Econet Wireless Zimbabwe 2013 annual report


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Econet Wireless Zimbabwe 2013 annual report

  1. 1. Annual Integrated Report 2013 Inspiring Innovations
  2. 2. ‘Unless the Lord builds the house, they labour in vain who built it. Unless the Lord guards the city, the watchman stays awake in vain.’ Psalm 127:1 NKJV “An Integrated Report tells the overall story of the organisation. It is a report to stakeholders on the strategy, performance, and activities of the organisation in a manner that allows stakeholders to assess the ability of the organisation to create and sustain value over the short-, medium-, and long-term. An effective Integrated Report reflects an appreciation that the organisation’s ability to create and sustain value is based on financial, social, economic, and environmental systems and by the quality of its relationships with its stakeholders. The Integrated Report should be written in clear and understandable language in order for it to be a useful resource for stakeholders.” Integrated Reporting Committee of South Africa (IRC SA) Our Commitment to Integrated Reporting In our first integrated report, we acknowledged that we had started on a journey. The first step was to lay a foundation for integrated reporting. This is our second integrated report and we trust you will perceive the improvements over last year: more information; greater insights; improved transparency. Disclaimer - Forward-looking statement An integrated report includes certain ’forward-looking statements’. These ‘forward-looking statements’ are necessarily about the future and therefore incorporate degrees of uncertainty. Consequently future actual results and performance may differ from these statements. The forward-looking statements are current as of the date of publication of the integrated report. The Company makes no representation that the information will be publicly updated after the release of the integrated report.
  3. 3. 1 Inspiring Innovations Econet’s innovations are inspiring and life changing; we believe that technology that does not change and improve lives is irrelevant. Hence we continuously search for transforming technologies to facilitate social transformation in existing and new markets. With the most extensive coverage in Zimbabwe, Econet commands market leadership, delivering value and inspiring transformation across the country.
  4. 4. 2 3. New in the Group 4. Performance highlights 5. Shareholder value delivery report 6. Share price movement 7. Four- year trading view Contents The year in perspective Corporate and leadership Governance Administration People and community Financial reporting “...What matters most about a new technology is not how it works, but how people use it and the changes it brings about in human lives…” Frances Cairncross 10. Our business 11. Corporate profile 14. Chairman’s statement to shareholders 18. Chief Executive Officer’s operations review 22. Board of Directors 25. From the Directors 28. Governance statement 31. Risk report 36. Remuneration 37. Our people and our community 41. Corporate social investment 46. Directors’ responsibility for financial reporting 47. Certificate by the Group Company Secretary 48. Independent Auditor’s Report 49. Consolidated annual financial statements 131. Our strategic business partnerships 132. Shareholder analysis 133. Corporate and advisory information 134. Financial diary 135. Notice to Members Detachable Proxy Form for Annual General Meeting
  5. 5. 3 New company acquisition – TN Bank Limited In a business acquisition, on 12 July 2012, the Company acquired 45% of the voting shares of TN Bank Limited (TN Bank), a commercial bank incorporated and registered in Zimbabwe. This investment gave the Company significant influence over the financial and operating affairs of TN Bank Limited and as such it was accounted for as an associate from that date. The business is in the proccess of rebranding the bank to Steward Bank Limited. The Company acquired a further 53.6% of the voting shares of TN Bank Limited on 31 January 2013 bringing its total interest to 98.6%. As a result, TN Bank Limited was consolidated as a subsidiary from that date. In May 2013 the Company completed 100% acquisition of the bank. The Board took a strategic decision to acquire a licenced banking entity after realising the need to accelerate the convergence of mobile telephone and financial services, in line with global trends. TN Bank’s licence is critical to the regulatory environment in which EcoCash operates. This acquisition will allow the mobile business to develop, sustain and enhance its mobile based financial services products. TN Bank Limited’s responsibility is to act as custodian of the financial dreams and aspirations of our banking customers, in growing and protecting their investments. New Products and Services Buddie Zone – this product was launched in September 2012 and has been a huge success with our customers. This service allows our customers to obtain dynamic discounts which are the best in the market. Multiple value-added services launched during the year: - Buddie Beatz; - ‘SMS & Win’; - Mobile News. High Value and Business Customer Bundles – new bundles were launched for our high value and business customers bundling handsets with contracts. Econet Solar - new solar-powered products are changing the lives of people, especially in rural and developing areas. EcoCash - multiple new features were introduced during the year. These included the EcoCash “debit-card” functionality. Several new merchant payment options as well as the ability to perform EcoCash transactions whilst roaming were also added. Details of our products and services can be found on our corporate website: TheYearInPerspective New in the Group
  6. 6. 4 Performance highlights Revenue Composition 1 Earnings before interest, taxation, depreciation, impairment and amortisation EBITDA for 2012 excludes once-off profit on disposal of investments. 2 Profit after taxation 3 Average revenue per user per month 4 Capital expenditure
