

risk provision). Any DAC written off as a result of this test is not

reinstated.

Insurance payables

Insurance payables are recognised when due and measured on

initial recognition at the fair value of the consideration received

less directly attributable transaction costs. Subsequent to initial

recognition, they are measured at amortised costs using the

effective interest rate method.


44


Derecognition insurance payables

Insurance payables are derecognised when the obligation under the

liability is settled, cancelled or expired.

4.15 Pensions and other post-employment benefits

The Group operates a defined contributions pension plan

administered by Fidelity Life Assurance for companies in Zimbabwe.

The Zimbabwean companies and employees contribute 7.5% and

16.5% of the pensionable salaries respectively. The assets of the fund

are held in separate trustee administered fund. The Zimbabwean

companies are not liable for any additional contributions in the

instance of a fund shortage.

In addition, for Zimbabwean companies the National Social Security

Scheme was introduced on 1 October 1994 and with effect from

that date all employees became members of the scheme to which

both employees and the company contribute. The companies’

obligationsundertheschemearelimitedtospecificcontributions

as legislated from time to time and are presently 6% of pensionable

emoluments.

4.16 Provisions

Provisions are recognised when the Group has a present obligation

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

that an outflow of resources embodying economic benefits will

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

made of the amount of the obligation. Where the Group expects

some or all of a provision to be reimbursed, the reimbursement is

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

virtually certain. The expense relating to any provision is presented

inprofitorlossnetofanyreimbursement.

4.17 Share-based transactions

Share Options

Employees (including senior executives) of the company receive

remuneration in the form of share options, whereby employees are

granted share options on an annual basis depending on their years

of service and prior year individual performance.

Theshareoptionsareexercisableoveraperiodoftimeasspecified

in the share option rules and are exercised at the grant price.

Options are cancelled on expiration and the company will be

absolved of all obligations relating to the expired share options.

Shares from the share options are issued as and when they are

exercised.

Equity-settled transactions

The cost of equity-settled transaction with employees is measured

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

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

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

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

performanceand/orserviceconditionsarefulfilled,endingonthe

date on which the relevant employees become fully entitled to the

award (“the vesting date”)

The cumulative expense recognised for equity-settled transactions

at each reporting date until the vesting period reflects the extent to

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

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

profitorlosschargeorcreditforaperiodrepresentsthemovement

in cumulative expense recognised as at the beginning and end of

the period.

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

except for awards where vesting is conditional upon a market

condition, which are treated as vesting irrespective of whether

or not market condition is satisfied, provided that all other

performanceand/orserviceconditionsaresatisfied.

When the terms of an equity-settled award are modified, the

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

yetbeenmodified,iftheoriginaltermsoftheawardaremet.An

additionalexpenseisrecognisedimmediatelyforanymodification

that increases the total fair value of the share-based payment

transaction,orisotherwisebeneficialtotheemployeeasmeasured

atthedateofmodification.

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

and designated as a replacement award on the date that it is

granted, the cancelled and new awards are treated as if they were

amodificationoftheoriginalaward,asdescribedintheprevious

paragraph. The dilutive effect of outstanding options is reflected as

additional share dilution in the computation of diluted earnings per

share, see note number 14.2.


45


4.18 Equity movements

Ordinary share capital

The Group has ordinary shares that are classified as equity

instruments. Incremental external costs that are directly attributable

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

Dividend on ordinary share capital

Dividend on ordinary shares are recognised as a liability and

deducted from equity when they are approved by the Company’s

shareholders. Dividends for the year that are approved after the

reporting date are dealt with as a non-adjusting event after the

reporting date.

4.19 Revenue Recognition

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

economicbenefitswillflowtotheGroupandtherevenuecanbe

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

4.19.1 Gross premiums

Gross premium written for general insurance comprise the total

premiums receivable for the whole period of cover provided

by contracts entered into during the accounting year. They

are recognised on the date on which the policy commences.

Premiums include any adjustments arising in the accounting period

for premiums receivable in respect of business written in prior

accounting periods. Premiums collected by intermediaries, but not

yet received, are assessed based on estimates from underwriting or

past experience and are included in premiums written.

Unearned premiums are those proportions of premiums written in a

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

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

attributable to subsequent periods is deferred as a provision for

unearned premiums.

4.19.2 Investment Income

(a) Interest Income

Revenue is recognised as interest accrued (using effective interest

rate), that is the rate that exactly discounts estimated future cash

receiptsthroughtheexpectedlifeofthefinancialinstrumenttothe

netcarryingamountofthefinancialasset.

(b) Dividend

Investment income also includes dividends when the right to

receive payment is established. For listed securities, this is the date

the security is listed as ex-dividend.

(c) Realised gains and losses

Realisedgainsandlossesrecordedinprofitorlossoninvestments

include gains and losses on financial assets and investment

properties. Gains and losses on the sale of investments are

calculated as the difference between net sales proceeds and the

original or amortised cost and are recorded on occurrence of the

sale transaction.

(d) Rental Income

Rental income arising from operating leases on investment

properties is accounted for on a straight line basis over the lease

terms.

4.19.3 Fees and Commission

Commission income is only from ceded Reinsurance. The fees are

recognised as revenue per policy over the period of the policy.

4.20 Benefits, claims and expenses recognition

4.20.1 Gross benefits and claims

General insurance include all claims occurring during the year,

whether reported or not, related internal and external claims

handling costs that are directly related to the processing and

settlement of claims, a reduction for the value of salvage and other

recoveries and any adjustments to claims outstanding from previous

years.

4.20.2 Finance cost

Interest paid is recognised in profit or loss as it accrues and is

calculated by using the effective interest rate method. Accrued

interest is included within the carrying value of the interest bearing

financialliability.

4.20.3 Acquisition costs

Acquisition costs, which represent commissions and other related

expenses, are deferred over the period in which the related

premiumsareearnedandarerecognised infull throughprofitor

loss for the period they relate to. An impairment review is performed


46


at each reporting date or more frequently when an indication of

impairment arises. When the recoverable amount is less than the

carryingvaluean impairments loss is recognised inprofitor loss.

The recoverable amount would be assessed on applicable premium

deferred. Deferred acquisition costs are also considered in the

liability adequacy test for each reporting period.

4.20.4 Reinsurance Claims

Amounts recoverable from reinsurers on claims incurred or

outstandingclaimsareshownasadeductiontothegrossbenefits.

4.21 Property and Equipment

Property including owner occupied properties is stated at cost,

excluding the cost of day to day servicing, less accumulated

depreciation and accumulated impairment losses. Replacement

or major inspection costs are capitalised when incurred and if it is

probable that future economicbenefits associatedwith the item

will flow to the entity and the cost of the item can be reliably

measured.

Equipment is also stated at cost less accumulated depreciation and

impairment. Depreciation is calculated on a straight line method to

write off the depreciable amounts (costs less residual value) of each

asset over its estimated useful life as follows:

- Land and Buildings N/A

- Computer Equipment and Software 5 years

- OfficeEquipment 10years

- Motor Vehicles 5 years

- Furnitureandfittings 10years

The assets’ residual values, useful lives and method of depreciation

are reviewed and prospectively adjusted if appropriate at each

reporting date.

An item of property and equipment is derecognised upon disposal

orwhennofurtherfutureeconomicbenefitsareexpectedfromits

use or disposal. Any gain or loss arising on derecognition of the

assetisincludedinprofitorlossintheyeartheassetisderecognised.

4.22 Investment Properties

Property held for long term rental yields that is not occupied by the

Groupcompanies is classifiedas investmentproperty. Investment

property comprises freehold land and buildings.

Property located on land that is leased out under operating lease is

classifiedasinvestmentpropertyaslongasit’sheldforlongterm

rental yields and is not occupied by the Group companies. The land

is initially recognised at cost. The property is carried at fair value

after initial recognition.

Investment properties are initially measured at cost, including

transaction costs. The cost includes the cost of replacing part of

an existing investment property at the time that cost is incurred

if the recognition criteria are met; and excludes the costs of day-

to-day servicing of an investment property. Subsequent to initial

recognition, investment properties are measured at fair value, which

reflects market conditions at the reporting date. Gains or losses

arising from changes in the fair values of investment properties are

includedinprofitorlossintheyearinwhichtheyarise.

Fair value is determined annually by an accredited external

independent valuer. Investment property that is being redeveloped

for continuing use as investment property, or for which the market

has become less active, continues to be measured at fair value.

Changes in fair valuesare recorded inprofitor loss. Fair value is

based on active market, adjusted, if necessary, for any difference in

thenature,locationorconditionofthespecificasset.

Transfers are made to or from investment property only when there

is a change in use. For a transfer from investment property to owner

occupied property, the deemed cost for subsequent accounting

is the fair value at the date of change in use. If owner occupied

property becomes an investment property, the Group accounts for

such property in accordance with the policy stated under property

and equipment up to the date of change in use.

Investment properties are derecognised when either they have been

disposed of or when the investment is permanently withdrawn from

useandnofutureeconomicbenefitisexpectedfromitsdisposal.


47


Any gains or losses on the retirement or disposal of an investment

propertyarerecognisedinprofitorlossintheyearofretirementor

disposal.

4.23 Inventories

The inventories are made up of:

a)stationeryandotherofficeconsumablesand

b) costs in relation to an investment property development.

Inventories are valued at the lower of cost and net realisable value.

5 SOURCES OF ESTIMATION UNCERTAINTY

Thepreparationof theconsolidatedfinancial statements requires

management to make judgments, estimates and assumptions

that affect the reported amounts of revenues, expenses, assets

and liabilities, and the disclosure of contingent liabilities, at the

reporting date. However, uncertainty about these assumptions and

estimates could result in outcomes that could require a material

adjustment to the carrying amount of the asset or liability affected

in the future periods.

Judgments

In the process of applying the Group’s accounting policies,

management has made the following judgements, which have

the most significant effect on the amounts recognised in the

consolidatedfinancialstatements:

(a) Operating lease commitments – Group as lessor

The Group has entered into commercial property leases on its

investment property portfolio. The Group has determined, based

on an evaluation of the terms and conditions of the arrangements,

such as the lease term not constituting a substantial portion of

the economic life of the commercial property, that it retains all the

significantrisksandrewardsofownershipofthesepropertiesand

accounts for the contracts as operating leases.

(b) Valuation of financial assets using valuation techniques

The unquoted equities are valued using the discounted cashflow

approach. Previously these were being measured used the net

asset valuation method. The change was necessitated by the

need to align the accounting estimate to International Accounting

Standards.


48


Estimates and assumptions

The key assumptions concerning the future and other key sources of

estimatinguncertaintyatthereportingdate,thathaveasignificant

risk of causing a material adjustment to the carrying amounts of

assets and liabilities within the next financial year, are discussed

below.

(c) Unearned premium reserves (UPR)

Unearned premiums represent the proportion of premiums, written

in the year that relate to unexpired terms of policies in force at

the reporting date generally calculated on the 365th basis after

providing 20% for deferred acquisition costs (DAC). (The DAC

percentage is split between commissions (15%) and administrative

expenses (5%)). As 31 December 2014 unearned premium reserve

was $4,658,365 (2013 - $4,934,285). The movement on the

unearnedpremiumreserveareshownthroughprofitorloss.

As at 31 December 2014 DAC was $914,759, (2013 - $942,835)

(d) Insurance Contract Liabilities

Outstanding claims

Outstanding claims represent the ultimate cost (net of salvage

recoveries) of setting all claims arising from events that have

occurred up to the reporting date. Accrual is made for the estimated

costs of claims net of anticipated recoveries under reinsurance

arrangementsnotifiedbutnotsettledatyearend.

Incurred but not reported claims provision (IBNR)

Claims incurred but not reported (IBNR) claims provision, is a

provision for claims arising out of events which have occurred by

the reporting date but have not yet been reported at that date.

The group does not use actuarial claims projection techniques.

However, the historical patterns have led the Group to determine

the following parameters as appropriate estimates of the related

provision:

IBNR 5% of NPW

DAC 20% of UPR (15% commissions and 5% administrative

expenses)

(e) Deferred tax assets and liabilities

Deferred tax assets are recognised for unused tax losses to the extent

thatitisprobablethattaxableprofitwillbeavailableagainstwhich

the losses can be utilised. Significantmanagement judgement is

required to determine the amount of deferred tax asset that can

be recognised, based upon the likely timing and the level of future

taxableprofitstogetherwithfuturetaxplanningstrategies.

(f) Fair value on investment properties

The Group carries its investment properties at fair value, with

changesonfairvaluebeingrecognisedinprofitorlossaccount

The Group engaged an independent valuer to assess fair value

as at 31 December 2014. A valuation methodology based on a

discounted cashflow model was used together with reference

to market based evidence using comparable prices adjusted for

specificmarket factors suchasnature, locationand conditionof

the property.

The determined fair value of the investment properties is most

sensitive to the estimated yield as well as the long term vacancy

rate. The key assumption used to determine the fair value of the

investment properties are further explained in note 10.

6 EARNINGS PER SHARE

Basic earnings per share amounts is calculated by dividing the net

profitfortheyearattributabletoordinaryshareholdersoftheparent

by the weighted average number of ordinary shares outstanding at

the reporting date.

