Audited Financial Results
For the year ended 31 December 2008
ISO 9001:2000 Certified
CHAIRMAN’S STATEMENT
The Operating Environment
After declining by 6% in 2007, Zimbabwe's GDP is estimated to have declined by
a further 7% in 2008. The GDP decline is a result of output slump across all the
major sectors of the economy, particularly agriculture, mining, manufacturing,
and tourism. The agricultural sector suffered from lack of inputs. The mining
sector saw some mining houses closing shop or suspending operations citing
foreign currency shortages and the central bank's delay in releasing proceeds
from mineral sales. The manufacturing sector still has low capacity utilization
of below 15% as a result of shortages of raw materials, foreign currency, and a
whole host of other production bottlenecks.
Although no official figures have been forthcoming from the Central Statistical
Office, hyperinflation continued to wreck havoc throughout the economy, with
the result that by year end, the local currency had ceased to be accepted for
commercial transactions in most sectors of the economy. The decision by the
authorities to allow the use of multiple foreign currencies is a welcome development
as hyperinflation had rendered the use of the local currency impractical.
Money market investment rates remained depressed for the whole of the year
2008, with short-term interest rates hardly exceeding 200% against inflation rate
in excess of 231m%. Despite a sharp decline towards the end of the year, the
equities market, on the other hand, achieved a brilliant performance, recording
a 30.3 sextillion percent growth during the year 2008.
While we acknowledge that due to the hyperinflationary environment, detailed
presentation of financial statements in Zimbabwe dollar terms does not allow for
meaningful analysis and interpretation, the same figures are presented to comply
with regulatory requirements.
Financial Performance Overview
Given the hyperinflationary environment, management must be commended for
having employed strategies that not only preserve shareholder’s value, but also
grew the business in real terms through investing in properties and the stock
market, resulting in a profit before transfer to policyholders and tax of $143.3
sextillion, for the year ended 31 December 2008.
Total income for the year 2008 amounted to $155.2 sextillion, representing a
growth of 39.5 quintillion percent over the $6 430 achieved in the year 2007.
Investments income remained the dominant contributor, accounting for 99.6%
of total income for the year 2008.
Administration expenses went up from $1.99 thousand in 2007 to $10.2 sextillion
for the year ended 31 December 2008. This was reflective of the hyperinflationary
environment that we are operating in, and the staff remuneration measures that
management implemented during the year to retain essential skills.
Fidelity Life Assurance
Reflecting the dwindling disposable incomes as a result of the hyperinflationary
environment, total premium income grew by 5 quadrillion percent from $22.3
in 2007 to $11.2 quintillion for the year ended 31 December 2008. The growth
in premiums, though lower than inflation, was higher than the claims growth of
14.3 trillion percent, from $1.9 in the year 2007 to $2.7 quadrillion in 2008.
Realised income on equities grew marginally to $1.2 quadrillion in 2008, as the
strategy was to hold inflation hedging assets.
The company's profit before tax for the year 2008, at $134.7 sextillion, was
above the prior year figure of $5.95 thousand.
Vanguard Life Assurance
This subsidiary, based in Malawi, posted a profit before tax of $2.55 sextillion
for the year ended 31 December 2008 compared to $86 recorded for the year
2007.
Fidelity Life Asset Management
The asset management subsidiary posted a profit before tax of $4.09 sextillion
for the year ended 31 December 2008. This compares favourably to the $810
recorded in the year 2007.
as at 31 December 2008
for the year ended 31 December 2008
INCOME
Premium
ASSETS
Dividend
The Board has not declared a dividend in respect of the 2008 financial year.
Outlook
The recent reforms introduced by both the monetary and fiscal policies will help
improve the business landscape in the country, and Fidelity Life Assurance is
well positioned to take advantage of the arising opportunities, as well as deal
with the associated challenges. The company welcomes the opportunity to charge
premiums in foreign currency, and is ready to explore alternative investment
opportunities that may arise as the financial markets become more liberalised.
Appreciation
I would like to commend my fellow directors, management and staff for the
efforts made during the past year. Clients and other stakeholders' support is
greatly appreciated.