  7. 7. 5 The Group continues to grow shareholder value as illustrated by the metrics above. Through the authority of the shareholders, the Group has made a number of prudent share buy-backs in an effort to retain value. Over the period, the Group made significant efforts to grow shareholder value, which mainly included the following: Securing long-term funding In the current financial year, the Group managed to secure substantial debt facilities, and continued to service ongoing facilities. This has enabled the Group to continue in its infrastructure and resource development aimed at optimising operations and remaining the network of choice in the country. Investment in infrastructure and resources The Group continues to invest in network infrastructure development aimed at increasing network coverage and improving network quality. As at year end, the Group’s total assets have surpassed the $1 billion mark. The Group’s subscriber base has also increased from 1.2 million in 2009 to 8 million subscribers. Investment in various systems that are aimed at improving operational efficiencies and containing costs continues to be made. The focus on customer experience through delivery of superior products EcoCash, the Group’s mobile money transfer and payment system continues to transform the lives of individuals across the country. New functionalities have been added to the EcoCash system that are aimed at servicing the needs of our customers. A wide range of solar products was also introduced in the year. The Group increased its mobile data coverage in the year through setting up new base stations to enable users to access data facilities. We continue to leverage our investment in fibre infrastructure to deliver exceptional quality and data speeds. The acquisition of core investments The Group acquired TN Bank Limited as a strategic investment after realising the need to accelerate the convergence of mobile telephone and financial services in line with global trends. TN Bank Limited also holds the licence for EcoCash, a key product in the Group. Reducing investor uncertainty through the provision of value-relevant information Following the publication of the Group’s inaugural integrated annual report in 2012, the Group has continued in its efforts to provide useful and valuable information to all stakeholders. To this end, this year’s annual integrated report has improved in the quality of information provided, with a focus towards meeting the informational needs of key stakeholders. Through diligent adherence to the latest International Financial Reporting Standards and best practices in financial reporting, the Group continued to provide improved disclosure of its activities in its annual reports, interim financial results publications, as well as presentations to the market. TheYearInPerspective Shareholder value delivery report Earnings per share (cents) 10.0 8.0 6.0 4.0 2.0 9.0 10.0 8.3
  8. 8. 6 Share price movement from February 2009 to February 2013 Note: The share price during the year has been adjusted for the 10 for 1 share split in February 2013.
  9. 9. 7 Summarised income statement ('000) 2013 2012 2011 2010 Revenue 694,844 611,116 493,491 362,776 EBITDA 305,344 290,894 242,746 179,285 Finance charges (28,600) (10,202) (8,061) (4,903) Profit before tax 204,903 239,130 196,471 148,122 Taxation (64,965) (73,389) (55,502) (34,912) Net Profit for the year 139,938 165,741 140,969 113,210 Summarised statement of financial position ('000) Non-current assets 739,951 644,763 536,439 296,875 Current assets 275,158 167,664 101,073 95,794 Equity and reserves 492,883 382,793 290,477 165,486 Non-current liabilities 288,293 174,005 244,038 127,460 Current liabilities 233,933 255,629 102,997 99,723 Net debt 264,571 249,138 248,392 138,707 Capital expenditure (147,044) (216,010) (270,034) (160,148) Performance per ordinary share (cents) Basic earnings per share 9.0 10.0 8.3 6.6 Headline and diluted earnings per share 9.0 10.0 8.3 6.6 Net asset value per share 319 232 172 95 Profitability and returns (%) EBITDA margin 44% 45% 49% 49% Operating profit margin 20% 27% 29% 31% Effective tax rate 32% 31% 28% 24% Net profit margin 20% 27% 29% 31% Notes: 1. 2012 EBITDA margin excludes once off profit on disposal of investments Four-year trading view TheYearInPerspective
  10. 10. 8 INFRASTRUCTURE Infrastructure Zimbabwe’s telecommunications sector has entered a new age of growth and opportunity. After years of investment and dedication to building our country’s telecommunications infrastructure, we can now look forward with greater hope. Once seen as backward in terms of technology, today Zimbabwe has leapfrogged many of its regional peers to become one of the fastest growing ICT markets in sub-Saharan Africa. To date, Econet has invested over one billion US dollars into building a modern network for our country. New Econet sites are going up across the country, bringing affordable telecommunications services to previously marginalised communities across the country. New switches have been built across Zimbabwe. We have built an extensive fibre network, connecting all our switches and base stations, for the benefit of all; from businesses and government agencies, to individual customers. We are humbled to see our investment take the country forward. Today, Zimbabwe is one of the most connected countries in Africa. Our growth is empowering many of our young entrepreneurs, who are seizing the vast opportunities available to develop supporting businesses. We are excited by the vast business opportunities that lie ahead of us. The possibilities are endless.
  11. 11. 9 Inspiring Innovations
  12. 12. 10 Our business Our Vision To provide world-class telecommunications to all the people of Zimbabwe. Our Mission To serve Zimbabwe by pioneering, developing and sustaining reliable, efficient and high- quality telecommunications of uncompromising world-class standards and ethics. Our Values The values we hold in common are: Pioneering We are a company committed to finding the best way forward in the fast-moving and highly competitive technology field. To remain leader in the field, we shall relentlessly pursue innovative solutions and constantly grow our knowledge base, with an uncompromising passion for excellence. Professionalism In everything we do, both within Econet and in the community, we always work in a customer and objective-oriented manner with clearly defined goals, in terms of quality of service. In all our professional areas and at all levels we carry out our duties skilfully and diligently. Personal Internally we always remember that we are a company made up of individuals. These people are the Company. Each one is an intrinsically valuable member of the organisation irrespective of their gender, race or position. We will always show concern for each other in an atmosphere that is open and stimulates personal development, job satisfaction and a sense of responsibility. We believe in working in teams, in effective and confident co-operation, in environments where honesty, praise, constructive criticism and fair reward have their place. Who we are inside the Company reflects who we are externally. Our relationship with our customers enthuses with warmth and a genuine desire to meet their needs. We reach out to customers in a holistic and organic way that makes them true stakeholders and willing participants in Econet Wireless.
