Group Audited Financial Results
For the year ended 31December 2009
Chairman’s Statement
Group statement of financial position
as at 31 December 2009
OPERATING ENVIRONMENT
The introduction of the multi currency system in February 2009 brought
stability in the economy with notable positive results on inflation. The 2009
monetary and fiscal policies managed to reduce inflation to a negative 7.7%
and created a conducive environment which resulted in companies increasing
capacity utilization to average between 30% and 40%. We expect continual
improvement in the Socio economic and political environment, leading to
enhanced growth in Gross Domestic Product in 2010. The Pensions and
Insurance sector will benefit from improved industrial activity and disposable
incomes.
Assets
FINANCIAL PERFORMANCE REVIEW
GROUP RESULTS
The Group’s financial performance during the period under review was
commendable, given the prevailing operating environment. Total revenue for
the year was $3.9 million, while profit after tax was $2.2 million.
During the same period, investment income's contribution to total income
was 26% from the 95% in the previous year. This was largely a result of
decline in values of mainly equity investments, in view of the liquidity
challenges and low economic activity.
The Group successfully undertook a capital raising exercise during the second
half of 2009 to recapitalize the business. The company will use the stronger
capital base to take advantage of the expected growth in the economy going
forward.
Fidelity Life Assurance Of Zimbabwe
Total premium income for the year was $1.5 million, while claims during the
same period were at $130 000. Investments income stood at $1.5 million.
This was due to a deliberate non crystallization strategy on equities positions
to take advantage of the upside potential to be triggered by economic
recovery. We are hopeful that our strategy on investments will still deliver
value going forward. Operating and administration costs were $1.3 million.
Overally the company recorded a profit after tax for the year of $2.1 million.
• Individual Life Division
Premium income was $239 000 reflecting the harsh economic realities
characterized by low household disposable incomes. Product innovation
remains a priority area going into the future.
• Employee Benefits Division
Premium income for the period was $1.2 million. Most companies have
reverted to remunerating employees via the payroll albeit on low salaries
and this has helped in terms of premium income inflows. Going forward, the
company will be aggressive on acquiring new business while at the same
time ensuring business presently on board is retained.
Vanguard Life Assurance
This subsidiary, based in Malawi, posted a profit before tax of $813 000 for
the year ended 31 December 2009.
Fidelity Life Assurance Zambia
This subsidiary, based in Zambia, posted a loss before tax of $476 000 for
the year ended 31 December 2009. There was a fraud involving senior
management. The extent of the loss to date is about $100 000 broken down
as follows: Company $36 043 and $63 957 from funds under management
and the investigation is still on going to establish the full extent of the loss.
The company's trading license was subsequently suspended in June 2009
hence the loss is due to fixed over heads without income being generated.
The company's operation has been temporarily suspended pending the
resolution of the license suspension.
Fidelity Life Asset Management
The asset management subsidiary posted a loss before tax of $42 000 for
the year ended 31 December 2009. The company was largely affected by
prevailing liquidity challenges and low economic activity which affected
institutional, corporate entities and individual investors alike.
Zimbabwe Actuarial Consultants
Profit before tax for the year ended 31 December 2009 amounted to $5 000.
The subsidiary continues to compete for business with other players in the
industry, both locally and regionally.
Fidelity Funeral Services
The company recorded a marginal loss of $14 000 for the period under
review. We expect the company to increase its presence in the market in
2010 and compete effectively with other players in the sector. Contribution
to Group performance is expected to improve going forward.
Dividend
Due to the need to strengthen the group's balance sheet and underwriting
capacity, the Directors recommend that no dividend be declared for the year.
Outlook
General economic improvement is expected across all sectors of the economy
and this is likely to boost disposable incomes in the market. The group is
positive about the future in view of the political dispensation ushered in by
the signing of the Global Political Agreement and already improving operating
environment.
Appreciation
I take this opportunity to express my deep appreciation to our clients and
stakeholders for their continued support. I would also like to commend my
fellow directors, management and staff for the efforts made during the past
twelve months.