Dilutedearningspershare iscalculatedbydividingthenetprofit

attributable to ordinary equity holders of the parent by the

weighted average number of ordinary shares outstanding during

the year plus the weighted average number of ordinary shares

that would be issued on the conversion of all the dilutive potential

ordinary shares into ordinary shares.

The following reflects the income and share data used in the basic

and diluted earnings per share computations:


49


Group Group

2014 2013

US$ US$

Profitfortheyearattributedtoequity

holders of the parent 1,131,081 2,250,046

Weighted number of shares for basic EPS 566,764,773 565,798,859

Scrip dividend shares - 965,914

Weighted number of shares for basic EPS 566,764,773 566,764,773

Effect of share options 20,458,289 11,267,360

Weighted number of shares for diluted EPS 587,223,062 578,032,133

Basic earnings per share (US cents) 0.20 0.40

Diluted earnings per share (US cents) 0.19 0.39

7 SEGMENT INFORMATION

Formanagementpurposes, theGroup isorganized intobusiness

units based on their products and services and geographicl spread.

The two reportable segment are as follows:

1) Short term insurance

2) Property investment.

- Short term insurance segment provides general insurance

products to individuals and corporates. Revenue in this

segment is derived primarily from insurance premiums,

investment income and fair value gains and losses on

investments.

- Thepropertysegmentleasesofficesandresidentialproperties

owned by the Group which are surplus to the Group’s

requirements.

- No operating segments have been aggregated to form the

above reportable operating segments.

- Management monitors operating results of its business units

separately for the purpose of making decisions about resource

allocation and performance assessment.

- Segmentperformanceisevaluatedbasedonoperatingprofit

orlossandismeasuredconsistentlywithoperatingprofitor

lossintheconsolidatedfinancialstatements.


50


SEGMENT REPORT - 2014

Group 2014

1. Analysis by products and services Short-term insurance Property Total

US$ US$ US$

Profitandlossitems

Revenue from external customers 25,094,983 - 25,094,983

Revenue from related parties 3,633,158 - 3,633,158

Total gross premium written 28,728,141 - 28,728,141

Investment Income & other revenue 214,567 667,166 881,733

Gross revenue and income 28,942,708 667,166 29,609,874

Netbenefitsandclaims (7,928,776) - (7,928,776)

Net Commission and acquisition expenses (1,677,832) - (1,677,832)

Reinsurance & unearned premium reserve movement (10,962,425) - (10,962,425)

Finance costs (6,895) (33,091) (39,986)

Other operating and administrative expenses (6,863,357) (479,527) (7,342,884)

Total benefits, claims and other expenses (27,439,285) (512,618) (27,951,903)

Operating profit before share of associate 1,503,423 154,548 1,657,971

Share of loss of associates (472,272) - (472,272)

Taxation credit/(expense) 17,467 (64,020) (46,553)

Segment result 1,048,618 90,528 1,139,146

Statement of financial position items

Total Assets 27,505,927 3,330,612 30,836,539

Total Liabilities (12,571,387) (395,780) (12,967,167)

Investment in associates included in non-current assets 489,384 - 489,384


51



2. Analysis by geographical areas Zimbabwe Uganda Total

US$ US$ US$

Revenue from external customers 23,530,550 1,564,433 25,094,983


Total gross premium written 27,163,708 1,564,433 28,728,141

Investment income & other revenue 702,865 178,868 881,733

Netbenefitsandclaims (7,605,162) (323,614) (7,928,776)

Net commission and acquisition expenses (1,429,808) (248,024) (1,677,832)

Reinsurance & unearned premium reserve movement (10,722,233) (240,192) (10,962,425)

Finance costs (35,248) (4,738) (39,986)


Total benefits, claims and other expenses (26,258,747) (1,693,156) (27,951,903)


Shareofprofitofassociates (472,272) - (472,272)

Taxation (13,773) (32,780) (46,553)

Segment Result 1,121,781 17,365 1,139,146


Total Assets 27,505,927 3,330,612 30,836,539

Total Liabilities (11,205,876) (1,761,291) (12,967,167)


52


SEGMENT REPORT - 2013

Group 2013

1. Analysis by products and services Short-term insurance Property Total

1. Profit and loss items US$ US$ US$

Revenue from external customers 25,519,175 - 25,519,175


Total gross premium written 30,018,341 - 30,018,341

Investment Income & other revenue 1,134,649 1,236,605 2,371,254

Gross revenue and income 31,152,990 1,236,605 32,389,595

Netbenefitsandclaims (7,900,800) - (7,900,800)

Net Commission and acquisition expenses (1,791,100) - (1,791,100)

Reinsurance & unearned premium reserve movement (13,110,023) - (13,110,023)

Finance costs (20,385) (46,269) (66,654)

Other operating and administrative expenses (6,310,317) - (6,310,317)

Total benefits, claims and other expenses (29,132,625) (46,269) (29,178,894)

Operating profit before share of associate 2,020,365 1,190,336 3,210,701


Taxation (expense) (451,218) (151,286) (602,504)

Segment result 1,272,458 1,039,050 2,311,508


Total Assets 22,875,972 6,892,842 29,768,814

Total Liabilities (12,454,384) (441,705) (12,896,089)



53


2. Analysis by geographical areas Zimbabwe Uganda Total

US$ US$ US$

Revenue from external customers 23,564,275 1,954,900 25,519,175


Total gross premium written 28,063,441 1,954,900 30,018,341

Investment income & other revenue 2,103,688 267,566 2,371,254

Netbenefitsandclaims (7,423,319) (477,481) (7,900,800)

Net commission and acquisition expenses (1,606,946) (184,154) (1,791,100)

Reinsurance & unearned premium reserve movement (12,760,235) (349,788) (13,110,023)

Finance costs (57,875) (8,779) (66,654)


Total benefits, claims and other expenses (27,159,390) (2,019,504) (29,178,894)



Taxation (531,873) (70,631) (602,504)

Segment Result 2,179,177 132,331 2,311,508


Total Assets 26,725,694 3,043,120 29,768,814

Total Liabilities (11,028,220) (1,867,869) (12,896,089)



54



2014 2013 2014 2013

US$ US$ US$ US$

8.1 Investment income

Rental income from investment properties 758,767 666,978 127,703 61,613

Dividendincomefromfinancialassetsatfairvaluethroughprofitandloss 44,093 46,003 44,093 46,003

Interestincomefromfinancialassetsatfairvaluethroughprofitandloss 436,250 540,361 369,486 488,320

Other investment income 225,384 164,579 123,472 94,072

1,464,494 1,417,921 664,754 690,008

Other investment income consists of interest earned on staff

loans and fees for collection agency services.

8.2 Other income

Management fees charged 6,000 8,000 89,478 91,478

Income from the lodge 24,800 15,850 - -

30,800 23,850 89,478 91,478

8.3 Net Benefits And Claims

Gross benefits and claims paid 12,440,576 10,070,682 11,720,789 9,315,478

Claims recovered from reinsurers (4,466,445) (3,212,129) (4,075,063) (2,896,488)

Gross change in contract liabilities

Change in outstanding losses provision (25,852) 831,926 (21,686) 798,953

Change in IBNR claims provision (19,503) 210,321 (18,879) 205,375

Total gross change in contract liabilities (45,355) 1,042,247 (40,565) 1,004,328

7,928,776 7,900,800 7,605,161 7,423,318


55


8.4 Operating and Administrative Expenses Group Group Company Company

2014 2013 2014 2013

Note US$ US$ US$ US$

Other operating expenses include the following:

Auditors’ remuneration for audit 106,555 105,337 89,970 85,356

Directors’ fees and emoluments 129,633 186,974 79,340 74,605

Wages and salaries (excluding executive management) 2,747,134 2,544,178 2,605,737 2,373,537

Wages and Salaries (executive management) 713,156 478,800 578,004 478,800

Pension costs 258,533 245,618 247,712 233,699

Social security costs 49,018 59,009 24,528 15,423

Depreciation 317,835 298,663 279,056 281,135

Share option costs 46,233 23,118 46,233 23,118

Legal fees 11,166 14,334 11,166 14,102

Rent, premises costs and utilities 491,465 464,980 385,476 357,174

Travel and representation 383,566 328,406 360,701 304,959

Marketing, advertising & promotion 446,323 425,397 415,080 407,925

Investment property expenses (less depreciation) 475,693 354,129 - -

Impairment of receivables 229,972 - 229,972 -

Allowances for credit losses (Note 15) 101,364 16,955 - -

Other operating and administration costs 835,238 1,137,723 797,016 795,688

7,342,884 6,683,621 6,149,991 5,445,521

8.5 Other Gains/(Losses)

Profit/(loss)ondisposalofpropertyandequipment 11,029 (16,566) 10,879 (16,566)

Gainsondisposaloffinancialassetsthroughprofitandloss 83,051 91,060 83,051 91,060

Write off of investments (492,247) - (492,247) -

Gain on disposal of investment property - 141 - 141

(398,167) 74,635 (398,317) 74,635

Unrealised (loss)/ gain

Fair value gains on investment properties 10 36,347 1,250,679 15,000 199,040

Fairvaluegain/(loss)onfinancialassetsthroughprofitandloss 11.2.1 (213,195) 23,439 (213,195) 23,439

Fair value gain/(loss) on unquoted equities 11.1.1 (7,328) 86,250 (7,328) (79,299)

Impairment of investments - (125,374) - (325,377)

Unrealised exchange (loss)/gain on monetary assets and liabilities (31,218) (6,842) (31,218) (6,842)

(215,394) 1,228,152 (236,741) (189,039)

Net other gains/(losses) (613,561) 1,302,787 (635,058) (114,404)

During the year investments amounting to $492,247 were written off as they related to amounts deemed as not fully recoverable from troubled

Financial Institutions.


56


8.6 Investment in associates Group Group Company Company

2014 2013 2014 2013

US$ US$ US$ US$

Reconciliation of the carrying amount

Balance at beginning of the year 961,656 958,345 363,010 63,010

Acquisition of interest in associate - 300,000 - 300,000

Share of loss for the year (472,272) (296,689) - -

Balance at year end 489,384 961,656 363,010 363,010

ThefollowingtablesillustratesthesummarisedfinancialinformationofAssociates:

Clover Leaf Panel Beaters

2014 2013

Country of incorporation Zimbabwe Zimbabwe

Principal activities Motor Industry Motor Industry

Percentage holding 45% 45%

Year end December December

Accounting method Equity Accounting Equity Accounting

Non-current assets 92,532 154,999

Current assets 1,123,751 895,277

Current liabilities (408,580) (98,411)

Non current liabilities (18,648) (16,913)

Equity 789,055 934,952

Proportion of the Group’s ownership 45% 45%

Share of Net Asset Value 355,075 420,728

Revenue 2,116,701 2,413,176

Cost of sales (1,210,825) (1,263,778)

Admin expenses (1,027,535) (964,301)

(Loss)/Profitbeforetax (121,659) 185,097

Income tax expense (42,946) -

(Loss)/Profit for the year (164,605) 185,097

Group’s share of profit for the year (74,072) 83,294


57



Fidelity Funeral Services

2014 2013

Country of incorporation Zimbabwe Zimbabwe

Principal activities Life Assurance Life Assurance

Percentage holding 23.9% 23.9%



Non-current assets 271,740 286,571

Current assets 167,004 168,034

Current liabilities (337,421) (146,076)

Non-current liabilities (30,470) (30,149)

Equity 70,853 278,380

Proportion of the Group’s ownership 23.9% 23.9%

Share of Net Asset Value 16,934 66,533

Revenue 191,825 1,680,917

Cost of sales - (981,494)

Admin expenses (830,769) (2,291,427)

(Loss)/Profitbeforetax (638,944) (1,592,004)

Income tax expense 192 2,121

(Loss)/Profitfortheyear (638,752) (1,589,883)

Group’s share of (loss)/profit for the year (152,662) (379,982)

58


Diamond Seguros

2014 2013

Countryofincorporation Mozambique Mozambique

Principal activities Non life Insurance Non life Insurance

Percentage holding 27.27% 30%



Non-current assets 85,021 -

Current assets 2,216,118 -

Current liabilities (2,101,426) -

Non-current liabilities - -

Equity 199,713 -

Proportion of the Group’s ownership 27.27% 30.0%

Share of Net Asset Value 54,462 -

Revenue 2,594,607 -

Cost of sales (2,452,751) -

Admin expenses (1,063,231) -

Exchange gain 21,088 -

(Loss)/Profitbeforetax (900,287) -

Income tax expense - -

(Loss)/ Profit for the year (900,287) -

Group’s share of (loss)/profit for the year (245,538) -

Reconciliation of Investments in associates 2014 2014 2014 Total

Clover Leaf Fidelity Funeral Diamond

Panel Beaters Assurance Seguros

Share of net assets 355,075 16,934 54,462 426,471

Subsequent capitalisation of associate - 62,913 - 62,913

Carrying amount of investment 355,075 79,847 54,462 489,384

Reconciliation of Investments in associates 2013 2013 2013 Total

Clover Leaf Fidelity Funeral Diamond

Panel Beaters Assurance Seguros

Share of net assets 420,728 66,533 - 487,261

Subsequent capitalisation of associate - 62,913 300,000 362,913

Difference in measurement policy on translation to USD 8,419 103,063 - 111,482

Carrying amount of investment 429,147 232,509 300,000 961,656


59



2014 2013 2014 2013

US$ US$ US$ US$

8.7 Income Tax

The major components of income tax expense for the

year ended 31 December 2014 and 2013 are:

Current income tax:

Current income tax charge (note 18) 314,078 100,080 249,294 -

Deferred tax:

Relating to origination and reversal of temporary differences (267,525) 502,424 (299,541) 380,587

Incometaxexpense/(credit)reportedinthestatementofprofitorloss 46,553 602,504 (50,247) 380,587

Tax rate reconciliation

Tax at normal rate (25.75%) (25.75%) (25.75%) (25.75%)

Adjust for:

Effect of non-deductible expenses 34.1% (7.8%) 27.9% (10.8%)

Effect of non-taxable income (9.7%) 13.3% (9.7%) 11.4%

Other effects (37.9%) (0.5%) (29.0%) (0.5%)

Effective rate (39.3%) (20.7%) (36.6%) (25.7%)

8.8 Components of other comprehensive income

Exchange difference on foreign operation translation (103,337) 47,202 - -

This arose from the foreign translation of First Insurance Company (FICO), from Ugandan Shillings (functional currency) to United States Dollars

(reporting currency). The rate used to translate the Statement of Financial Position was $1:UGX 2,773 (2013 - 2,533). The average rate used to

translatethestatementofProfitorLossandothercomprehensiveincomewas$1:UGX2,773(2013-2,588).