  13. 13. 11 CorporateandLeadership Corporate profile EWZL - Zimbabwe holding company This annual integrated report incorporates the results of all the subsidiaries and associates of Econet Wireless Zimbabwe Limited. Econet Wireless Zimbabwe Limited (EWZL) is the holding company of businesses involved in various sectors of the economy as detailed below. EWZL, which is listed on the Zimbabwe Stock Exchange (ZSE), is Zimbabwe’s leading technology company. It is one of the largest quoted companies in terms of market capitalisation and directly and indirectly employs in excess of 15 000 people. Subsidiary Companies Econet Wireless (Private) Limited Econet Wireless (Private) Limited is EWZL’s cellular network operator with a base of 8 000 000 subscribers. EW Capital Holdings (Private) Limited EW Capital Holdings (Private) Limited is EWZL’s investment vehicle through which the Group holds a variety of investments carefully selected with the twin objectives of growing earnings and preserving value for shareholders. Transaction Payment Solutions (Private) Limited The Company is a leading provider of financial transaction, switching, point of sale and value-added services that exploit the convergence of banking, information technology and telecommunications. The Company provides local and international financial institutions and telecommunications operators access to cutting-edge technology to enhance customer service, in partnership with one of the world’s leading manufacturers of smart card-based point-of-sale systems. TN Bank Limited TN Bank Limited offers commercial banking services in the major centres of Zimbabwe. It is planned to play a pivotal role in the Group, especially concerning EcoCash, for which the Bank holds the banking licence neccessary for money transfer services. Pentamed Investments (Private) Limited EWZL through wholly-owned Pentamed Investments (Private) Limited holds 63% of the ordinary shares of Mutare Bottling Company (Private) Limited. It also holds 6% in the form of convertible instruments. Mutare Bottling Company (Private) Limited Mutare Bottling Company operates the Coca-Cola franchise in the Eastern Region of Zimbabwe. Associate Company Data Control and Systems (1996) (Private) Limited t/a LiquidTelecom Zimbabwe Liquid is a registered internet access provider in Zimbabwe and is a leading data, voice and Internet Protocol provider in the country. The Company supplies wholesale and retail fibre- optic and satellite services throughout Zimbabwe. Econet Wireless Zimbabwe Limited (EWZL; listed on Zimbabwe Stock Exchange) Econet Wireless (Private) Limited (EWPL; cellular network operator) EW Capital Holdings (Private) Limited (EWCH; group investment vehicle) TN Bank Limited (commercial bank) Pentamed Investments (Private) Limited (holding company) Mutare Bottling Company (Private) Limited (MBC; Coca-Cola franchise) Data Control and Systems (1996) (Private) Limited t/a Liquid Telecom Zimbabwe 98.60% 84.30% 63%
  14. 14. 12 BUSINESS PARTNA Business Partna The country’s premium contract package from the country’s leading cellular network that is smarter, dependable and well connected. It is a post-paid package that gives you choice and unlimited network access with a lot of Value-Added Services like Mobile Data, Roaming, Conference Calling, Unlimited Talk Time, Smart Phones, Voicemail, Vehicle Tracking , a High Value Loyalty Programme, Corporate Account Management and a lot more. With a flexible and convenient 30-day post- paid billing cycle subscribers receive their bills once a month via email or SMS alerts. It is the ideal package for the business individual or small- to-medium enterprise consumer, designed to reward the high-end user with lower tariffs and extra value-added services in keeping with the smart partnership.
  15. 15. 13 Inspiring Innovations
  16. 16. 14 Chairman’s statement to shareholders DR J. MYERS - Chairman of the Board Introduction Through pursuing inspiring innovations and continued investment in human capital, systems and technology, Econet continues to maintain its market leadership position. The Company is changing lives and transforming the communities for the better by providing products and services that address the needs of people across the country in line with its vision to provide telecommunication services to all people in Zimbabwe. The country’s mobile penetration rate improved from 15% in 2010 to almost 100% for the period under review, largely as a result of the increase in Econet Wireless’ subscriber base. The Company’s extensive network coverage has allowed access to telecommunication and other services to previously marginalised communities resulting in a transformational impact on those communities. Econet made significant strides in providing access to internet services by making internet access ubiquitously available through its extensive data-enabled network resulting in the internet penetration rate increasing to about 35%. Investment Review Since inception the business has invested over US$1 billion in the Zimbabwean economy, making it one of the largest investors in the country. Further investment was made in the year under review in network infrastructure to improve coverage and bring more capacity, particulary for data services. This investment resulted in an increase to 8 million subscribers; a growth of 25% from the previous year. The investment in network infrastructure is complemented by an extensive distribution network which has made the Company’s products and services easily accessible to its subscribers across the country. This distribution network consists of over 100 different locations where there is either a company owned shop, an exclusive franchise or a dealer. This investment has had a profound effect on employment as it has created an extensive network that deals directly and indirectly with the Company’s products and services. The business identified an opportunity in the financial services sector where most of the people in the country did not have access to bank accounts or a means to do financial transactions easily and responded by launching EcoCash; which to date has been a highly successful interventionwith over2.1millioncustomers.Internationally, there has been a trend towards convergance of mobile telecommunications and financial services. The Company acquired TN Bank Limited as it realises the strategic role financial services will play in its future growth. Mobile money services in Zimbabwe require a banking licence and this investment allows the Company to be firmly in control of the future growth prospects of its financial services- related innovations. The Company continues to research into areas in which technology can be used to address needs