S. Tembo
Chairman
Cavmont Life and Asset Management Company (Pvt) (Ltd) (Zambia)
Cavmont Life and Asset Management Private Limited based in Zambia posted a
profit before tax of $1.24 sextillion for the year. The premium income generated
ABRIDGED CONSOLIDATED INCOME
STATEMENT
DEC 2007
$ trillion
Zimbabwe Actuarial Consultancy
The subsidiary posted a profit before tax of $325 quintillion for the year.
Fidelity Funeral Assurance
Fidelity Funeral Assurance in its second year of operating managed to post $167
quintillion before tax.
ABRIDGED CONSOLIDATED BALANCE SHEET
DEC 2008
$ trillion
for the period ended 31 December 2008 was $3.63 sextillion and other income
was $0.52 sextillion. The results exceeded expectations since it was the first
year of operation under the group.
Fees and Commission Income
Investment Income
Fair Value Gains - Investments
Other Operating income
HISTORICAL COST
GROUP CASHFLOW STATEMENT
DEC 2008
$ trillion
DEC 2007
$ trillion
13,734,445,097
-
1,365,203,310
738,731,761
137,456,912,736
1,944,670,384
-
141,505,518,191
for the year ended 31 December 2008
HISTORICAL COST
DEC 2008
AUDITED
$ trillion
DEC 2007
AUDITED
$ trillion
OPERATING ACTIVITIES
Profit Before Tax
143,315,144,600
-
-
Non Cash Items
(136,517,546,224)
-
(945,073,959)
5,852,524,417
Non Current Assets
Property and Equipment
54,758,853,906
-
Investment Property
59,236,423,353
-
Total Revenue
155,239,963,288
-
Other Investments
18,605,694,690
132,600,971,949
-
OUTGO
Claims
Transfer to Policy Holders
Other Operating and Administration Costs
Changes in working Capital
Cash From Operating Activities
1,716,445,677
128,388,115,209
10,208,373,011
-
Tax Paid
(869,339,834)
-
4,983,184,583
-
140,312,933,897
-
NET CASH FROM OPERATING
ACTIVITIES
(4,732,035,053)
-
-
-
251,149,529
-
-
-
251,149,529
-
Current Assets
Inventory
61,801,532
-
Total Claims, Benefits and Other Expenses
6,078,569,869
-
PROFIT BEFORE TAX
14,927,029,391
-
Short term investments
104,742,880,265
-
Tax
(1,460,807,975)
-
Bank and Cash Balances
281,585,307
111,164,836,973
-
PROFIT AFTER TAX
13,466,221,416
-
13,080,151,995
386,069,421
13,466,221,416
-
4,492,059,545
-
299,778,340
299,778,340
Accounts Receivable
TOTAL ASSETS
243,765,808,922
-
Basic Earnings Per Share ($)
EQUITY AND LIABILITIES
Equity
Share Capital
-
-
Share Premium
-
-
Retained Profit
13,080,151,995
-
Life Fund
222,743,706,478
235,823,858,473
-
Minority Interest
Total Equity
Attrbutable to
Equity Holders
Minority Interest
386,069,421
-
263,209,927,894
-
Weighted average number of ordinary shares
in issue
GROUP STATEMENT OF CHANGES IN
EQUITY AND RESERVES
Current Liabilities
Outstanding claims
Other Accounts Payable
Tax
Bank overdraft
Total Current Liabilities
TOTAL EQUITY AND LIABILITIES
1,951,347,651
-
893,298,708
-
4,301,998,734
-
378,800,158
-
30,435,778
5,604,533,377
-
243,765,808,922
-
NET CASH INFLOW FROM FINANCING
ACTIVITIES
NET DECREASE/INCREASE IN CASH AND
CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD
CASH AND CASH EQUIVALENTS AT END
OF PERIOD
Attributable to shareholders and policy holders of the parent
for the year ended 31 December 2008
Retained
Minority
Share Capital
$ trillion
-
Share Premium
$ trillion
-
Profit
$ trillion
-
Life fund
$ trillion
-
Interest
$ trillion
-
Total
$ trillion
-
Shares Issued
Translation Gain
Property revaluation
Surplus For The Year
Dividend paid
-
-
-
-
-
-
Balance as at 31 December 2007
-
-
-
-
-
-
Shares Issued
Life fund withdrawal
Translation Gain
Fair value adjustment-Available for sale
Investments
Revaluation Surplus - Properties
-
-
-
26,644,388,657
-
26,644,388,657
-
-
-
14,975,751,995
54,530,753,997
-
14,975,751,995
54,530,753,997
Surplus For The Year
-
-
13,080,151,995
128,388,115,209
386,069,421
141,854,336,625
Balance as at 31 December 2008
-
-
13,080,151,995
222,743,706,478
394,480,743
236,209,927,894
Balance as at 31 December 2006
Non Current Liabilities
Deferred Tax
NET CASH OUTFLOW FROM INVESTING