60


9. Property and Equipment

Group Freehold Land Motor vehicles Equipment & Furniture

& Buildings computers & fittings Total

US$ US$ US$ US$ US$

Cost

Balance as at 1 January 2013 210,000 1,017,139 496,399 331,755 2,055,293

Exchange rate movement on foreign operations - 1,953 4,024 4,371 10,348

Additions - 113,634 72,496 154,770 340,900

Disposals (130,000) (61,738) (6,132) - (197,870)

Balance as at 31 December 2013 80,000 1,070,988 566,787 490,896 2,208,671

Exchange rate movement on foreign operations - (903) 3,769 (9,862) (6,996)

Additions - 58,360 54,339 11,985 124,684

Disposals - (19,270) (3,361) (4,404) (27,035)

Balance at 31 December 2014 80,000 1,109,175 621,534 488,615 2,299,324

Accumulated Depreciation

Balance as at 1 January 2013 - (424,296) (265,506) (171,323) (861,125)

Charge for the year - (179,547) (83,330) (35,787) (298,664)

Eliminated on disposals - 44,267 333 - 44,600

Exchange rate movement on foreign operations - (23,939) (4,917) (2,451) (31,307)

Balance on 31 December 2013 - (583,515) (353,420) (209,561) (1,146,496)


Eliminated on disposals - 19,140 3,648 3,193 25,981

Exchange rate movement on foreign operations - 5,735 (13,330) 10,807 3,212

Balance at 31 December 2014 - (760,079) (446,432) (228,628) (1,435,139)

Carrying amount at 31 December 2014 80,000 349,096 175,102 259,987 864,185

Carrying amount at 31 December 2013 80,000 487,473 213,367 281,335 1,062,175


61



Company Freehold Land Motor vehicles Equipment & Furniture

& Buildings computers & fittings Total

US$ US$ US$ US$ US$

Cost

Balance at 01 January 2013 210,000 984,660 341,888 189,118 1,725,666

Additions - 93,468 47,270 138,303 279,041

Disposals (130,000) (61,738) (6,132) - (197,870)


Additions - 58,360 49,571 9,160 117,091

Disposals - (19,270) (3,361) (4,404) (27,035)


Depreciation

Balance on 01 January 2013 - (411,603) (192,411) (94,121) (698,135)


Eliminated on disposals - 44,267 279 - 44,546

Balance on 31 December 2013 - (556,936) (256,449) (121,339) (934,724)


Eliminated on disposals - 19,140 3,168 2,365 24,673

Balance at 31 December 2014 - (734,641) (303,072) (151,394) (1,189,107)



62



63

10 Investment Properties


Company 2014 2013 2014 2013

US$ US$ US$ US$

1. Reconciliation of the carrying amount

Balance at 1 January 9,703,843 8,013,253 2,323,487 1,865,958

Additions 176,368 406,850 - 258,489

Transfer to inventory 16.1 (678,487) - (678,487) -

Exchange rate movement on foreign operations (78,991) 33,061 - -

Fair value adjustments (recognised as part of investment income) 8.5 36,347 1,250,679 15,000 199,040

Balance at 31 December 9,159,080 9,703,843 1,660,000 2,323,487

The Group’s investment properties consist of commercial and residential properties located in Zimbabwe and Uganda.

Investment properties are stated at fair value as at 31 December 2014 and 31 December 2013. Fair values were determined, with reference to

valuations performed by Tony West Real Estates, an accredited independent valuer.

The value of the property was determined by its capacity to generate income in form of rentals. This was measured by a rental yield. The

optimal rental yield of 10% was used as at 31 December 2014. The value of the commercial properties was therefore calculated using the yield

computation formulae as follows:

V = R/Y

where V = Value

R = Annual rental

Y = Annual yield

With regard to residential properties, the valuer was able to identify various residential properties sold or which were on sale and situated in

comparableareas.Afteradjustmentsforquality,locationandsizeontheratesfortheproperties,theserateswerethenappliedtothespecific

residential properties.

Description of valuation techniques used and key inputs to valuation on commercial properties are as follows:

Valuation technique Significant Range

unobservable inputs

Commercial properties Rental yield Net open market rental rate 10%

$7.00 per square metre yield

Significantincreases(decreases)inestimatedrentalvalueandrentgrowthperannuminisolationwouldresultinasignificantlyhigheror(lower)

fair value of the properties. The rental income that arose during the year is included in investment income. Investment properties are mainly kept

for capital appreciation and to earn rentals. The Group entered into operating lease contracts with all tenants for the investment property.



64


2. Income and expenses related to investment property 2014 2013 2014 2013

US$ US$ US$ US$

Rentalincomefrominvestmentpropertyrecognisedinprofitandloss. 758,767 666,978 127,703 61,613

Direct operating expenses (repairs, maintenance, etc.) for:

- Property that generated rentals during the year (excluding depreciation) 8.4 (475,693) (354,129) - -

Profit arising from investment properties carried at fair value 283,074 312,849 127,703 61,613

The following table provides the fair value measurement hierarchy of the Group’s investment property:

Quoted prices in Significant Significant

active Market observable inputs Unobservable inputs

Date of Valuation Total Level 1 Level 2 Level 3

Commercial properties 31 December 2014 6,668,980 - - 6,668,980

Residential properties 31 December 2014 2,490,099 - - 2,490,099

9,159,079 - - 9,159,079

Commercial properties 31 December 2013 6,500,000 - - 6,500,000

Residential properties 31 December 2013 3,203,843 - - 3,203,843

9,703,843 - - 9,703,843

Investment properties that were pledged as security for the mortgage loan were valued at $580,000 as at 31 December 2014, (2013 -

$580,000). As at 31 December 2014, the loan balance amounted to $148,799, (2013 - $193,307).

Sensitivity analysis

Thefollowinganalysisshowstheimpactofa10%decline/increaseinpropertyvalueonprofitandnetassets.

2014 Profit Net Assets ($)

10% decline in property value (915,908) (915,908)

10% increase in property value 915,908 915,908

Positivefiguresrepresentanincreaseinprofitorincreaseinvalueofnetassets.



11 Investments

11.1 Investment in Unquoted Equities


2014 2013 2014 2013

%age Holding US$ US$ US$ US$

Fidelity Life Asset Management (Zimbabwe) 1.92% 7,489 25,480 7,489 25,480

Uganda Reinsurance 1.00% 43,455 39,480 - -

Central Broadcasting Service (Uganda) 17.61% 211,928 208,649 - -

Genesis Finance Limited 10.00% - 223,630 - 223,630

Diamond General Insurance (Zambia) 11% 304,864 94,001 304,864 94,001

567,736 591,240 312,353 343,111

11.1.1 Movements in Unquoted Equities

Opening balance 591,240 268,242 343,111 193,780

Additions 200,200 228,630 200,200 228,630

Reclassificationtoreceivables (10,649) - (10,649) -

Fair value adjustments 8.5 (7,328) 86,250 (7,328) (79,299)

Investments impaired (212,981) - (212,981) -

Exchange rate movement on foreign operations 7,254 8,118 - -

Closing balance 567,736 591,240 312,353 343,111

During the year an amount of $212,981 relating to Genesis Finance Limited was written off and the balance of $10,649 deemed collectable was

reclassifiedtootherreceivables.

11.2 Short Term Investments

Government, Municipal stocks and bonds 697,492 518,698 390,000 250,000

Money market deposits 489,781 147,670 - -

Quoted equities 547,374 1,142,767 547,374 1,142,767

Grand Total 1,734,647 1,809,135 937,374 1,392,767

TheGroupholdsinvestmentsinmoneymarketdeposits,Government,Municipalstocksandbondswithfinancialinstitutionswithinterestrates

ranging from 3% to 13%, per annum and mature in 3 to 9 months.

65



11.2.1 Movement in Quoted Equities Group Group Company Company

2014 2013 2014 2013

US$ US$ US$ US$

Opening balance 1,142,767 346,372 1,142,767 346,372

Additions 50,991 1,732,998 50,991 1,732,998

Disposals (433,189) (960,042) (433,189) (960,042)

Fair value adjustment 8.5 (213,195) 23,439 (213,195) 23,439

Closing balance 547,374 1,142,767 547,374 1,142,767

11.2.2 Movement in Short Term Investments (Excluding Quoted Equities)

Opening balance 666,368 1,370,012 250,000 1,078,608

Additions 5,055,295 3,957,626 4,425,853 3,640,384

Investment income 436,250 533,116 369,486 488,320

Realised on maturity (4,970,640) (5,194,386) (4,655,339) (4,957,312

Closing balance 1,187,273 666,368 390,000 250,000

11.3 Long Term Investments Held to Maturity

Government, Municipal stocks and bonds - 100,000 - 100,000

Money market deposits 300,000 300,000 300,000 300,000

300,000 400,000 300,000 400,000

Thecompanyholdsinvestmentsinmoneymarketdepositswithfinancialinstitutionswithinterestratesof6%andmaturein28to54months.

In 2013 the company held long-term bonds at an interest rate of 6% and matured after 12 months.

11.3.1 Movement in Long Term Investments Held to Maturity

Opening balance 400,000 507,745 400,000 507,745

Additions - 400,000 - 400,000

Realised on maturity (100,000) (507,745) (100,000) (507,745)

Closing balance 300,000 400,000 300,000 400,000

66



67

11.4 Fair Value Measurements

The table below provides the fair value measurement hierarchy of the Group’s assets and liabilities.

Quantitative disclosure fair value measurement hierarchy for assets as at 31 December 2014:

Quoted prices in Significant Significant

active Market observable inputs Unobservable inputs Total

Level 1 Level 2 Level 3 31-Dec-14

2014 Group

Asset measured at fair value:

Quoted equity shares

Consumer 448,347 - - 448,347

Financial services 99,027 - - 99,027

Unquoted equity shares

Financial services - - 567,736 567,736

Total 547,374 - 567,736 1,115,110

2014 Company



Consumer 448,347 - - 448,347




Total 547,374 - 312,353 859,727

2013 Group



Consumer 958,179 - - 958,179


Construction 2,064 - - 2,064



Money Market investments

Total 1,142,767 - 591,240 1,734,007

2013 Company Level 1 Level 2 Level 3 31-Dec-13


Investment Properties


Consumer 958,179 - - 958,179


Construction 2,064 - - 2,064


Total 1,142,767 - 343,111 1,485,878



For investment property ranking, refer to note 10.

Thecarryingamountoffinancialassetsandfinancialliabilitiescarriedatarmotisedcostapproximatetheirfairvalues.

11.5 Other Non-Current Assets

Included in other non- current assets are long term staff loans amounting to $219,813 (2013 - $331,302)

12 Investment in Subsidiaries

12.1 Information about subsidiaries

Name Principal Activity Country of % equity % equity

Corporation interest US$ interest US$

2014 2014 2013 2013

Thirty Samora Machel (Private) Limited Property Investment Zimbabwe 100% - 100% -

First Insurance Company Limited Insurance Solutions Uganda 53.56% 1,020,236 53.56% 829,930

Marabou Investments (Private) Limited Property Investment Zimbabwe 100% 250,000 100% 250,000

Investment in Thirty Samora (Private) Limited is nil as this company was purchased during the Zimbabwe dollar era and at conversion the value was

not redenominated to United States Dollars (USD). There has not been subsequent investment in this subsidiary.