that are unique to Zimbabwe and Africa. Its innovations in solar devices has brought power and phone charging solutions to communities that previously were not addressed by conventional power solutions. Innovation is a core value of the Company and it will continue to drive its investment philosophy. Operations Review EcoCash subscribers increased by 62% from 1.3 million to 2.1 million subscribers. The agency network that supports the EcoCash business witnessed a growth of 242% to close at over 3,000 agents thereby creating further employment opportunities and improving the national payments system. Under the EcoCash service offering, new services were introduced which include: bill payments, bulk payments, merchant services, as well as banking-related facilities. The provision of banking-related services necessitated the integration of most of the banks in Zimbabwe onto the EcoCash platform. Through this intergration new features such as the bank to wallet functionality that allows banked customers to transfer money from their bank account to their mobile wallet were launched. Further to this the EcoCash debit card which facilitates payments to retailers and other merchants was
  17. 17. 15 CorporateandLeadership 500 academically talented students on a full scholarship basis. to be the “Partner of Choice” in all programmes aimed at responding to national healthcare crisis, such as cholera and typhoid, as well as building and maintaining capacity in the national healthcare delivery system. Licence Renewal The Econet Wireless Zimbabwe operating licence was issued, as a 15 year licence in July 1998, and was scheduled to expire on the 9th of July 2013. The original licence, as is standard international practice, set out guidelines to be followed for the renewal process. It also stipulated a licence renewal fee of $100 million. I am pleased to advise that the operating licence has now been formally renewed by government, on substantially the same terms and conditions as the previous period, save for the fact that the licence period was extended to 20 years, and the renewal fee, was set at $137.5 million. All operators will be required to pay the same licence fee on renewal of their licences. Outlook Econet Wireless is inspired to change the world of its customers through relevant innovations that address customer needs. Having made a significant investment in network capacity and coverage in the past few years the Company will continue to focus on improving its customer service platforms, distribution network, and further enhance its internet service delivery capabilities. Research and innovation in services that address the needs in financial services, farming, health and education sectors will continue so that the Company remains on the cutting edge of new and inspiring innovations. Appreciation I would like to extend my appreciation to the outgoing Chairman Mr. Tawanda Nyambirai, for the guidance and leadershipduringhistenure.Hisinvaluablecontributionover a period spanning years in the Company’s history is greatly appreciated. I extend my appreciation to our customers, shareholders, strategic partners, and regulatory authorities for their unwavering support during the year under review. I would also like to thank management and staff for their commitment in creating value for all stakeholders. I acknowledge the tremendous support that I received from fellow Board members who provided insightful wisdom and direction which has propelled the Company to yet another level of success. DR J. MYERS CHAIRMAN OF THE BOARD 14 May 2013 introduced. These innovations introduce a greater level of convienence to our subscribers and makes the technology relevant for their day to day lives. Another first by the Company was the introduction of the exciting “Buddie Zone”, a service that allows customers to receive exciting dynamic discounts for voice calls. This innovative concept has allowed for network resources to be more optimally utilised. Broadband continues to gain popularity due to its high speed, excellent quality and the most extensive coverage of any operator in Zimbabwe. Data subscribers increased by 52% from 2.1 million to 3.2 million in the year under review. The Green Kiosk initiative continued in the year under review. Under this initiative traders have the opportunity to merchandise airtime, accessories, lanterns and other products. This is yet another example of how the Company is transforming the lives of ordinary people by giving small traders an opportunity to retail the Company’s products and creating for them unique opportunities to better their lives. At the same time this initiative allows the provision of free solar powered phone charging solutions to subscribers who have limited or no access to grid power. Financial Performance Revenue for the year ended 28 February 2013 was US$694.8 million, an increase of 14% compared to the previous year. Earnings Before Interest, Taxation, Depreciation and Amortisation (EBITDA) recorded a margin of 44%. Depreciation and amortisation increased by 54% to US$71.6 million in line with growth of the asset base. Finance charges increased due to finalisation of the multi-creditor facilities in the year under review. Total assets surpassed the US$1,0 billion mark as of reporting date, registering a growth of 25% from last year. The debt to equity ratio improved to 54%, from 65% as at 28 February 2013. The Group increased its investment in TN Bank Limited from 45% (an associate as at half year) to 98.6% (a subsidiary). This investment has been accounted for as a subsidiary from the date control was assumed, on 31 January 2013. Shareholders approved a 10 (ten) to 1 (one) ordinary share split at an Extraordinary General Meeting held on 28 February 2013. Corporate Social Investment The Company has introduced a more sustainable way of assisting the marginalised members of our society. The Company set up the Higher Life Foundation, which consists of the following Trusts: orphaned children into “History Makers” with a leadership mindset for global impact. There are currently over 41 000 “History Makers” who are benefiting through the Capernaum Trust. Scholarship Fund which so far has supported over
  18. 18. 16 ECOCASH ECOCASH Econet launched EcoCash Mobile Money in 2011. EcoCash, our mobile money transfer and payment system, has promoted financial inclusion in Zimbabwe by connecting the rural to the urban population. It has also opened a new world of financial transactions to our unbanked population. Through EcoCash, we are redefining the mobile experience and transforming the way people transact in Zimbabwe. Our customers are now able to pay for goods and services, including airtime, using their mobile handsets. With EcoCash you no longer have to worry about change issues. So cash in (deposit money into your EcoCash wallet) today and pay the exact fare. EcoCash also facilitates the purchase of merchandise from shops or vendors that accept EcoCash. Once registered, one can send or receive money at any time. To date EcoCash has built the widest distribution network with more than 3 000 agents country-wide and more than 2,1 million registered customers. Your phone. Your wallet