Non-current assets
Property, plant and equipment
Investments
Deferred acquisition costs
4
US$
9,212,941
3,970,753
4,106,756
1,135,432
6,667,711
8,919
1,244,921
4,361,423
763,050
289,398
Current assets
Inventory
Trade and other receivables
Held for trading investments
Short term investments
Cash and cash equivalents
15,880,652
Total assets
Equity and liabilities
15,055,926
1,089,233
1,202,667
1,912,588
58,898
22,664
545,942
10,223,934
Equity and policyholders’ funds
Share capital
Share premium
Non distributable reserve
Currency translation reserve
Revaluation surplus
Retained earnings
Life fund
(15,047)
Non-controlling interest
15,040,879
Total equity
Non-current liabilities
Deferred tax
10,663
10,663
Current liabilities
Trade payables
Related party payables
Current tax payable
829,110
767,082
34,901
27,127
Total liabilities
839,773
15,880,652
Total Equity and liabilities
Group statement of comprehensive income for
the year ended 31 December 2009
Notes
US$
Premium income
5
3,902,070
Net benefits and claims
Operating and administrative expenses
6
(3,525,003)
(535,985)
(2,989,018)
377,067
Underwriting surplus
1,504,380
353,815
Investment income
Other income
Profit before tax
Tax
Profit for the period
Other comprehensive income:
Exchange differences on translation of foreign operations
Gains on property, plant and equipment revaluations
7
2,235,262
(14,399)
2,220,863
58,898
22,664
Total comprehensive income for the period
2,302,426
Total comprehensive income attributable to:
Transfer to policy holders
Owners of the parent
Non-controlling interests
Total comprehensive income for the period
1,654,983
656,025
(8,582)
2,302,426
Weighted number of ordinary shares in issue
76,697,574
Basic Earnings Per Share (cents)
0.8553
Diluted Earnings Per Share (cents)
0.8553
Headline Earnings Per Share (cents)
0.8879
Group statement of cashflows
for the year ended 31 December 2009
US$
Cashflows from operating activities
Profit before tax
2,235,262
Non- cash items
(539,681)
Changes in working capital
(616,914)
Tax paid
Net cash from operating activities
Net cash outflow from investing activities
Net cash inflow from financing activities
S Tembo
Chairman
Notes
(6,523)
1,072,144
(2,084,226)
1,700,000
Net increase in cash and cash equivalents
687,918
Cash and cash equivalents at 01 January 2009
364,530
Cash and cash equivalents at 31 December 2009
1,052,448
Directors: S Tembo (Chairman) SB Chapereka (Managing)*, Dr. EM Khosa, PS Madzonga, Dr. G Mandishona, P Razunguzwa*, G Mushoma*, Dr. GC Mataka, Prof. R Murapa, S Mabheju
* Executive
Group statement of changes in equity
for the year ended 31 December 2009
Share capital
Share
premium
US$
US$
Retained
earnings
Currency
translation
reserve
Revaluation
surplus
Life Fund
Non
distributable
reserves
US$
US$
US$
US$
US$
-
-
(110,083)
-
-
8,852,380
Issue of shares
429,676
1,202,667
-
-
-
Transfer from non distributable reserve
659,557
-
-
-
-
Balance at 1 January 2009
Equity
attributable to
owners of
Nonparent andControlling
policyholdersInterest
US$
US$
Total equity
US$
2,572,145
11,314,442
(6,465)
11,307,977
-
-
1,632,343
-
1,632,343
-
(659,557)
-
-
2,302,426
Changes in equity for 2009
Total comprehensive income for the year
-
-
656,025
58,898
22,664
1,573,421
-
2,311,008
(8,582)
Life fund withdrawal
-
-
-
-
-
(201,867)
-
(201,867)
-
(201,867)
1,089,233
1,202,667
545,942
58,898
22,664
10,223,934
1,912,588
15,055,926
(15,047)
15,040,879
Balance at 31 December 2009
Notes to the consolidated financial statements
for the year ended 31 December 2009
1.GENERAL INFORMATION
Fidelity Life Assurance of Zimbabwe is a limited company incorporated and domiciled in Zimbabwe and has the following subsidiaries, Fidelity Life Asset
Management Company of (Private) Limited, Fidelity Financial Services (Private) Limited, Fidelity Funeral Services (Private) Limited, Zimbabwe Actuarial Consultants
(Private) Limited, Vanguard Life Assurance Company (Private) Limited and Fidelity Life Zambia (2009) Limited. Fidelity Life asset Management Company (Private)
Limited is an asset management company which provide financial services, Zimbabwe Actuarial Consultants (Private) Limited provides actuarial services, Fidelity
Life Funeral Services (Private) Limited provides funeral services, Vanguard provides life assurance services, Fidelity Life Zambia (2009) Limited provides asset
management and life assurance services.
2. STATEMENT OF COMPLIANCE
The Group’s accounting policies used in preparing these financial results are in all material respects consistent with those applied in previous years except
for the non compliance with International Financial Reporting Standards (IFRS) as regards the following:
IAS 1 - Presentation of Financial Statements.
IAS 21 - The effects of changes in Foreign Exchange Rates.
IAS 29 - Financial Reporting in Hyperinflationary Economies
IAS 1 requires an entity to disclose comparative information in respect of previous reporting periods, while in order to report in the new functional currency,
IAS 21 and IAS 29 require that inflation adjusted financial statements be prepared and converted into new currency using the closing exchange rates at the
date of change to the new functional currency. The effects of these departures have not been quantified. However in preparing these financial statements,
the Group has complied with the Financial Reporting Guidance jointly recommended for use by the Public Accountants and Auditors Board, the Zimbabwe
Accounting Practices Board and the Zimbabwe Stock Exchange. Although it’s not a legal requirement to apply the Financial Reporting Guidance, the directors,
in line with their fiduciary responsibilities to prepare financial statements that fairly present the state of affairs and performance of the Group have adopted
these recommendations as it is the best possible manner in which they can present financial statements that are as fair as practicable under the prevailing
circumstances.
3. CURRENCY
The financial statements are expressed in United States Dollars which is the group’s functional currency. The functional currency was changed from Zimbabwe
dollars to United States Dollars on 1 February 2009.
US$
4. INVESTMENTS
Investment properties
Unlisted equities
3,606,756
500,000
4,106,756
5.PREMIUM INCOME
Individual life business
Group business
Gross premium income
Less: Reassurance
Net premium income
6. NET CLAIMS
Death
Maturities
Annuities
Surrenders
Group claims
Gross Claims
Less: Reassurance recoveries
1,614,934
2,384,507
3,999,441
(97,371)
3,902,070
182,823
48,187
21,136
93,010
262,516
607,672
(71,687)
535,985
7. PROFIT BEFORE TAX
Profit before tax at is shown after crediting/(charging)
the following:
Fair value adjustments on held for trading investments
Fair value adjustments on investment properties
Audit fees
Directors emoluments- for services as directors
- for other services
Depreciation of property, plant & equipment
Unrealised exchange gain
Amortisation of deferred acquisition costs
Staff costs
Life and Funeral Assurance Pensions and Employee Benefits Asset Management Financial Services
188,144
744,614
(29,556)
(165,377)
(75,348)
(256,757)
58,898
(160,256)
(1,377,116)