68



69

12.2 Information about subsidiaries

Name Principal Activity Country of % equity % equity

Corporation NCI US$ NCI US$

2014 2014 2013 2013

Thirty Samora Machel Private Limited Property Investment Zimbabwe 0% - 0% -

First Insurance Company Limited Insurance Solutions Uganda 46.44% 799,247 46.44% 549,438

Marabou Investments Property Investment Zimbabwe 0% - 0% -

12.3 Reconciliation of investments in subsidiaries


2014 2013 2014 2013

US$ US$ US$ US$

Opening balance - - 1,079,930 1,279,930

Impairment - FICO - - - (200,000)

Additional Investment - - 190,306 -

Closing balance - - 1,270,236 1,079,930

In 2014 an additional investment in First Insurance Company of Uganda was made of $190,306. There was no change in shareholding structure as

all shareholder followed their rights. In 2013, the investment in First Insurance Company of Uganda was impaired by $200,000 in order to reflect

the estimated recoverable amount of the investment.

Reduction of shareholding in Subsidiary

In 2013, the Group’s shareholding in First Insurance Company Limited was reduced due to injection of new capital by new shareholders. Schedule

below shows an analysis of the net asset value before and after injection of cash. The difference has been recognised in retained earning within

equity:

Net asset value adjustment before injection of cash

Net Asset Value 945,862

Group’s share at 63.06% 596,461



70

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Net asset value adjustment after injection of cash

Net Asset Value after dilution 1,127,958

Group’s share at 53.56% 604,134

Difference recognised in retained earnings within equity 7,674

12.4 Financial Information of the subsidiary that has material non-controlling interest: - First Insurance Company of Uganda

Summarised Statement of profit and loss

2014 2013

US$ US$

Gross premium written & other revenue/income 1,743,302 2,222,466

Reinsurance premium (325,840) (389,281)

Unearned premium provision 85,650 39,493

Net claims incurred (323,615) (477,481)

Net commission paid (248,022) (184,154)

Operating costs (876,589) (999,302)

Finance Costs (4,738) (8,779)

Profitbeforetax 50,148 202,962

Tax (expense)/credit (32,780) (70,631)

Total comprehensive income 17,368 132,331

Attributable to non controlling interest 8,065 61,462



Summarised Statement of Financial Position

As at 31 December 2014 2014 2013

US$ US$

Inventories, cash and bank balances & other current assets 2,380,018 1,994,353

Property and equipment & other non-current assets 771,671 800,638

Financial assets (non-current) 255,382 248,129

Trade and other payables (1,837,751) (1,867,869)

Interest bearing loans and borrowing - -

and deferred tax liabilities (non-current) - -

Total equity 1,569,320 1,175,251

Non controlling interest (NCI) 799,247 549,438

Summary of cash flow information

For the Year ended 31 December 2014 2014 2013

Operating (136,464) 248,505

Investing (440,670) (334,467)

Financing 386,554 57,122

Net increase/(decrease) in cash and cash equivalent (190,580) (28,840)


2014 2013 2014 2013

13 Deferred Tax US$ US$ US$ US$

13.1 Deferred Tax Asset 31,818 70,722 - -

Movement in deferred tax asset

Opening balance 70,722 134,756 - -

Deferredtaxchargefortheyearinprofitorloss (32,780) (70,631) - -


Closing balance 31,818 70,722 - -

Deferred Tax Asset Analysis

Property and equipment (10,503) 825 - -

Investment properties (67,075) 1,148 - -

Unquoted equities (52,762) 52,100 - -

Tax losses 152,220 - - -

Short-term provisions 9,938 16,649 - -

31,818 70,722 - -

The deferred tax asset have been recognised by the Group arising from assessed tax losses made by the Subsidiary FICO, which can be recovered

fromfuturetaxableprofits.

71



13.2 Deferred Tax Liability Group Group Company Company

2014 2013 2014 2013

Movement in Deferred Tax Liability US$ US$ US$ US$

At beginning of year 691,204 259,411 380,995 408

Exchange difference 1,736 - - -

Deferredtaxcharge/(credit)fortheyearinprofitorloss (300,305) 431,793 (299,542) 380,587

Balance at 31 December 392,635 691,204 81,453 380,995

Deferred Tax Liability Analysis

Property and equipment (18,353) 69,296 (35,709) 52,873

Investment properties 220,314 404,668 (73,513) 110,882

Unquoted equities 9,689 (5,851) 9,689 (5,851)

Investment in associates 238 60,238 238 60,238

Investment in subsidiary 27,971 27,971 27,971 27,971

Held for trading (53,669) (22,931) (53,669) (22,931)

Quoted equities (16,325) (20,445) (16,325) (20,445)

Trade receivables 1,056,844 1,146,400 1,056,844 1,146,400

Deferred acquisition costs 213,116 216,894 213,117 216,894

Estimated tax losses - (7,118) - (7,118)

Trade payables (363,040) (483,310) (363,040) (483,310)

unrealised exchange gain/(loss) (13,889) - (13,889) -

Short-term provisions (670,261) (694,608) (670,261) (694,608)

392,635 691,204 81,453 380,995

14 Statutory Deposit

Opening balance 79,917 75,364 - -

Movement 72,218 4,553 - -

Closing balance 152,135 79,917 - -

The statutory deposit pertains entirely to FICO and is a requirement per the Insurance Act of Uganda that every insurer should establish and

maintain at the central bank a security deposit of at least 10% of the prescribed paid up capital of the company. The paid up capital was increased

toUshs4billioneffective01October2014,therebyraisingthesecuritydepositfromapreviousfigureofUshs100milliontoUshs400million.

The investments earn interest at the market rate. This deposit is only available for distribution at liquidation.

72



15 Insurance Receivables Group Group Company Company

2014 2013 2014 2013

Trade Receivables and recoveries US$ US$ US$ US$

Due from policy holders (Direct clients) 644,117 603,568 256,077 224,133

Due from reinsurers 2,054,126 1,885,882 947,621 1,119,204

Due from brokers, agents & intermediaries 3,832,852 4,202,215 3,832,853 4,202,215

Due from insurers 15,319 25,691 15,319 25,691

Write off - - - -

Provision for credit losses (18,849) (16,955) - -

6,527,565 6,700,401 5,051,870 5,571,243

Other trade receivables

Direct and treaty losses receivable 486,927 957,563 486,927

957,563

Grand Total 7,014,492 7,657,964 5,538,797 6,528,806

Premiums are generally payable at inception of policy, however, in certain instances payment terms over the policy period are agreed with the policy

holders. As at 31 December 2014, trade receivables at initial value of $18,849, (2013 - $16,955) were impaired. The Group cancels all policies

which will be long over due and where premiums were deemed not collectable. The Group does not intend to keep debtors above 365 days save

for exceptional cases where clear payment plans are in place and being adhered to.


15.1 Other receivables and pre-payments 2014 2013 2014 2013

US$ US$ US$ US$

Staff loans 223,563 193,466 221,334 190,291

Accrued interest - investments - 89,280 - 89,280

Balances due from banks 356,557 - 356,557 9,250

Rentals receivable 92,821 43,476 66,429 -

Other receivables 312,005 301,455 281,094 190,891

Prepayments 248,550 145,603 126,737 90,319

1,233,496 773,280 1,052,151 570,031

15.1.1 Balances due from banks

Gross amount 777,009 - 777,009 -

Provision (420,452) - (420,452) -

Net amount 356,557 - 356,557 -

15.2 Trade Receivables and recoveries

Neither past due nor impaired Not due 779,257 762,249 779,257 762,249

Past due but not impaired 0-30 days 591,365 962,307 358,825 715,309

Past due but not impaired 31-60 days 1,394,338 760,257 1,069,955 734,858

Past due but not impaired 61-90 days 1,109,740 1,048,785 446,530 1,005,058

Past due but not impaired over 90 days 2,652,865 3,166,803 2,397,303 2,353,769

6,527,565 6,700,401 5,051,870 5,571,243

73




2014 2013 2014 2013

US$ US$ US$ US$

Movements in provision for credit losses

Opening balance (16,955) (78,494) - -

Provision Reversal/(Impairment losses) 1,469 61,539 - -

Balance at end of year (15,486) (16,955) - -

The carrying amounts of trade and other receivables approximate fair value. An impairment analysis is performed at each reporting date on an

individual basis for all clients. An impairement was performed on balances with banks which have closed and an amount of $229,972 was provided

for.

16 Inventories Group Group Company Company

2014 2013 2014 2013

US$ US$ US$ US$

Consumables and stationery 45,123 40,792 45,123 40,792

Property development costs 2,908,622 - 2,908,622 -

2,953,745 40,792 2,953,745 40,792

TheamountsunderpropertydevelopmentrelatestotheHatfieldClusterunitsbeingdevelopedforresale.

16.1 Movement in inventories

Opening balance 40,792 48,557 40,792 48,557

Movement in consumables 4,331 (7,765) 4,331 (7,765)

Reclassificationfrominvestmentproperty 10 678,487 - 678,487 -

Property development 2,230,135 - 2,230,135 -

Closing balance 2,953,745 40,792 2,953,745 40,792

17 Deferred Acquisition Costs

Insurance Insurance Insurance

contracts contracts contracts

NDI FICO Group

At 1 January 2013 553,789 96,547 650,336

Expenses deferred 2,299,386 11,970 2,311,356

Amortisation (2,010,870) (1,810) (2,012,680)

At 31 December 2013 842,305 106,707 949,012

Expenses deferred 1,494,981 23,717 1,518,698

Amortisation (1,509,647) (43,304) (1,552,951)

At 31 December 2014 827,639 87,120 914,759

74



75


2014 2013 2014 2013

US$ US$ US$ US$

18 Current Tax Payable

Balance at the beginning of the year 6,849 (47,800) (65,824) (65,824)

Prior year adjustment (1,735) - - -

Amountschargedtostatementofprofitorloss 314,078 100,080 249,294 -

Amounts paid (109,122) (45,431) (23,507) -

Balance at the end of the year 210,070 6,849 159,963 (65,824)

19 Related Party Disclosures

19.1 ThefinancialstatementsincludethefinancialstatementsofNicozdiamondInsuranceLimitedandthesubsidiarieslistedbelow:

Country of Primary Business % Held

Incorporation Operation

First Insurance Company Limited Uganda Short term Insurance 53.56%

Thirty Samora Machel (Private) Limited Zimbabwe Property Investments 100%

Marabou Investments (Private) Limited Zimbabwe Property Investments 100%

19.2 a) Transactions with related parties

Terms and conditions of transactions with related parties

For the year ended 31 December 2014, the Group has not recorded any impairment of receivables relating to amounts owed by

relatedparties(2013-nil).Thisassessmentisundertakeneachfinancialyearthroughexaminingthefinancialpositionoftherelatedpartyandthe

marketinwhichtherelatedpartyoperates.Therepaymenttermsforrelatedpartybalancesdifferperspecificcontracts.




2014 2013 2014 2013

US$ US$ US$ US$

Transactions with Related Parties

ZimRe Holdings Limited (ZHL) - (Shareholder)

Management Fees 207,073 191,318 207,073 191,318

Insurance premiums received 7,910 12,823 7,910 12,723

Claims&benefitspaid (12,702) (3,105) (12,702) (3,106)

Fidelity Life Assurance Group (Associate of ZHL)



Medical aid contributions paid (190,106) (233,699) (190,106) (233,699)

Pension contributions paid (247,712) (233,699) (247,712) (233,699)

Baobab Reinsurance (subsidiary of ZHL)

Net reinsurance paid (705,461) (1,357,150) (705,461) (1,357,150)



Zimbabwe Insurance Brokers (subsidiary of ZHL)

Insurance premiums received 2,746,801 3,362,448 2,746,801 3,362,448

Brokerage commission and fees paid (412,762) (708,732) (412,762) (708,732)

Claims&benefitspaid (1,545,523) (1,258,855) (1,545,523) (1,258,855)

Reinsurance Brokers International (Associate of ZHL)

Insurance premiums received 2,304 515 2,304 515

Net reinsurance paid (994,199) (1,190,104) (994,199) (1,190,104)


CFI (Associate of ZHL)



Zimre Property Investments (Subsidiary of ZHL)


Rentals paid (20,589) (22,194) (20,589) (22,194)


NATIONAL SOCIAL SECURITY AUTHORITY (Shareholder)



76




2014 2013 2014 2013

US$ US$ US$ US$

ALLIED BANKING GROUP (Shareholder)


Nissan Clover Leaf (Associate)


Claims&benefitspaid (64,418) (114,744) (64,418) (114,744

Special Automobile Underwriters of Zimbabwe (Underwriting agency)

Insurance premiums received 1,019,656 15,750 1,019,656 15,750

19.2 b) Amounts owed to/(owed by) Related Parties

Receivables and Payables to Related Parties are as follows;

Receivables from Related Parties

DennisMugwanya&SamKizito-FICOnewshareholders 17,787 107,500 - -

Victoria Motors - FICO new shareholders - 4,248 - -

Thirty Samora Machel (Private) Limited - - 270,719 257,651

Marabou Investments (Private) limited - - 27,243 13,092

A Mundial - Angola - - - -

ZimRe Holdings Limited - 70,194 - 70,194

First Insurance Company limited - 67,453 76,460 67,453

Diamond Seguros - 22,103 - 22,103

Mozre,MocambiqueResegurosSA 27,687 - 27,687 -

Zimbabwe Insurance Brokers 116,999 - 116,999 -

Special Automobile Underwriters of Zimbabwe 37,838 - 37,838 -

200,311 271,498 556,946 430,493

Payables to Related Parties

Special Automobile Underwriters of Zimbabwe - 26,542 - 26,542

Baobab Reinsurance (subsidiary of ZHL) 10,503 - - -

10,503 26,542 - 26,542

Transactions with related parties are made on terms equivalent to those that prevail in arm’s length transactions. Outstanding balances at the

year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party

receivables or payables. For the year ended 31 December 2014, the Group has not recorded any impairment of receivables relating to amounts

owedbyrelatedparties(2013:$Nil).Thisassessmentisundertakeneachfinancialyearthrough examining the financial position of the related

party and the market in which the related party operates.

