CHAIRMAN’S STATEMENT
There was a marked slowdown in the economic growth momentum in 2012 as the
economy continued to face ...
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Fidelity Life Assurance of Zimbabwe Limited FY 2012 results

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Fidelity Life Assurance of Zimbabwe Limited FY 2012 results

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Fidelity Life Assurance of Zimbabwe Limited FY 2012 results

  1. 1. CHAIRMAN’S STATEMENT There was a marked slowdown in the economic growth momentum in 2012 as the economy continued to face challenges including liquidity shortages and company closures. The banking sector, which has remained without a lender of last resort, remains fragile as a result of undercapitalization and non performing loans. The stock market was in negative territory for much of 2012 before rebounding in the last quarter of the year to post a 4% return which was above annual inflation of 2.9%. The conclusion of the constitution making process through the referendum in March 2013 and the subsequent elections should go a long way in addressing political uncertainty which had characterized the economy and hopefully be the catalyst in unlocking new liquidity to oil the economy’s growth. Despite the challenges experienced in the year, the Fidelity Group performed well with gross written premium increasing by 21% to US$14.4 million from US$11.9 million in 2011. Total revenue witnessed a 43% increase to US$27.2 million from US$18.9 million in 2011.Profit for the year was US$4.1 million, a 91% increase from US$2.1 million recorded in the previous year. INDIVIDUAL COMPANY PERFORMANCE INSURANCE BUSINESS Fidelity Life Assurance The anchor company experienced a good year with premium income increasing by 21% to US$8.7 million whilst total revenue was US$17.8 million,an increase of 70% over the corresponding period. Profit for the year was US$3 million, an increase of 197% over the corresponding period.In line with the growth in income,Fidelity Life Assurance embarked on an aggressive development of the property portfolio; starting with Fidelity Life Park.This is meant to create assets that match the profile of the insurance liabilities. Vanguard Life Assurance Notwithstanding the political and economic challenges faced by Malawi especially in the first half of 2012, Vanguard did reasonably well with a profit for the year of US$0.6 million down from US$1.65 million in the corresponding period largely due to the effects of devaluation of the Malawian Kwacha. The company undertook a successful capital raising program to address solvency issues. Fidelity Funeral Assurance The company registered premium income growth of 47% to US$2.5 million from US$1.7 million recorded in the prior year. The company continues to increase its visibility in the market and garner increasing market share. NON INSURANCE SUBSIDIARIES The non insurance subsidiaries led by the Micro finance unit made reasonable contributions to group profits. Micro finance continues to do well as the company takes advantage of the liquidity situation in the economy. The unit registered a profit before tax of US$0.6 million during the period. The Asset Management company recorded modest profitability of US$0.1 million which is commendable given the low propensity of the economy to save due to poor liquidity. DIVIDEND The Directors have recommended a dividend of 0.3443 cents per share up from 0.3213 cents in the previous year. In recommending this level of dividend, the Directors were cognisant of the growth in profitability, the desire to reward shareholders and the need to retain internal resources for business expansion. OUTLOOK Having successfully completed servicing of Fidelity Life Park in Manresa,the Group will commence development of a larger project called Fidelity South View Park during 2013.The project along Masvingo Road comprises 5,950 residential stands and various amenities. The Group will continue consolidating market share in traditional products,and where demand is strong,new branches will be opened. APPRECIATION I wish to thank our clients, regulators, the investing community and other stakeholders for the support rendered to the Group in 2012. The company was voted the Best Insurance company