ACTIVITIES
NOTES TO THE FINANCIAL STATEMENTS
1 GENERAL INFORMATION
Fidelity Life Assurance Company Limited is a limited company incorporated and domiciled in Zimbabwe and has subsidiaries
including Fidelity Life Financial Services, Fidelity Funeral Services , Fidelity Life Asset management Company, Zimbabwe
Acturial Consultants, Vanguard Life Assurance and Cavmont Life & Asset Management. Fidelity Life Asset Management
Company is an asset management company which provides financial services, Zimbabwe Acturial Consultants provides
acturial services, Fidelity Funeral Services provides funeral services , Vanguard provides life assurance services, Cavmont
provides asset management and life assurance services.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the revision affects only the period or in the period of the revision
and future periods if the revision affects both current and future periods.
(a) Fair value of shares quoted on the Zimbabwe Stock Exchange.
The Zimbabwe Stock Exchange suspended trading on 20 November 2008. The prices obtaining on this date have been used
as the fair values of the shares. Actual fair values may differ from the estimates used.
1.1 Non Compliance with IFRS
(b) Exchange rates
The financial statements are not compliant with International Financial Reporting Standards in that the requirements of IAS
29 "Financial Reporting in Hyperinflationary Economies" have not been complied with. The standard requires that financial
statements of entities reporting in currencies of a hyperinflationary economy be stated in terms of the measuring unit
currrent at the balance sheet date. Restatements have not been possible due to non availability of indices from the Central
Statistical Office. The requirements of all other lnternational Financial Reporting Standards have been complied with under
the historical cost convention as modified by fair valuation of certain assets.
In 2008 there was a multiplicity of exchange rates. Financial results and financial position are greatly influenced by exchange
rates applied on foreign balances and transactions denominated in foreign currencies. For the purpose of these Group
financial statements the Old Mutual Implied rate has been used. The rate moved as follows:
1.2 Basis of preparation
The financial statements are presented in Zimbabwe dollars, rounded to the nearest trillion. They are prepared under the
historical cost basis except that the following assets and liabilities are stated at their fair value: derivative financial instruments,
financial instruments held for trading and financial instruments at fair value through profit and financial instruments
classified as available for sale, properties and motor vehicles.
2 SIGNIFICANT JUDGEMENTS
The following are the significant judgements made by management:
The preparation of financial statements in accordance with IFRSs requires directors to make judgements, estimates and
assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses.
The estimates and associated assumptions are based on historical experience and various other factors that are believed
to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values
of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
1 January 2008
30 June 2008
31 December 2008
$8.254
$12,617,983,349,233,500.000
(c)Valuation of Insurance Contract liabilities
Valuation of insurance contract liabilities is carried out by a qualfied actuary Mr N Kapadia
2.7 Basis of consolidation
The consolidated financial statements incorporate the financial statements of the company and its subsidiaries. The results
of the subsidiaries are included from the effective dates of acquisition until the effective dates of their disposal. Subsisiaries
are all the entities over which the Group has the power to govern the financial and operating policies, generally accompanying
a shareholding of more than half the voting rights.