77




2014 2013 2014 2013

US$ US$ US$ US$

19.3 Compensation of key management personnel of the Group

Shorttermbenefits 751,528 577,626 636,724 510,930

Share based payments transactions - - - -

The amounts disclosed in the table are the amounts recognised as an expense during the reporting period related to key management personnel.

19.4 Executive Directors loan balance 46,407 55,801 46,407 55,801

20 Cash And Cash Equivalents

Cash on hand and balances with banks 1,337,050 1,646,934 1,268,861 1,591,503

Deposits with original maturity less than 3 months 3,603,006 3,358,462 3,603,006 3,143,605

Total cash and bank 4,940,056 5,005,396 4,871,867 4,735,108

21 Ordinary Share Capital And Share Premium

Authorised Share Capital

600 000 000 ordinary shares of $0.005 each 3,000,000 3,000,000 3,000,000 3,000,000

Issued Share Capital

566 764 773 (2013 - 566 764 773) ordinary shares of $0.005 each 2,833,525 2,833,525 2,833,525 2,833,525

Share Premium 3,291,039 3,291,039 3,291,039 3,291,039

21.1 Dividend Paid

Dividends on ordinary shares: declared and paid during the year.

Final dividend for 2013:0.064 cents per share 375,129 367,242 375,129 367,242

21.2 Share Options

Shareholders approved a share option scheme for 55,945,016 shares in 2010.

Grantedshareoptionsareexercised40%afterfirstyear,upto80%aftersecondyearandinfullafterthirdyear.

Share option granted as at 31 December 2014 were 22,296,475 exercisable as follows:

Granted in 2014 Granted in 2013

Amount

Exercisable from March 2014 - 4,506,944

Exercisable from March 2015 4,411,646 9,013,888

Exercisable from March 2016 8,823,292 11,267,360

Exercisable from March 2017 11,029,115 -

78



Movements during the year 2014 2013

Number Number

Outstanding at January 2014 11,267,360 -

Granted during the year 11,029,115 11,267,360

Exercised during the year - -

Expired during the year - -

Outstanding as at 31 December 2014 22,296,475 11,267,360

The share options were valued by an independent valuer using the Black-Scholes-Merton valuation model.

Inputs into the Black-Scholes-Merton valuation model are given below:

2014

Description Symbol Value Comment

Current price S0 1.35 cents Market price at grant date ( 4 March 2014

Exercise Price K 1.35 cents As agreed by Board on resolution

Time period T 3 years Expected expiry of options in terms of scheme

Excepted volatility δ 0.593 Annualised standard deviation of share price daily returns

for 3 years to 31 December 2014

Risk free rate r 8% Estimated average risk-free yield on 3-year government securities

Dividend yield Y 4.42% Average dividend yield for 2011 and 2012

2013

Description Symbol Value Comment

Current price S0 1.1 cents Market price at grant date ( 7 March 2013)

Exercise Price K 1.1 cents As agreed by Board on resolution

Time period T 3 years Expected expiry of options in terms of scheme

Excepted volatility δ 0.909 Annualised standard deviation of share price daily returns for 3 years to

31 December 2013

Risk free rate r 10.05% Estimated average risk-free yield on 3-year government securities

Dividend yield Y 3.05% Average dividend yield for 2011 and 2012

21.2.1 Share option costs

Themovementoftheshareoptionreserveareshownthroughtheprofitorloss(seenote8.4).Themovementwas$46,233in2014($23,118in

2013).

79



80


2014 2013 2014 2013

US$ US$ US$ US$

22 Loans

22.1 Long Term Loans

Long term loans are made up of:

RefurbishmentLoan-NicozDiamondInsuranceLimited(NDI) 95,139 148,799 95,139 148,799

22.2 Short Term Loans

Short- term loans are made up of:

Refurbishment Loan - NDI (current portion) 53,660 44,508 53,660 44,508

22.3 Reconciliation of the long term and short term loan

Opening balance 193,307 232,491 193,307 232,491

Interest charged 32,546 34,900 32,546 34,900

Payments made (77,054) (74,084) (77,054) (74,084)

Closing balance 148,799 193,307 148,799 193,307

In2012NICOZDIAMONDtookoutaloanof$250,000forpropertyrefurbishments.Theloanisforfiveyearsataninterestrate of 15% per

annum. The balance of the loan due within 12 months from the reporting date is shown under short term loans while the remainder due after 12

months is shown under long term loans. See note 10 for information on properties that were pledged as security for the above stated loan.

23 Insurance and Other Payables Group Group Company Company

2014 2013 2014 2013

US$ US$ US$ US$

Due to policy holders, reinsurers 1,833,309 2,310,646 1,409,863 1,889,486

Other payables and accruals 2,334,999 1,757,653 1,796,912 1,252,979

Insurance payables are non interest bearing and are normally settled on 30 day terms.

Other payables are non interest bearing and have an average term of 60 days.

23.1 A further breakdown of other payables and accruals is listed below:

Salary related accruals 157,018 106,940 156,381 106,940

Other Accruals 99,363 111,748 57,804 27,175

Motor Levy payable 654,238 462,537 654,234 462,537

Stamp duty payable 507,247 443,392 249,534 185,679

Deferred revenue 249,088 15,087 236,922 -

Dividend Payable 27,568 - 27,568 -

Leave Pay provision 237,766 203,083 237,766 203,083

Other payables 402,711 414,866 176,703 267,565

2,334,999 1,757,653 1,796,912 1,252,979



81


2014 2013 2014 2013

24 Insurance Provisions US$ US$ US$ US$

Outstanding claims provision 2,520,474 2,197,883 2,256,445 1,860,219

Incurred but not reported claims provisions 858,014 837,289 818,410 837,289

Total outstanding claims and IBNR 3,378,488 3,035,172 3,074,855 2,697,508

Unearned premium provision 4,658,364 4,874,716 4,138,251 4,211,523

Balance at 31 December 8,036,852 7,909,888 7,213,106 6,909,031

24.1 Movement In Outstanding Claims and IBNR

Opening balance 3,035,172 2,065,328 2,697,508 1,783,439


Utilised in the year (2,641,323) (740,490) (1,997,842) (447,969)

Raised in the year 2,595,968 1,782,738 1,957,277 1,452,297

Claims payable 417,912 (90,259) 417,912 (90,259)

Closing balance 3,378,488 3,035,172 3,074,855 2,697,508

24.2 Movement In Unearned Premium Provision

Opening balance 4,875,990 3,432,419 4,211,523 2,768,949


Utilised in the year (6,294,749) (3,641,401) (6,207,485) (2,952,905

Raised in the year 6,135,832 5,043,210 6,134,213 4,395,479

Closing balance 4,658,364 4,874,716 4,138,251 4,211,523

25 Cash Receipts from Customers

Opening balance for insurance and other receivables (excluding prepayments) 9,019,399 7,398,997 8,318,681 5,931,309

Impairment 82,515 61,539 - -

Gross premiums receivable for the year 27,876,471 27,810,550 26,833,555 26,933,247

Other gross receivables for the year 2,102,667 2,409,006 2,208,783 2,429,547

Unrealised exchange gains/(losses) 31,218 6,842 31,218 6,842

Rentals revenue 847,159 666,978 127,703 61,614

Closing balance for trade and other debtors (excluding prepayments) (8,199,749) (9,019,399) (7,021,157) (8,318,681)

Cash received 31,759,680 29,334,513 30,498,783 27,043,878

26 Cash Paid to Suppliers and Employees

Opening balance for current liabilities (excluding tax) (12,004,728) (9,919,884) (10,118,830) (8,031,516)

Gross premiums payable/cedable for the year (11,121,342) (11,706,940) (10,795,504) (11,317,660

Grosspayablesforbenefitsandclaims,commission (11,756,783) (12,245,591) (11,206,916) (11,465,128)

Operating expenses (less depreciation) (6,666,652) (5,988,536) (5,870,935) (5,141,268)

Prepayments (248,550) 37,452 (126,737) 37,452

Movement in inventories (4,331) 7,765 (4,331) 7,765

Closing balance for current liabilities (excluding tax) 12,215,664 12,004,728 10,419,881 10,118,830

Cash paid (29,586,722) (27,811,006) (27,703,372) (25,791,525)



82

27 Risk Management Framework

27.1 Governance frame work

TheprimaryobjectiveoftheGroup’sriskandfinancialmanagementframeworkistoprotecttheGroup’sshareholdersfromeventsthathinderthe

sustainableachievementoffinancialperformanceobjectives,includingfailingtoexploitopportunities.Keymanagementrecognisesthecritical

importanceofhavingefficientandeffectiveriskmanagementsystemsinplace.

The Group established a risk management function with clear terms of reference from the Board of Directors, Audit and Risk Management

committeeandtheManagementCommittees.AGrouppolicyframeworkwhichsetsouttheriskprofilesfortheGroup,riskandmanagement

controlhasbeenputinplace.Eachriskidentifiedhascontrolsputinplacetocounteritandamemberofseniormanagementchargedwith

overseeing compliance.

TheAuditandRiskManagementcommitteeoftheBoardapprovestheGroupriskmanagementpolicies.ThesepoliciesdefinetheGroup’s

identificationofriskanditsinterpretation,limitstructuretoensuretheappropriatequalityanddiversificationofassets,alignunderwritingand

reinsurance strategy to the corporate goals, and specify reporting requirements.

27.2 Approach to capital management

The Group seeks to optimise the structure and sources of capital to ensure that it is consistently maximising returns to the shareholders.

The Group’s approach to managing capital involves managing assets, liabilities, and risks in a coordinated way, assessing shortfalls between

reported and required capital levels on a regular basis and taking appropriate actions to influence the capital position of the Group in the light of

changes in economic conditions and risk characteristics. An important aspect of the Group’s overall capital management process is the setting of

target risk adjusted rates of return, which are aligned to performance objectives, to ensure that the Group is focused on the creation of value for

shareholders.

27.3 Capital Management objectives, policies and approach

The primary source of capital used by the Group is equity shareholders’ funds and reinsurance support. The primary objective of the Group’s

capital management is to ensure that it maintains a strong claims paying ability rating, healthy solvency and liquidity ratios in order to support its

business (underwriting capacity) and maximise shareholder value. The Group manages its capital structure and makes adjustments to it, in light of

changes in economic conditions. The Group monitors capital using a solvency ratio calculated as equity divided by Net Premiums Written . As at 31

December the solvency ratio was 66%(2013:58.1%). The solvency ratio comes down to 37% when upon factoring the capital guidelines issued

by the regulator mainly relating to the disallowance of Debtors above 90 days. This will however still be above the regulatory minimum solvency

margin of 25%.

The components of the capital were as follows:


2014 2013 2014 2013

US$ US$ US$ US$

Share capital 2,833,525 2,833,525 2,833,525 2,833,525

Share premium 3,291,039 3,291,039 3,291,039 3,291,039

Retained earnings 10,745,548 10,007,889 4,628,588 3,579,939

Capital reserves 30,394 28,859 - -

Foreign translation reserve (218,639) (163,292) - -

Other reserves 388,258 325,267 69,351 23,118

Total Equity 17,070,125 16,323,287 10,822,503 9,727,621



27.4 Regulatory framework

Regulators are primarily interested in protecting the rights of policy holders. The Group is monitored closely by the Regulator to ensure that it

satisfactorilymanagesaffairsforthebenefitofpolicyholders.AtthesametimeregulatorsarealsointerestedinensuringthattheGroupmaintains

an appropriate solvency position to meet unforeseen liabilities arising from economic shocks or natural disasters.

The operations of the Group are also subject to regulatory requirements within the jurisdictions in which it operates. Such regulations, also impose

certain restrictive provisions (e.g. Solvency ratios) to minimise the risk of default and insolvency on the part of the insurance companies to meet

unforeseen liabilities as these arise. Minimum capital requirements as set by the Insurance and Pensions Commission in Zimbabwe is $1,500,000,

and the minimum capital applicable for Uganda is $372,301. Both entities are meeting capital requirements in their respective jurisdictions.

27.5 Insurance and financial risk

Theprincipal risktheGroupfacesunder insurancecontracts is thattheactualclaimsandbenefitpaymentsorthetimingthereof,differ from

expectations.Thisisinfluencedbythefrequencyofclaims,severityofclaims,actualbenefitspaidandsubsequentdevelopmentoflongterm

claims,severityofclaims,actualbenefitspaidandsubsequentdevelopmentoflongtermclaims.ThereforetheobjectiveoftheGroupistoensure

thatsufficientreservesareavailabletocovertheseliabilities.Theaboveriskexposureismitigatedbydiversificationacrossalargeportfolioclaims.

Therefore,theobjectiveoftheGroupistohavesufficientreservesavailabletocovertheseliabilities.