  19. 19. 17 Inspiring Innovations
  20. 20. 18 Introduction The exceptional track record that has been achieved so far demonstrates that the fundamental pillars that are required to build, develop and sustain a robust and profitable business are in place. As the economic environment continues to improve and disposable incomes increase, new opportunities for growth will be created. The Group is well positioned to take advantage of these opportunities. Operations review Continued growth Econet Wireless Zimbabwe registered 14% growth in revenues in the year ended February 2013. This continued growth was despite a subdued economic environment. The focus of the business remained on growing sustainable value for all stakeholders by developing products and services that meet the needs of customers and ensuring that the pricing of these products reflects a sustainable value proposition; having regard to the high capital nature investments required in the telecommunications industry. Chief Executive Officer’s operations review DOUGLAS MBOWENI - Chief Executive Officer Exciting products and services Notable developments in the business during the year under review include the launch of exciting and innovative products such as the Buddie Zone initiative which is aimed at ensuring that we derive maximum benefit from our investment in the network through enhancing the customer’s appetite to make voice calls based on certain dynamic criteria. Other exciting products and services developments are outlined below. Mobile Money Transfers EcoCash, the Mobile Money Transfer (MMT) System, launched several exciting features that were an unprecedented success. The continued roll out of point- of-sale machines and the interface between point-of-sale terminals and the mobile wallet brings with it unparalleled convenience for our customers. In addition, the continued integration with all major banking institutions of the EcoCash platform as well as the extensive agent network makes EcoCash the most integrated, widely accessible and most convenient financial transaction service in Zimbabwe
  21. 21. 19 products and services. We believe that this continued investment demonstrates our commitment to ensuring that our customers get the best quality of service. Brand quality Our brand surveys continued to show that our brand is highly visible, well recognised, respected and appreciated. Our brand is founded on strong principles that embody a pioneering approach to business, which means we will always relentlessly pursue new ways of doing things in a very fast moving field. We continue to defend and protect our leading market share position and revenue growth through new innovations, aggressive promotions that create a heightened brand awareness and a positive disposition towards the Econet brand. Going Forward Our focus continues to be on providing world-class services that are relevant to our customers. We aim to provide a platform for continued economic growth whilst transforming our communities in a way that goes beyond the normal corporate social responsibility practices. The licence renewal has provided a new lease of life for us to plan and execute our strategic priorities. We welcome the future with confidence that we are poised for some exciting opportunities as the economy continues on its current path to recovery. D. MBOWENI CHIEF EXECUTIVE OFFICER 14 May 2013 today. The acquisition of TN Bank Limited is another exciting development which will propel the success of EcoCash. EcoCash has been cited as the second fastest growing MMT service after the world renowned M-PESA system that operates in Kenya. The fact that this feat has been achieved in just under 18 months of operation is a significant achievement. Our vision is to continue to innovate and provide Mobile Phone-based Applications. Roaming services Continued rollout of post-paid, data and prepaid roaming with international partners remained a key priority. Campaigns to increase customer awareness of roaming as a mass-market offering continued. Data services Our data service continues on an exceptional growth curve. Our investment in fibre technology and our superior data coverage has resulted in a growth rate of over 50% in our data subscribers. Our data speeds are amongst the fastest in Africa and our coverage is superior to our competitors. Network quality and customer service The network is truly a world-class network which has a quality and performance that we constantly benchmark with other leading operators in the region and on a global scale. Our network performance has been well above international benchmark performance and our continued focus in this area will result in a network that is far superior to many other operators. To complement the network quality and performance initiatives, significant investment has been made to upgrade call centre facilities and capacity as well as the retail and customer services footprint. This has enhanced our customer points of presence as well as our responsiveness to customer enquiries about our CorporateandLeadership
  22. 22. 20 ECONET SOLAR Light up your world with Econet Solar Econet Solar is a manufacturer and distributor of solar products. Econet Solar is committed to improving the lives of our customers and providing a range of practical and affordable products that have been manufactured to perform in African conditions. Our team is constantly innovating and developing new ranges of products. The target market is predominantly rural dwellers that rely on paraffin and wood for lighting energy. They have mobile handsets which are not being used optimally due to restricted access to power and mobile owners have to pay to charge their handsets once they run out of power. There are safety concerns attached to paraffin as there are cases of blow-outs which have been reported. Solar light users are urban and rural dwellers who are affected by power outages or stay in non-electrified areas and need safe and renewable access to energy. These consumers will enjoy a better quality of life as a result of opportunities brought by the access to renewable solar energy. Econet solar solutions are reliable, give up to 15 hours of light, do not emit any fumes and enhance safety for households.