for the second successive year. I would like to thank fellow Directors, Management and Staff for the pleasing results and the public recognition of the performance of the company. S.TEMBO BOARD CHAIRMAN 2012 2011 US$ US$ Revenue Gross written premiums 14,434,369 11,884,748 Outward reinsurance premiums (353,327) (192,269) Net premiums earned 14,081,042 11,692,479 Fees from fund management and investment contracts 244,435 65,046 Investment return 6,854,017 3,895,666 Income from sale of residential stands 2,565,409 - Other income 3,432,043 3,286,900 Total revenue 27,176,946 18,940,091 Expenses Claims and benefits (1,781,342) (1,278,119) Reinsurance recoveries 122,000 48,977 Net claims and benefits incurred (1,659,342) (1,229,142) Transfer to policyholders (8,015,725) (7,862,058) Cost of sales on residential stands (2,001,712) - Fee and commission expenses, and other acquisition costs (1,071,803) (798,547) Other operating and administrative expenses (8,364,457) (5,393,535) Total expenses (21,113,039) (15,283,282) Profit from operations 6,063,907 3,656,809 Finance costs (1,633,893) (1,228,773) Profit before tax 4,430,014 2,428,036 Income tax expense (339,717) (285,403) Profit from continuing operations after tax 4,090,297 2,142,633 Discontinued operations Profit/(loss) from discontinued operations after tax - - Profit for the year 4,090,297 2,142,633 Other comprehensive income Exchange differences on translation of foreign operations (62,140) (196,189) Gains on property and equipment revaluation net of tax 24,272 245,238 Total other comprehensive income for the year (37,868) 49,049 Total comprehensive income for the year 4,052,429 2,191,682 Profit for the year attribuatable to: Equity holders of the parent 3,838,183 1,972,708 Non-controlling interests 252,114 169,925 Total profit for the year 4,090,297 2,142,633 Total comprehensive income attributtable to: Equity holders of the parent 3,816,598 2,021,757 Non-controlling interests 235,831 169,925 Total comprehensive income for the year 4,052,429 2,191,682 Continuing operations Basic earnings per share (cents) 3.50 1.86 FIDELITY LIFE ASSURANCE OF ZIMBABWE LIMITED AND ITS SUBSIDIARIES Consolidated statement of comprehensive income for the year ended 31 December 2012 2012 2011 US$ US$ Profit before tax 4,430,014 2,428,036 Adjustments: 543,005 (766,323) Changes in working capital (1,688,586) (534,609) Cash generated from operations 3,284,433 1,127,104 Income taxes paid (269,725) (335,281) NET CASH FROM OPERATING ACTIVITIES 3,014,708 791,823 CASH FLOWS FROM INVESTING ACTIVITIES (10,454,236) (3,272,803) CASH FLOWS FROM FINANCING ACTIVITIES 7,504,433 6,083,061 NET INCREASE IN CASH AND CASH EQUIVALENTS 64,905 3,602,081 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 4,875,038 1,272,957 CASH AND CASH EQUIVALENTS AT END OF YEAR 4,939,943 4,875,038 FIDELITY LIFE ASSURANCE OF ZIMBABWE LIMITED AND ITS SUBSIDIARIES Consolidated statement of cash flows for the year ended 31 December 2012 Directors:S Tembo (Chairman),SB Chapereka (Managing)*,Dr H Chikova,PS Madzonga,Dr.G Mandishona,Dr.GC Mataka,L Tamayi,G Mushoma*,P Razunguzwa* *Executive FIDELITY LIFE ASSURANCE OF ZIMBABWE AND ITS SUBSIDIARIES Audited Consolidated Financial Statements for the year ended 31 December 2012 2012 2011 US$ US$ ASSETS Non-current assets Property,vehicles and equipment 7,006,281 6,221,852 Investment property 15,700,386 6,299,700 Intangible assets 382,908 75,000 Deferred acquisition costs 1,414,293 1,337,160 Loans and receivables 459,035 234,808 24,962,903 14,168,520 Current assets Inventories 2,310,554 866,994 Trade and other receivables 7,879,287 6,670,124 Related party receivables 334,082 347,938 Held for trading investments 7,311,603 6,531,876 Money market investments 2,980,882 3,804,191 Bank and cash balances 1,960,461 1,102,470 22,776,869 19,323,593 Assets in disposal group classified as held for sale 241,228 241,228 Total assets 47,981,000 33,733,341 EQUITY AND LIABILITIES Equity attributable to owners of the parent Share capital 1,089,233 1,089,233 Share premium 1,185,317 1,185,317 Non distributable reserve 174,461 730,102 Currency translation reserve (450,830) (388,690) Revaluation reserve 165,171 1,018,728 Retained earnings 6,598,789 3,110,606 8,762,141 6,745,296 Non-controlling interest 941,730 