Theriskexposureismitigatedbydiversificationacrossalargeportfolioofinsurancecontractsandgeographicalareas.Thevariabilityofrisksisalso

improved by careful selection and implementation of underwriting strategy guidelines, as well as the use of reinsurance arrangements.

The Group purchases reinsurance as part of its mitigation programme. Reinsurance ceded is placed on both a proportional and non-proportional

basis. The majority of proportional reinsurance is quota-share reinsurance which is taken out to reduce the overall exposure of the Group to

certain classes of business. Non-proportional reinsurance is primarily excess-of-loss reinsurance designed to mitigate the group’s net exposure to

catastrophe losses. Retention limits for the excess of loss reinsurance vary by product line.

Amounts recoverable from reinsurers are estimated in a manner consistent with the outstanding claims provision and are in accordance with the

reinsurance contracts. Although the Group has reinsurance arrangements, it is not relieved of its direct obligations to its policyholders and thus

a credit exposure exists with respect to ceded insurance, to the extent that any reinsurer is unable to meet its obligations assumed under such

reinsurancearrangements.TheGroup’splacementofreinsuranceisdiversifiedsuchthatitisneitherdependantonasinglereinsurernorarethe

operations of the Group substantially dependant upon any single reinsurance contract.

TheGroupprincipallyissuesthefollowingtypeofgeneralinsurancecontracts:motor,fire,marine,accident,engineering,farmingetc.Thevariability

ofrisksisimprovedbycarefulselectionandimplementationofunderwritingstrategies,whicharedesignedtoensurethatrisksarediversified

intermsofriskandlevelofinsuredbenefits.Thisislargelyachievedthroughdiversificationacrossindustrysectorsandgeography.Further,strict

claim review policies to assess all lodged claims, regular detailed review of claims handling procedures and frequent investigation of possible

fraudulent claims are all policies and procedures put in place to reduce the risk exposure of the Group. The Group further enforces a policy of

actively managing and promptly pursuing claims, in order to reduce its exposure to unpredictable future developments that can negatively impact

the business.

The major source of risk is motor class followed by Fire, in 2014. In 2013 the major source of risk was motor followed by the accident class.

The table below sets out the concentration of insurance contract liabilities (outstanding claims and IBNR) by type of contract:

83



2014 Gross Liability Reinsurance recovery Net Liabilities

Motor 2,322,654 449,547 1,873,108

Fire 772,378 343,279 429,099

Marine 111,904 21,659 90,245

Engineering 102,563 19,851 82,712

Accident 703,051 312,467 390,584

Credit 48,412 9,370 39,042

Farming 2,229 431 1,797

4,063,191 1,156,604 2,906,587

2013 Gross Liability Reinsurance recovery Net Liabilities

Motor 2,214,106 465,020 1,749,086

Fire 610,505 264,022 346,483

Marine 160,478 133,921 26,557

Engineering 56,063 864 55,199

Accident 1,613,524 1,013,988 599,536

Credit 213,868 51,371 162,497

Farming 5,555 - 5,555

4,874,099 1,929,186 2,944,913

The geographical concentration of the Group’s insurance contract liabilities is noted below. The disclosure is based on the countries where the

business is written.

2014 Gross Liabilities Reinsurance of Liabilities Net Liabilities

Zimbabwe 3,443,725 840,773 2,602,952

Uganda 619,466 315,831 303,635

Total 4,063,191 1,156,604 2,906,587

2013 Gross Liabilities Reinsurance of Liabilities Net Liabilities

Zimbabwe 3,789,398 1,091,889 2,697,509

Uganda 1,174,961 837,298 337,663

Total 4,964,359 1,929,187 3,035,172

Key assumptions

Material judgement is required in determining the liabilities and in the choice of assumptions. Assumptions in use are based on past experience,

current internal data, external market indices and benchmarks which reflect current observable market prices and other published information.

Assumptionsandprudentestimatesaredeterminedat thedateofvaluationandnocredit is takenforpossiblebeneficialeffectsofvoluntary

withdrawals. Assumptions are further evaluated on a continuous basis in order to ensure realistic and reasonable valuations.

Claims Development table

Thefollowingtableshowtheestimatesofcumulativeincurredclaims,includingbothclaimsnotifiedandIBNRforeachsuccessiveaccidentyearat

each reporting date, together with cumulative payments to date.

Gross non-life insurance contract outstanding claims provision for 2014:

84



Accident Year 2010 2011 2012 2013 2014 Total

At end of accident year 6,712,152 11,043,064 8,763,974 10,438,157 10,008,145

one year later 7,530,195 11,350,314 9,100,127 10,687,802

Two years later 7,535,502 11,387,663 9,117,179

Three years later 7,535,942 11,387,689

Four Years Later 7,536,964 -

Current Estimate of cumulative claims incurred 7,536,964 11,387,689 9,117,179 10,687,802 10,008,145 48,737,779

Accident Year 2010 2011 2012 2013 2014

At end of accident year 5,208,891 8,040,779 6,734,705 6,201,298 7,103,217

one year later 7,131,337 10,910,372 9,101,271 10,302,328 -

Two years later 7,235,874 11,267,108 9,447,947 -

Three years later 7,624,467 11,343,246 - -

Four Years Later 7,723,213 - -

Cumulative Payments to date 7,723,213 11,343,246 9,447,947 10,302,328 7,103,217 45,919,951

Total gross Non-life Insurance Outstanding Claims

Provisionperthestatementoffinancialposition 15,260,177 22,730,936 18,565,127 20,990,130 17,111,363 94,657,733

CurrentEstimateofSurplus/(Deficiency) (824,812) (344,625) (353,205) (249,645)

%Surplus/deficiencyofInitialGrossReserve -12% -3% -4% -2%

Sensitivities

The following analysis is performed for reasonably possible movements in key assumptions with all other assumptions held constant, showing the

impactongross,andnetliabilities,profitbeforetaxandequity.

31 December 2014 Changes in Impact on Impact on net Impact on profit Impact on equity

assumptions gross liabilities liabilities before tax

Average claim cost +10% 186 73 (73) (73)

31 December 2013 Changes in Impact on Impact on net Impact on profit Impact on equity

assumptions gross liabilities liabilities before tax

Average claim cost +10% 130 79 (79) (79)

85



86

28 Credit Risk

Credit risk is risk that one party to a financial instrument will

causeafinanciallosstotheotherpartybyfailingtodischargean

obligation.

The following policies and procedures are in place to mitigate the

Group’s exposure to credit risk:

- Net exposure limits are set for each counterparty or group of

counterparties are set each year by the Board of Directors,

(i.e. limits are set for investments counterparties and cash

deposits). -

Reinsurance is placed with counter parties that have a good

credit rating and concentration of risks is avoided by following

policy guidelines in respect of counterparties’ limits that are set

each year by the Board of Directors and are subject to regular

reviews. At each reporting date, management performs an

assessment of creditworthiness of reinsurers and review the

reinsurance placement strategy.

- Risks arising on uncertainty in underwriting are managed

through termination of policies.

Collateral

The amount and type of collateral required depends on an

assessment of the credit risk of the counterparty.

28.1 Credit Exposure

The Group’s maximum exposure to credit risk for the components

ofthestatementoffinancialpositionat31December2014and

2013 is the carrying amounts as presented in Note 15 expect for

financialguarantees.TheGroup’smaximumexposureforfinancial

guarantees is equal to the maximum amount the entity could have

to pay if the guarantee is called on. The maximum risk exposure

presented below does not include the exposure that arise in the

future as a result of the changes in values.

Group Dec - 2014 Dec - 2013

$ $

Financial guarantees 509,157 53,496

28.2 Liquidity Risk

Liquidity risk is that risk that theGroupwill encounter difficulty

inmeetingobligationsassociatedwithfinancialinstruments.The

following policies and procedures are in place to mitigate the

Group’s exposure to liquidity risk.

- Guidelines are set for asset allocation, portfolio limit structures

andmaturity profiles of assets in order to ensure sufficient

funding is available to meet insurance and investment

contracts obligations.

- Contingency funding plans are in place, which specify

minimum proportion of funds to meet emergency calls as

well as specifying events that trigger such plans.

Maturity Profiles

The Group maintains a portfolio of highly marketable and diverse

assets that can be easily liquidated in the event of an unforeseen

interruption of cash flow. The table that follows summarises the

maturityprofileofthenon-derivativefinancialassetsandfinancial

liabilities of the Group.

Unearned premiums have been excluded from the analysis as they

are not contractual obligations.



Maturity Analysis (contractual undiscounted cash flow basis)

Group

2014 Carrying Amount Up to one year 1-3 years No maturity date Total

Financial Assets

Held to Maturity 1,487,273 430,103 408,000 - 838,103

Insurance receivables 7,014,492 7,014,492 - - 7,014,492

Related party receivables 200,311 200,311 - - 200,311

Cash and cash equivalents 4,940,056 4,940,056 - - 4,940,056

Quoted equities 547,374 547,374 - - 547,374

Total undiscounted assets 14,189,506 13,132,336 408,000 - 13,540,336

Financial Liabilities

Borrowings 148,799 53,660 95,139 - 148,799

Insurance payables 1,833,309 1,833,309 - - 1,833,309

Other payables 2,334,999 2,334,999 - - 2,334,999

Outstanding claims 3,378,488 3,378,488 - - 3,378,488

Related party payables 10,503 10,503 - - 10,503

Total undiscounted liabilities 7,706,098 7,610,959 95,139 - 7,706,098

Net liquidity surplus 6,483,408 5,521,377 312,861 - 5,834,238

Company


Financial Assets

Financialassetsatfairvaluethroughprofitandloss 690,002 250,000 300,000 - 550,000




Quoted equities 547,374 547,374 - - 547,374



Borrowings 148,799 86,205 95,139 - 181,344


Other payables 1,796,912 1,796,912 - - 1,796,912


Related party payables - - - - -

Total undiscounted Liabilities 6,430,429 6,367,835 95,139 - 6,462,974


87



Group


Financial Assets

Financialassetsatfairvaluethroughprofitandloss 1,066,367 666,366 400,000 - 1,066,366




Quoted equities 1,142,768 1,142,768 - - 1,142,768



Borrowings 193,307 77,053 186,213 - 263,266


Other payables 1,757,653 1,757,653 - - 1,757,653


Related Party payables 26,542 26,542 - - 26,542



Company


Financial Assets

Financialassetsatfairvaluethroughprofitandloss 650,000 250,000 400,000 - 650,000




Quoted equities 1,142,768 1,142,768 - - 1,142,768



Borrowings 193,307 77,053 186,213 - 263,266


Other payables 1,252,979 1,252,979 - - 1,252,979


Related Party payables 26,542 26,542 - - 26,542



88


28.3 Market risk

Marketriskistheriskthatthefairvalueorfuturecashflowsofafinancialinstrumentwillfluctuatebecauseofchangesinmarketprices.

Market risk comprises three types of risk: foreign exchange rates (currency risk), market interest rates (interest rate risk) and market prices, (price

risk).

(a) Foreign Currency Risk

Currencyriskistheriskthatthefairvalueoffuturecashflowsofafinancialinstrumentwillfluctuatebecauseofchangesinforeignexchange

rates. The Group’s principal transactions are carried in United Sates Dollars and its exposure to foreign exchange risk arise primarily with respect

toSouthAfricanRandandUgandanShillings.TheGroup’sfinancialassetsareprimarilydenominatedinthesamecurrenciesasitsinsuranceand

investment contract liabilities, which mitigates the foreign currency exchange rate risk for the foreign operations. Thus the main foreign exchange

risk arises from recognised assets and liabilities denominated in currencies other than those in which insurance and investment contract liabilities

areexpectedtobesettled.ThecurrencyriskiseffectivelymanagedbytheGroupthroughnon-derivativefinancialinstruments.

(b) Foreign Currency Sensitivity

The Group’s principal foreign currency exposures are to the USD against the Ugandan Shilling (UGX). The table below illustrate the hypothetical

sensitivitytotheGroup’sreportedprofit(I/S)andnetassets(Equity)toa10%increaseanddecreaseintheUS$/UGXExchangeratesattheyear

end date, assuming all other variables remain unchanged. The sensitivity of 10% represents the Directors’ assessment of a possible change.

2014 P/L $) Equity ($)

US$ weakens by 10% to UGX (3,906) (146,341)

US$ strengthens by 10% to UGX 4,775 178,861

Exchange rate applied USD: UGX 2,773 2,773

2013 P/L $) Equity ($)

US$ weakens by 10% to UGX (12,215) (153,320)

US$ strengthens by 10% to UGX 54,196 187,391

Exchange rate applied USD: UGX 2,588 2,533

Positivefiguresrepresentanincreaseinprofitorincreaseinvalueonnetassets.

(c) Interest rate risk

Interestrateriskistheriskthatthevalueorfuturecashflowsofafinancialinstrumentwillfluctuatebecauseofchangesinmarketinterestrates.

The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s long term debt obligations with floating interest

rates.Thepolicyalsorequiresittomanagethematuritiesofinterestbearingfinancialliabilities.Interestonfloatingrateinstrumentsisre-pricedat

intervalsoflessthanoneyear.Interestonfixedinterestrateinstrumentsispricedatinceptionofthefinancialinstrumentandisfixeduntilmaturity.