  23. 23. 21 Inspiring Innovations
  24. 24. 22 Board of Directors Dr James Myers Chairman of the Board of Directors (W.E.F 12-12-2012) Mr Strive Masiyiwa Executive director Mr Craig Fitzgerald Non-executive director Mr Douglas Mboweni Executive director - Chief Executive Officer Mrs Sherree Shereni Independent non-executive (Appointed 15-05-2013) MrsTracy Mpofu Non-executive director Mr Kris Chirairo Executive director - Finance director Ms Beatrice Mtetwa Non-executive director Mr Godfrey Gomwe Independent non-executive (Appointed 15-05-2013) Mr Martin Edge Independent non-executive (Appointed 06-06-2013) Mr John Pattison Retired (31-08-2012) MrTawanda Nyambirai Retired (12-12-2012)
  25. 25. 23 Dr James Myers Dr James Myers is a former Executive Vice-President of South Western Bell International (SBC Inc., now AT&T), the largest telecoms operator in the world. He has considerable experience in Africa, having led the team that acquired a controlling stake in MTN in the early nineties. He went on to lead a consortium of SBC and Malaysia Telekom that for a while controlled Telkom SA. Dr Myers also sits on the Board of Econet Wireless Group (EWG), the parent company of Econet Wireless Zimbabwe. He holds a BA in Mathematics from Texas A&M University (1962), MA in Mathematics from University of Arizona (1965) and a PhD in Industrial Engineering/Operations Research from Texas Tech University (1969). Mr Strive Masiyiwa Strive Masiyiwa spearheaded the formation of Econet Wireless, Zimbabwe’s largest mobile network operator. His extensive resume, awards and achievements can be found on the Econet website. Mr Craig Fitzgerald Craig Fitzgerald has worked in a number of senior positions in leading quoted and unquoted companies. He has been involved in setting up Econet businesses in other parts of the world. He holds a Bachelor of Accounting Science (Hons.) degree from the University of Zimbabwe and is a Chartered Accountant (Zimbabwe). Mr Douglas Mboweni Douglas Mboweni joined Econet in 1996. He was part of the team that launched the Mascom Wireless network in Botswana and Econet Wireless Nigeria (EWN). He assumed various positions in Econet Wireless International before his appointment as Chief Executive Officer of Econet Wireless Zimbabwe Limited in March 2002. Among other qualifications, Douglas holds a Master’s in Business Leadership (UNISA) and a BSc Maths and Computer Science degree from the University of Zimbabwe (UZ). MrsTracy Mpofu Tracy Mpofu joined Econet in February 2001 as Finance Director from Coca-Cola Central Africa, where she occupied senior positions. As regional Finance Director, she was responsible for all accounting functions for the region of ten countries. Before then Tracy worked for Ernst & Young and the Comptroller and Auditor General. She holds a Bachelor of Accountancy degree and an MBA, both from the University of Zimbabwe. Tracy is a Chartered Accountant (Zimbabwe) and a Chartered Management Accountant and has completed her qualification for registration as a Chartered Accountant (South Africa). She is currently the Econet Group Chief Operating Officer. Mr Kris Chirairo Kris Chirairo holds an MBA from the University of Zimbabwe. He is a registered Public Accountant and is a fellow member of both the Chartered Institute of Management Accountants and the Institute of Chartered Secretaries and Administrators. He joined Econet Wireless on June 1, 1998. Kris was posted to Econet’s operations in Nigeria where he set up the Finance Department in March 2001 before returning to Zimbabwe in January 2004. Ms Beatrice Mtetwa Beatrice Mtetwa is one of Zimbabwe’s most recognised lawyers, and brings over two decades’ worth of legal experience to the Group. She is a partner at Mtetwa and Nyambirai Legal Practitioners, and is a past president of the Law Society of Zimbabwe. Mrs Sherree Shereni Sherree Shereni brings a wealth of expertise from The Coca-Cola Company which she joined in 2002 and has gained experience in public affairs and communication, managing functions in eight countries across Central Africa. She was also Chairperson of the Women’s Leadership Council for the 39-country Coca-Coca Central, East and West Africa Business Unit. As Programme Director of The Coca-Cola Africa Foundation, she was responsible for formulating community intervention strategies and managing implementation of over 200 projects by 15 international partners of The Coca -Cola Africa Foundation across the continent. She joined The Coca-Cola Company in October 2002. She previously held senior positions at the Reserve Bank of Zimbabwe prior to joining Coca-Cola. She holds a Bachelor of Science (Economics) Hons degree (UZ), a Diploma in Business Administration (University of Manchester, UK), leadership training from The Coca-Cola Company and a host of other top qualifications, among them from the Bank of England’s Centre for Central Banking Studies, the University of Pennsylvania’s Wharton International Housing Finance School, the International Monetary Fund Institute, the World Bank, and the Macro- Economic and Finance Management Institute. CorporateandLeadership
  26. 26. 24 Mr Godfrey Gomwe Godfrey is Chief Executive of Anglo American’s global Thermal Coal business. Until 31 August 2012, he was Executive Director, Anglo American South Africa Limited. He was previously Head of Group Business Development, Africa for Anglo American Plc and prior to that, Finance Director and Chief Operating Officer of Anglo American South Africa. He is Chairman of Tshikululu Social Investments and a former non-executive director of Kumba Iron Ore Ltd and Anglo Platinum Ltd. Before moving to South Africa in 2003, he was Chairman and CEO of Anglo American Zimbabwe. He is a past President of the Institute of Chartered Accountants of Zimbabwe and past Senior Vice President of the Chamber of Mines of Zimbabwe. He has held many Directorships in both listed and unlisted companies. He is currently on the board of Thebe Investment Corporation (Pty) Ltd where he is Chairman of Thebe Mining Resources Limited, Chairman of the Remuneration Committee as well as a member of the Investment Committee. He currently serves on the Executive Council of the Chamber of Mines of South Africa. Godfrey has a Bachelor of Accountancy degree from the University of Zimbabwe, is a Chartered Accountant (Zimbabwe), and holds a Master’s degree in Business Leadership from the University of South Africa. Mr Martin Edge Martin Edge brings the experience gained from a financial career focused on both Africa and the telecommunications sector. Until mid-2012 he was a Managing Director with Standard Chartered Bank in Johannesburg. Martin has practised as a corporate finance advisor since 1985, working for nine years at Hambros Bank in London, four years as head of TMT Advisory at HSBC in Johannesburg