689,616 Total equity 9,703,871 7,434,912 Non-current liabilities Life assurance policyholder liabilities 28,864,142 19,026,555 Deferred tax 135,317 151,781 28,999,459 19,178,336 Current liabilities Trade and other payables 4,034,907 3,176,834 Related party payables 92,208 - Loans and borrowings 4,452,897 3,301,834 Current tax liabilities 177,062 90,606 Bank overdraft 1,400 31,623 8,758,474 6,600,897 Liabilities in disposal group classified as held for sale 519,196 519,196 Total liabilities 38,277,129 26,298,429 Total equity and liabilities 47,981,000 33,733,341 AUDITOR’S STATEMENT These consolidated financial statements should be read in conjunction with the complete set of financial statements for the year ended 31 December 2012, which have been audited by BDO Zimbabwe Chartered Accountants and an unmodified audit opinion used thereon. The auditor’s report on these consolidated financial statements is available for inspection at the company’s registered office. FIDELITY LIFE ASSURANCE OF ZIMBABWE LIMITED AND ITS SUBSIDIARIES Consolidated statement of financial position as at 31 December 2012 FIDELITY LIFE ASSURANCE OF ZIMBABWE LIMITED AND ITS SUBSIDIARIES Consolidated statement of changes in equity - for the year ended 31 December 2012 Non Currency Attributable to Retained Revaluation distributable translation shareholders of Non-controlling Share capital Share premium earnings reserve reserves reserve parent interest Total equity US$ US$ US$ US$ US$ US$ US$ US$ US$ Balance at 31 December 2010 1,089,233 1,185,317 1,387,898 773,490 730,102 (192,501) 4,973,539 519,691 5,493,230 Total comprehensive income for the year - - 1,972,708 1,176,048 - (196,189) 2,952,567 169,925 3,122,492 Transfer of assets to policyholders - - - (930,810) - - (930,810) - (930,810) Dividend paid - - (250,000) - - - (250,000) - (250,000) Balance at 31 December 2011 1,089,233 1,185,317 3,110,606 1,018,728 730,102 (388,690) 6,745,296 689,616 7,434,912 Total comprehensive income for the year - - 3,838,183 24,272 - (62,140) 3,800,315 252,114 4,052,429 Transfer of assets to policyholders - - - (877,829) (555,641) - (1,433,470) - (1,433,470) Dividend paid - - (350,000) - - - (350,000) - (350,000) Balance at 31 December 2012 1,089,233 1,185,317 6,598,789 165,171 174,461 (450,830) 8,762,141 941,730 9,703,871 2. RESTATEMENT OF PROFIT AFTER TAX In order to fully comply with the requirements of IFRS 4-Insurance Contracts, the directors have classified the portion of profit attributable to policyholders from being a distribution to an expense.The effect of the new classification on current and prior year profit after tax is as follows: 2012 2011 US$ US$ Profit after tax using the old classification 12,106,022 9,073,881 Less profit attributable to policyholders (8,015,725) (6,931,248) Profit after tax using new classification 4,090,297 2,142,633 Had the directors used the old classification,the profit after tax would have increased from US$9,1 million to US$12,1 million. 3. GROSS WRITTEN PREMIUMS Employee benefits income 8,714,932 7,106,402 Individual life income 5,683,751 4,756,285 Life assurance – investment contracts with discretionary participation features 35,686 22,061 Gross earned premiums 14,434,369 11,884,748 4. INVESTMENT RETURN Financial investment return 759,832 2,572,521 Rental income 133,555 80,896 Fair value gains on investment property 5,960,630 1,242,249 Total investment return 6,854,017 3,895,666 5. INVESTMENT PROPERTY Opening balance 6,299,700 4,735,174 Additions and Improvements 7,844,872 1,227,560 Transfer to property,vehicles and equipment (640,000) - Transfer to inventories (3,766,316) (905,283) Fair value gain 5,962,130 1,242,249 Closing balance 15,700,386 6,299,700 Notes to the audited financial statements for the year ended 31 December 2012 1. BASIS OF PREPARATION The financial statements have been prepared in accordance with International Financial Reporting Standards, (IFRS) and the International Financial Reporting Interpretations Committee, (IFRIC) interpretations. The consolidated financial statements are based on statutory records that are maintained under the historical cost convention as modified by the revaluation of property,investment property and held for trading investments.

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