The Group has no material exposure to interest rate risk.


89



90

(d) Equity Price Risk

Equitypricerisk istheriskthatthefairvalueoffuturecashflowsofafinancial instrumentwillfluctuatebecauseofchangesinmarketprices

(otherthanthosearisingfrominterestrateriskorcurrencyrisk),whetherthosechangesarecausedbyfactorsspecifictotheindividualfinancial

instrumentoritsissuer,orfactorsaffectingallsimilarfinancialinstrumentoritsissuer,orfactorsaffectingallsimilarfinancial instruments traded

in the market.

The Group’s Board of Directors reviews and approves all equity investment decisions.

A decrease of 27% on the ZSE market index could have an impact of approximately $147,791 on the income attributable to the Group, depending

onwhetherthedeclineissignificantorprolonged.Anincreaseof10%inthevalueofthelistedsecuritieswouldhaveanimpactofapproximately

$147,791onprofitorloss.

29.1 Operational risk

Operational risk is the risk of loss arising from system failure, human error, fraud or external events. When controls fail to perform, operational

riskscancausedamagetoreputation,havelegalorregulatoryimplicationsorcanleadtofinancialloss.TheGroupcannotexpecttoeliminate

all operational risks, but by initiating a rigorous control framework and by monitoring and responding to potential risks, the Group is able to

manage the risks. Controls include effective segregation of duties, access controls authorisation and reconciliation procedures, staff education and

assessment processes, including the use of internal audit. Business risks such as changes in environment technology and the industry are monitored

through the Group’s strategic planning and budgeting process.

29.2 Contingencies and Commitments

(a) The Group operates in the insurance industry and is subject to legal proceedings in the normal course of business. The Group is also

subject to insurance solvency regulations in all the territories where it operates and has complied with all these solvency regulations. There are

no contingencies associated with the Group’s compliance or lack of compliance with such regulations. No changes were made in the objectives,

policies or processes during the years.

(b) Commitments: Group Group

2015 2013

US$ US$

Authorised capital expenditure 124,685 340,900

Project expenditure 2,230,135 -

30 Operating Lease Commitments - Group As Lessor

TheGrouphasenteredintocommercialpropertyleasesonitsinvestmentpropertyportfolio,consistingoftheGroup’ssurplusofficeandresidential

buildings. These property leases typically have lease terms of between 1-3 years and include clauses which enable periodic upward revision of the

rental charge according to prevailing market conditions. Some leases contain options to cancel before the end of the lease term.

Future minimum rentals receivable under non-cancellable operating leases as at 31 December are as follows:

Group Group

2014 2013

US$ US$

Within 1 year 390,000 490,896

*Due to uncertainties that exists in the operating environment, rentals due from operating leases for periods beyond one year could not be

determined since lease agreements contain escalation clauses. The rates of which are determined from time to time by prevailing market conditions



31 Standards issued but not yet effective

Thestandardsandinterpretationsthatareissued,butnotyeteffective,uptothedateofissuanceoftheGroup’sfinancialstatementsaredisclosed

below. The Group intends to adopt these standards, if applicable, when they become effective.

IFRS 9 Financial Instruments

InJuly2014,theIASBissuedthefinalversionofIFRS9FinancialInstrumentswhichreflectsallphasesofthe financial instruments project and

replaces IAS 39 Financial Instruments: Recognition and Measurement and all previous versions of IFRS 9. The standard introduces new requirements

forclassificationandmeasurement,impairment,andhedgeaccounting.IFRS9iseffectiveforannualperiodsbeginningonorafter1January2018,

with early application permitted. Retrospective application is required, but comparative information is not compulsory. Early application of previous

versions of IFRS 9 (2009, 2010 and 2013) is permitted if the date of initial application is before 1 February 2015. The adoption of IFRS 9 will have an

effectontheclassificationandmeasurementoftheGroup’sfinancialassets,butnoimpactontheclassificationandmeasurementoftheGroup’s

financialliabilities.

IFRS 14 Regulatory Deferral Accounts

IFRS 14 is an optional standard that allows an entity, whose activities are subject to rate-regulation, to continue applying most of its existing

accountingpolicies for regulatorydeferralaccountbalancesupon itsfirst-timeadoptionof IFRS.Entities thatadopt IFRS14mustpresent the

regulatorydeferralaccountsasseparatelineitemsonthestatementoffinancialpositionandpresentmovementsintheseaccountbalancesas

separatelineitemsinthestatementofprofitorlossandothercomprehensiveincome.Thestandardrequiresdisclosuresonthenatureof,andrisks

associatedwith,theentity’srate-regulationandtheeffectsofthatrate-regulationonitsfinancialstatements.IFRS14iseffectiveforannualperiods

beginning on or after 1 January 2016. Since the Group is an existing IFRS preparer, this standard would not apply.

Amendments to IAS 19 Defined Benefit Plans: Employee Contributions

IAS 19 requires an entity to consider contributions from employees or third parties when accounting for defined benefit plans.Where the

contributionsare linkedtoservice,theyshouldbeattributedtoperiodsofserviceasanegativebenefit.Theseamendmentsclarifythat, ifthe

amount of the contributions is independent of the number of years of service, an entity is permitted to recognise such contributions as a reduction

in the service cost in the period in which the service is rendered, instead of allocating the contributions to the periods of service. This amendment is

effective for annual periods beginning on or after 1 July 2014. It is not expected that this amendment would be relevant to the Group, since none

oftheentitieswithintheGrouphasdefinedbenefitplanswithcontributionsfromemployeesorthirdparties.

Annual improvements 2010-2012 Cycle

These improvements are effective from 1 July 2014 and are not expected to have a material impact on the Group. They include:

IFRS 2 Share-based Payment

Thisimprovementisappliedprospectivelyandclarifiesvariousissuesrelatingtothedefinitionsofperformanceandserviceconditionswhichare

vesting conditions, including:

•Aperformanceconditionmustcontainaservicecondition

•Aperformancetargetmustbemetwhilethecounterpartyisrenderingservice

•Aperformancetargetmayrelatetotheoperationsoractivitiesofanentity,ortothoseofanotherentityinthesamegroup

•Aperformanceconditionmaybeamarketornon-marketcondition

•Ifthecounterparty,regardlessofthereason,ceasestoprovideserviceduringthevestingperiod,theserviceconditionisnotsatisfied

91


IFRS 3 Business Combinations

The amendment is applied prospectively and clarifies that all

contingentconsiderationarrangementsclassifiedas liabilities (or

assets) arising from a business combination should be subsequently

measuredatfairvaluethroughprofitor losswhetherornot they

fall within the scope of IFRS 9 (or IAS 39, as applicable).

IFRS 8 Operating Segments

The amendments are applied retrospectively and clarifies

that:

•Anentitymustdisclosethejudgementsmadebymanagement

in applying the aggregation criteria in paragraph 12 of IFRS 8,

including a brief description of operating segments that have

been aggregated and the economic characteristics (e.g., sales and

gross margins) used to assess whether the segments are ‘similar’

• The reconciliation of segment assets to total assets is only

required to be disclosed if the reconciliation is reported to the chief

operating decision maker, similar to the required disclosure for

segment liabilities.

IAS 16 Property, Plant and Equipment and IAS 38 Intangible

Assets

TheamendmentisappliedretrospectivelyandclarifiesinIAS16and

IAS 38 that the asset may be revalued by reference to observable

data on either the gross or the net carrying amount. In addition, the

accumulated depreciation or amortisation is the difference between

the gross and carrying amounts of the asset.

IAS 24 Related Party Disclosures

The amendment is applied retrospectively and clarifies that a

management entity (an entity that provides key management

personnel services) is a related party subject to the related party

disclosures. In addition, an entity that uses a management entity

is required to disclose the expenses incurred for management

services.

Annual improvements 2011-2013 Cycle

These improvements are effective from 1 July 2014 and are not

expected to have a material impact on the

Group. They include:

IFRS 3 Business Combinations

The amendment is applied prospectively and clarifies for the

scope exceptions within IFRS 3 that:

•Jointarrangements,notjustjointventures,areoutsidethescope

of IFRS 3

• This scope exception applies only to the accounting in the

financialstatementsofthejointarrangementitself

IFRS 13 Fair Value Measurement

The amendment is applied prospectively and clarifies that the

portfolioexceptioninIFRS13canbeappliednotonlytofinancial

assetsandfinancialliabilities,butalsotoothercontractswithinthe

scope of IFRS 9 (or IAS 39, as applicable).

IAS 40 Investment Property

The description of ancillary services in IAS 40 differentiates between

investment property and owner-occupied property (i.e., property,

plant and equipment). The amendment is applied prospectively and

clarifiesthatIFRS3,andnotthedescriptionofancillaryservicesin

IAS 40, is used to determine if the transaction is the purchase of an

asset or business combination.

IFRS 15 Revenue from Contracts with Customers

IFRS15was issued inMay2014andestablishesanewfive-step

model that will apply to revenue arising from contracts with

customers. Under IFRS 15 revenue is recognised at an amount that

reflects the consideration to which an entity expects to be entitled

in exchange for transferring goods or services to a customer.

The principles in IFRS 15 provide a more structured approach to

measuring and recognising revenue. The new revenue standard

is applicable to all entities and will supersede all current revenue

recognition requirements under IFRS. Either a full or modified

retrospective application is required for annual periods beginning

on or after 1 January 2017 with early adoption permitted. The

Group is currently assessing the impact of IFRS 15 and plans to

adopt the new standard on the required effective date.


92


Amendments to IFRS 11 Joint Arrangements: Accounting for

Acquisitions of Interests

The amendments to IFRS 11 require that a joint operator accounting

for the acquisition of an interest in a joint operation, in which the

activity of the joint operation constitutes a business must apply the

relevant IFRS 3 principles for business combinations accounting.

The amendments also clarify that a previously held interest in a joint

operation is not re-measured on the acquisition of an additional

interest in the same joint operation while joint control is retained.

In addition, a scope exclusion has been added to IFRS 11 to specify

that the amendments do not apply when the parties sharing joint

control, including the reporting entity, are under common control of

the same ultimate controlling party. The amendments apply to both

the acquisition of the initial interest in a joint operation and the

acquisition of any additional interests in the same joint operation

and are prospectively effective for annual periods beginning on

or after 1 January 2016, with early adoption permitted. These

amendments are not expected to have any impact to the Group.

Amendments to IAS 16 and IAS 38: Clarification of Acceptable

Methods of Depreciation and Amortisation

The amendments clarify the principle in IAS 16 and IAS 38 that

revenuereflectsapatternofeconomicbenefitsthataregenerated

from operating a business (of which the asset is part) rather than

theeconomicbenefitsthatareconsumedthroughuseoftheasset.

As a result, a revenue-based method cannot be used to depreciate

property, plant and equipment and may only be used in very limited

circumstances to amortise intangible assets.

The amendments are effective prospectively for annual periods

beginning on or after 1 January 2016, with early adoption

permitted. These amendments are not expected to have any impact

to the Group given that the Group has not used a revenue-based

method to depreciate its non-current assets.

Amendments to IAS 16 and IAS 41 Agriculture: Bearer Plants

The amendments change the accounting requirements for

biologicalassets thatmeet thedefinitionofbearerplants.Under

the amendments, biological assets that meet the definition of

bearer plants will no longer be within the scope of IAS 41. Instead,

IAS 16 will apply. After initial recognition, bearer plants will be

measured under IAS 16 at accumulated cost (before maturity) and

using either the cost model or revaluation model (after maturity).

The amendments also require that produce that grows on bearer

plants will remain in the scope of IAS 41 measured at fair value less

costs to sell. For government grants related to bearer plants, IAS 20

Accounting for Government Grants and Disclosure of Government

Assistance will apply. The amendments are retrospectively effective

for annual periods beginning on or after 1 January 2016, with early

adoption permitted. These amendments are not expected to have

any impact to the Group as the Group does not have any bearer

plants.

Amendments to IAS 27: Equity Method in Separate Financial

Statements

The amendments will allow entities to use the equity method to

account for investments in subsidiaries, joint ventures and associates

in their separate financial statements. Entities already applying

IFRS and electing to change to the equity method in its separate

financialstatementswillhavetoapplythatchangeretrospectively.

Forfirst-timeadoptersofIFRSelectingtousetheequitymethodin

itsseparatefinancialstatements,theywillberequiredtoapplythis

method from the date of transition to IFRS. The amendments are

effective for annual periods beginning on or after 1 January 2016,

with early adoption permitted. These amendments will not have

anyimpactontheGroup’sconsolidatedfinancialstatements.

32 Subsequent Events

On 1 January 2015, the company acquired a 49% stake in United

General Insurance Company Limited of Malawi (“UGI”) from Zimre

Holdings Limited (“ZHL”) at a price of U$1,274,962

United General Insurance Company Limited is one of Malawi’s

leading short term insurers and has operated in Malawi for over

40 years. Prior to this acquisition, NicozDiamond Insurance

Limited (“NDI”) had been subcontracted by ZHL as managers of

United General Insurance Company Limited since 2009. As part of

NDI’s regional strategy, Malawi has been a target market and the

opportunity to invest in UGI came at the right time when ZHL was

realigning its assets in-order to focus on the reinsurance business.