and 7 years as Director and Head of Corporate Finance at First Africa, which was acquired by Standard Chartered in 2009. In between, he spent three years working at CCAfrica (& Beyond), a leading African luxury tourism group, as its Finance Director and Corporate Finance Director. Martin has advised on some of the largest corporate finance transactions in Africa for clients such as Econet, Anglogold, MTN, Vodacom, Bharti Airtel and McDonalds. He has served on many private company Boards in Africa and is a Trustee of two trusts within the Macmillan Africa group. Martin graduated with an honours degree in Philosophy, Politics and Economics from the University of Oxford, and is a UK Chartered Accountant. He has lived in South Africa since 1995. Mr John Pattison (retired 31-08-12) MrTawanda Nyambirai (retired 12-12-12) BOARD OF DIRECTORS (continued) Notes Audit Committee C. Fitzgerald* K. V. Chirairo D. Mboweni T. P. Mpofu (Mrs) P. J. Campbell M. Harris (Mrs) Investments Committee C. Fitzgerald* K. V. Chirairo D. Mboweni T. P. Mpofu (Mrs) Dr J. Myers B. Mtetwa (Ms) P. J. Campbell M. Harris (Mrs) Loans Committee C. Fitzgerald* K. V. Chirairo D. Mboweni T. P. Mpofu (Mrs) P. J. Campbell M. Harris (Mrs) Related Party Committee P. J. Campbell* Dr J. Myers B. Mtetwa (Ms) *Chairman
  27. 27. 25 The Directors have pleasure in presenting their report for the year ended 28 February 2013. In the report “Group” refers to Econet Wireless Zimbabwe Limited and its subsidiary companies. Principal Activities and Operations Review The Group’s core business continued to be the provision of cellular services, provision of internet access services, transaction processing services and mobile banking services. Econet continued to consolidate its position as the market leader in the telecoms industry, including EcoCash mobile banking services. A detailed review of the Group’s operations, results and principal activities during the year and the likely future activities are given in the Chairman’s Report and the Chief Executive Officer’s Operations Review. New Developments The Group acquired control of TN Bank Limited towards the end of the year. This acquisition is expected to strengthen Group activities, particularly its EcoCash mobile money service and increase its penetration of rural markets. The full effects of this acquisition will be felt through the Group in the coming years. Several new products were launched during the year, particularly under the Buddie banner. Human Capital The Directors are pleased to report that the Group’s staff continued to demonstrate commitment and dedication in all aspects of the business. As a result, the Group has been able to continue achieving the high levels of performance and market leadership it enjoys. From the Directors Various initiatives, which are elaborated on in the Human Capital Report, were embarked on during the year, aimed at achieving continuous improvement in the Group’s performance. The Directors are confident that these initiatives will bring about the intended benefits. Consolidated Results The Group’s financial results during the year are fully covered in the Chairman’s Report. Dividends In order to allow the business to focus on achieving the targets of the various initiatives it has embarked on, the Board considered it prudent not to declare a dividend for the year. Share Capital Due to new developments in terms of investment expectations, in particular the wish to reach more investors, the Board recommended the sub-division of the Group’s shares at the rate of ten (10) shares for every one (1) existing share. At an Extraordinary General Meeting held on 28 February 2013 shareholders approved the share sub-division. The special resolutions implementing the sub-division and amending the relevant provisions in the Company’s Memorandum and Articles of Association, were adopted. The notes to the annual financial statements provide further details on the share capital of the Company. The new shares were listed on the Zimbabwe Stock Exchange on 1 March 2013. CorporateandLeadership
  28. 28. 26 Share Buy-back The cost of shares bought back during the year was US$31.9 million (2012: US$28.4 million). Total treasury shares on hand as at 28 February 2013 were 75 981 050 (2012: 105 444 310). During the year the Company cancelled 82 574 590 shares which represents approximately 5% of the issued share capital as part of its strategy to return value to shareholders. It is the intention of the Company to cancel the shares on hand at an appropriate time. Directors In accordance with Article 81 of the Company’s Articles of Association, at least one third of the directors must retire and seek re-election at each annual general meeting. The following directors retire by rotation and, being eligible, offer themselves for re-election: Mr Craig Fitzgerald, Ms Beatrice Mtetwa and Mr Kris Chirairo. Mr Tawanda Nyambirai retired from the Board on 12 December 2012 and Dr James Myers succeeded him as chairman on the same date. Mr John Pattison, executive director for Customer Services, retired from the Company’s employ with effect from 31 August 2012. In terms of section 89.2 of the Articles of Association, the following directors, who were appointed after the reporting date, are to be confirmed as independent non-executive directors: Mr Godfrey Gomwe, Mrs Sherree Shereni and Mr Martin Edge. At the Annual General Meeting shareholders will be asked to approve payment of the directors’ fees, the re- appointment of the retiring directors and the confirmation of newly appointed directors. Directors’ Interests The beneficial interests of the directors in the shares of the Company are shown on note 26.6 of the financial statements. Register of Members The register of members of the Company is open for inspection to members and the public, during business hours, at the offices of the Company’s transfer secretaries, First Transfer Secretaries (Private) Limited. Borrowing Powers The details of the Group’s borrowing powers are set out in Note 40 of the financial statements. Capital commitments Details of the Group’s capital commitments are set out in Note 41 of the financial statements. Pension Fund The Group’s pension fund scheme is administered by a Board of Trustees. The Trustees manage the assets of the pension fund, which are held separately from those of the Group. The assets and funds of the scheme are administered in accordance with the rules of the pension fund. FROMTHE DIRECTORS (continued)