93


ZHLownsa28.58%shareholdingstakeinNicozDiamondInsurance

Limited and is therefore a related party however the disposal of

the stake in UGI was done at arm’s length. The pricing and

valuation of the company was subjected to an independent fair

and reasonableness assessment by Grant Thornton Chartered

Accountants Zimbabwe in line with ZSE listing requirements, who

considered fair and reasonable value of UGI as a whole to range

between US$2,320,000 and US$3,089,100. The parties agreed on

a valuation of U$2,601,963 for in UGI as a whole. The company will

pay a purchase consideration of $1,274,962 for the 49% stake.

NDI becomes the single largest shareholder in UGI with 49% whilst

the other shareholders are National Bank of Malawi with 26% and

ZHL with 25%. NDI will become the management and technical

services partner.

Thekeyfinancialinformationofthecompanyforthepast4yearsis

shown in the table below;

TheDirectorsbelievethatthisacquisitionwilladdsignificantvalue

to the shareholders of NDI. The Directors believe that they will

have control of the subsidiary effective 1 January 2015 as per

requirements of IFRS 10 and thus will be consolidated in line with

that standard as from that date.

Assets acquired and liabilities assumed The fair values allocated

to the assets and liabilities are based on a provisional assessment

of their fair values. According to IFRS 3.45, the Group is allowed

a measurement period,not exceeding one year, to retrospectively

adjust the provisional amounts recognised at the acquisition date

to reflect new information obtained about facts and circumstances

that existed as of the acquisition dates and,if known, would have

affected the measurement of the amounts recognised as of the

effectivedate.Thefairvaluesoftheidentifiableassetsandliabilities

of as at the date of acquisition were:

USD

Assets

Property and Equipment 719,425.63

Investments 2,712,764.30

Insurance receivables 4,442,823.80

Other receivables 1,282,295.19

Cash and bank balances 310,752.86

Other assets 1,658,032.04

Total Assets 11,126,093.82

Liabilities

Insurance payables 4,596,480.55

Unearned Premium reserve 1,919,768.88

Other 1,063,780.32

Total Liabilities 7,580,029.75

Total Identifiable net assets at fair value 3,546,064.07

Non-controlling interest at fair value (1,808,493)

Gain on bargain purchase (462,609)

Purchase Consideration 1,274,962.00

The fair value of the Insurance receivables amounts to $4,442,824.

The gross amount of the insurance receivables is $4,586,282

An amount of $143,458 was impaired and it is expected that the

balance will be collectable in full.

Other receivables amounts to $1,282,295 and none of the other

receivables have been impaired and it is expected that the full

contractual amounts can be collected.

The gain recognised on the acquisition will be shown under other

gainsinonthestatementofprofitandlossfor2015.

The transaction resulted in a gain as ZHL needed to urgently sell in

order to restructure and focus on their reinsurance business.


94


Shareholder AnalysisAS AT 31 DECEMBER 2014

SHAREHOLDERS NO OF SHARES % HOLDING

NATIONAL SOCIAL SECURITY AUTHORITY 162,936,483 28.75

ZIMRE HOLDINGS LIMITED 161,976,565 28.58

CAMPBELL-NNR BRUCE 56,643,597 10.00

ZIMBABWE ALLIED BANKING GROUP 38,089,480 6.72

LOXMILL INVESTMENTS (PVT) LTD 36,632,256 6.46

NOEL HAYES NNR 22,248,972 3.92

LOCAL AUTHORITIES PENSION FUND 9,991,914 1.76

GEDUL INVESTMENTS (PVT) LTD 6,384,475 1.13

GURAMATUNHU FAMILY TRUST 4,898,784 0.86

BARD NOMINEES 3,662,546 0.65

TOTAL TOP TEN 503,465,072 88.83

SHARES NOT REPORTED 63,299,701 11.17

TOTAL SHARES IN ISSUE 566,764,773 100

SHAREHOLDING PER CATEGORY

Group Code Shares % Holding Holders % Holders

COMPANIES LOCAL 215,268,372 38.01 177 3.09

PENSION FUNDS 183,114,945 32.21 35 0.66

NOMINEES LOCAL 8,048,066 1.42 45 0.85

BANK 38,097,006 6.70 2 0.04

LOCAL RESIDENT 23,616,154 4.17 4,042 76.76

INVESTMENT, TRUST AND PROPERTY COMPANIES 7,272,983 1.28 51 0.97

INSURANCE COMPANIES 1,511,105 0.27 4 0.08

EMPLOYEES 5,036,759 0.82 13 0.25

WARRANT NOT PRESENTABLE 4,704,617 1.00 881 17.00

NEW NON RESIDENT 80,088,334 14.13 9 0.17

ESTATES 6,432 0.00 7 0.13

Totals 566,764,773 100 5,266 100

SHAREHOLDING DISTRIBUTION

Range Shares % Shares Holders % Holders

1-500 529,295 0.0931 2,508 47.63

501-1000 483,282 0.0850 714 13.56

1001-5000 2,599,426 0.4572 1,226 23.28

5001-10000 1,815,081 0.3192 263 4.99

10001-20000 3,196,097 0.5621 232 4.41

20001-50000 4,572,136 0.8042 145 2.75

50001-100000 4,221,666 0.7425 62 1.18

100001-500000 16,759,588 2.9477 74 1.41

500001-1000000 10,219,046 1.7973 14 0.27

1000001-99999999999999 522,369,156 92.1916 28 0.53

Totals 566,764,773 100 5,266 100

95


Notices to Shareholders - Dividend

The Board has recommended a dividend of 0.05 cents per share for the year ended 31 December 2014.

The dividend shall be payable to members registered in the books of the company on Friday the 8th of May 2015.

The following timetable will be followed;

• LastDaytoRegister 8May2015

• ClosureofRegister 9-13May2015

• DividendPaymentDate 19May2015

Shareholders are requested to submit/update their bank details to the Transfer Secretaries;

ZB Transfer Secretaries (Pvt) Ltd

Ground Floor, ZB Centre

59 Kwame Nkrumah Avenue

P O Box 2540

Harare

Tel: 759660/5/6 or 796841/3/4

[email protected],[email protected],[email protected].

Submissions can also be made at any ZB Bank branch countrywide.

By Order of the Board

NICOZDIAMOND Insurance Limited

G Zvaravanhu

Company Secretary

16 April 2015

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Notice is hereby given that the 13th Annual General Meeting of the shareholders of NICOZDIAMOND Insurance Limited will be held at the NICOZ DIAMOND

Auditorium, 7th floor Insurance Centre, 30 Samora Machel Avenue, on 29 May 2015 at 1200 hours for purpose of transacting the following business:

ORDINARY BUSINESS

1. Toreceive,considerandadoptthefinancialstatementsandreportsoftheDirectorsandAuditorsofthecompanyforthefinancialyearended31

December 2014.

2. Tosanctionthefinaldividendof0.05centspershare.

3. To re-elect Directors retiring by rotation.

In terms of Article 77 of the companies’ Articles of Association, Mr. Albert J Nduna, Mr. Paul R Brien and Mrs. Rachel P Kupara retire by rotation and

being eligible; offer themselves for re- election.

4. ToapprovetheremunerationoftheDirectorsforthepastfinancialyear.

5. To approve the remuneration of the auditors for the past audit.

6. To appoint Ernst& Young Chartered Accountants (Zimbabwe) as auditors of the company until the conclusion of the next Annual General Meeting.

7. To transact all such business as may be transacted at an Annual General Meeting.

SPECIAL BUSINESS

8. Amendments to Articles of Association

I. That a new article, Article 12b be inserted as follows

“Notwithstanding any contrary provisions in the Companies Act [Chapter 24:03] and the company’s Articles of Association, the company shall

issuesecuritiesindematerializedform,convertcertifiedsecuritiestodematerializedsecurities,andallowitssecuritiestobetradedindematerialized

form,providedthatnocertificatedsecuritiesshallbeconvertedtotheirdematerializedformwithouttheconsentoftheholderthereof”

II. That a new article, Article 135b be inserted as follows

“Any documents and/or notices to be sent to members in terms of sections 115 and 133 to 135 above and 136 to 138 below may, notwithstanding

anything to the contrary in the aforementioned, be sent electronically to the electronic address last furnished by such members. Likewise, any

documents that may be required to be sent to members in terms of these Articles or of the Companies Act [Chapter 24:03] may be sent to the

electronicaddressofthemembersandshallbepostedontheCompany’sofficialwebsite.Suchdocumentsand/ornoticesshallbeforwardedto

the members concerned within the prescribed timelines, provided should a member request a hard copy, such document as requested shall be

availed in hard copy format to that member”

9. Loans to Executive Directors

Toconsiderandifdeemedfit,toapprovewithorwithoutmodification,thefollowingresolutionasanordinaryresolution,“Thatthecompanybeand

isherebyauthorizedtomakealoantoanyexecutiveDirectorortoenterintoanyguaranteeorprovidesecurityinconnectionwithaloantosuch

executiveforthepurposesofenablingthemtoperformtheirdutiesasanofficeroftheCompanyasmaybedeterminedbytheBoardofDirectors,

provided that the amount of the loan or extent of the guarantee shall not be more than two times the annual gross remuneration of the Director.”

10. Share buy-back

Toconsiderandifdeemedfit,toapprovewithorwithoutmodification,thefollowingresolutionasaspecialresolution.Aspecialresolutionisrequired

tobepassedbyamajorityofseventyfivepercentofthosepresentandvoting(includingproxyvotes),representingnotlessthantwentyfivepercent

of the total number of votes in the company.

“That the company, may undertake general repurchase by way of open market transactions on the Zimbabwe Stock Exchange (“ZSE”) of any of its

own ordinary shares in such manner or on such terms as the directors from time to time determine provided that;

i. the authority in terms of this special resolution shall expire on the earlier of the holding of the next Annual General Meeting or the passage of

15 months since the date of the resolution; and

Notices to Shareholders - AGM

97


98

ii. foreachshare,theminimumpricethatmaybepaidis5%(fivepercent)aboveand5%belowtheweightedaverageofthemarketpriceofthe

sharesforthefivedaysimmediatelyprecedingthedateofrepurchase;and

iii. Themaximumnumberofsharesauthorizedtobeacquiredisnomorethan10%(tenpercent)ofthecompany’sordinaryissuedsharecapital.

The Directors, in considering the effect of any such repurchases will duly take into account the ability of the company for a period twelve months,

to pay its debts in the ordinary course of business, the maintenance of an excess of assets over liabilities, and the adequacy of ordinary capital and

reserves as well as the adequacy of working capital.

In terms of the Companies Act (Chapter 24:03) a member entitled to attend and vote at a meeting is entitled to appoint a proxy to attend and vote

on a poll and speak in his stead. A proxy need not be a member of the Company. Proxy forms must be lodged with the secretaries not less than forty-

eight hours before the time for holding the meeting.

By Order of the Board

NICOZDIAMOND Insurance Limited

G Zvaravanhu

Company Secretary

4 May 2015

Notices to Shareholders - AGM(continued)


I/We ………………………………………………………………………………...............................being a member(s) of the above

Company and entitled to vote, hereby appoint.....................................................................of..............................................................

or failing him/her,...............................................................................................................................................................................

or failing him/her, the Chairperson of the Annual General Meeting, as my/our proxy to vote for me/us and on my/our behalf at the

AnnualGeneralmeetingofNicozDiamondShareholderstobeheldintheNICOZDIAMONDAuditorium,7thFloor,InsuranceCentre,

30 Samora Machel Avenue, Harare, at 1200 hours on Thursday, 29 May 2015, and at any adjournment thereof.

Signed this ……………………………..…….....................….….. day of ……...........................…...................…………..………...2014

SIGNATURE OF MEMBER ………………………………………………

Company Seal or Stamp ………………………………………………

Notes:

1. In terms of Section 129 of the Companies Act [Chapter 24:03] a member entitled to vote at the Annual General Meeting

is entitled to appoint one or more proxies to attend and vote and speak in his stead. A proxy need not be a member of the

Company.

2. In terms of Article 89 of the Company’s Articles of Association, to be valid, proxy forms should be completed and deposited at

theregisteredofficeoftheCompanyinHarare,notlessthantwentyfour(24)hoursbeforethetimeforholdingthemeeting.

3. Any alteration to this proxy form must be signed by the person signing the proxy form.

4. Dulycompletedproxyformsmustbelodgedwith,orpostedtothecompany’sregisteredoffice,NicozDiamond

Insurance Limited, 2nd Floor Insurance Centre, 30 Samora Machel Avenue, P O Box 1256, Harare so as to be received by them

not later than 1200 hours on Tuesday, 27 May 2015.

5. The completion and lodging of this form will not preclude the relevant Shareholder from attending the AGM and voting thereat,

in person to the exclusion of any proxy appointed in terms hereof, should such Shareholder wish to do so.

6. The authority of a person signing the Form of Proxy under a power of attorney or on behalf of a company must be attached to

theFormofProxyunlessthepowerofattorneyhasalreadybeenregisteredbyNicozDiamondorinthecaseofacompany;this

Form of Proxy is sealed.

Proxy Form

99

nicozdiamond insurance company 2014 annual report

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