  29. 29. 27 An audit of the fund had established that the fund was significantly undercapitalised. An exercise is currently underway to find the best means of recapitalising the fund. Corporate Social Investment Contributing to the country’s economic and social development remains a key component of the Group’s culture. Through various initiatives and activities the Group fulfilled this commitment during the year. Further discussion on the Group’s activities can be found in the section on Community and Trusts. Donations to Political Parties The Group does not, as a matter of policy, contribute to any political party. Auditors Ernst & Young Chartered Accountants (Zimbabwe) continued in office as the Group’s auditors during the year. At the annual general meeting, shareholders will be requested to approve the remuneration of the auditors for the year ended 28 February 2013. Going concern The Directors have satisfied themselves that the Group is a going concern as it has adequate financial resources to continue in operational existence for the foreseeable future. The Group’s Annual Report and other corporate publications are available on the corporate website By order of the Board Dr J. Myers CHAIRMAN D. Mboweni CHIEF EXECUTIVE OFFICER C. A. Banda GROUP COMPANY SECRETARY 14 MAY 2013 CorporateandLeadership
  30. 30. 28 The Board of Directors and Board Committees Composition and appointment Following the retirements of Messrs John Pattison and Tawanda Nyambirai on 31 August 2012 and 12 December 2012 respectively, the Board comprised seven directors made up of three executive and four non-executive directors. A non-executive director chairs the Board. The offices of the Chairman and Chief Executive Officer are separate. To strengthen the independence of the Board of Directors, three new independent non-executive directors are being appointed: Anglo Thermal Coal CE Godfrey Gomwe, Coca- Cola Africa Foundation Programme Director Sheree Gladys Shereni and Martin Edge, former Managing Director of Standard Chartered Bank. The non-executive directors are drawn from a wide range of fields, bringing broadly-based business knowledge and experience to the deliberations of the Board. The election to the Board of non-executive directors is subject to confirmation by shareholders. In terms of the Company’s Articles of Association and the Companies Act (Chap 24:03) at least one third of the directors must retire at every annual general meeting and, if eligible, can stand for re-election. At the last annual general meeting, held on 27 July 2012, the following directors were re-elected: Mr Tawanda Nyambirai who subsequently retired on 12 December 2012, Mr John Pattison who subsequently retired on 31 August 2012, and Dr James Myers. Accountability and delegated functions The Board has the ultimate responsibility of upholding and promoting the Group’s strategic and sustainable development. To achieve these goals the Board focuses on the following key areas: - reviewing and approving the Group’s overall strategy - reviewing and approving the Group’s capital expenditure - reviewing and approving the Group’s major investments and acquisitions and safeguarding the Group’s assets - monitoring and ensuring observance of good governance in the Group Governance Statement - reviewing financial, operational and compliance controls - reviewing and monitoring risk management procedures and assessing their effectiveness - reviewing and approving the Group’s budget and maintaining proper accounting records - reviewing and approving annual financial statements and all notices to shareholders and stakeholders. The Board is ultimately accountable to shareholders for the performance of the business. Directors are responsible for the preparation of financial statements for each financial period which give a true and fair view of the state of affairs of the Group as at the end of the financial period. To achieve this, the directors ensure the maintenance of adequate internal controls and procedures for financial reporting on the Group and that financial managers conduct themselves with integrity and honesty and in accordance with ethical standards of their profession. The Board is also ultimately responsible for communicating with the investor community. This communication is done through the Chief Executive Officer, the Financial Director and the Chairman, who organise regular briefing meetings with analysts, institutional investors and the media. The outcome of the meetings is communicated to the Board from which it learns of shareholders’ and investors’ opinions and perceptions of the Group. Access to Executives All directors have full and unfettered access to management and the Group Company Secretary for information required to discharge their responsibilities fully and effectively. Whenever they deem it necessary the directors are entitled, at the Group’s expense, to engage independent advisors for expert or independent professional advice in the furtherance of their duties. Directors’ interests In compliance with good corporate governance, directors are required each year to declare in writing whether they have any material interest in any contract of significance with the Group or any of its subsidiaries, which could give rise to a related conflict of interests. Directors are also required to disclose their other business interests. None of the directors had a material interest in any contract of significance to which the Group was a party during the year, other than their service contracts.
  31. 31. 29 Governance Board Committees The Board retained its three committees to assist it in discharging its duties and responsibilities. The Audit Committee has a sub-committee, the Related Party sub- committee. The committees and the role they play are fundamental to good corporate governance in the Group. The committees operate within defined terms of reference set by the Board. Regular reports of committee business and activities are given to the Board and minutes are circulated to all directors. The Board committees share with the main Board the authority to take independent professional advice at the Group’s expense when deemed necessary to do so. The committees are chaired by non- executive directors. They submit reports to the main Board on the committee’s deliberations and findings. Audit Committee The Committee’s main responsibilities include the reviewing of the Group’s internal controls and internal audit functions. It reviews the plans, principles, policies and practices adopted in the preparation of the Group’s financial information. It also reviews, in conjunction with management, procedures relating to financial and capital expenditure controls. Together with external auditors the Committee reviews the scope and results of the audit. The Committee also takes note of new legislation and new international reporting standards and ensures that these are adopted by the business. The Committee oversees the Group’s risk management policies and procedures and ensures these are fully implemented and observed. The Board, through the Committee, has since established a process of identifying, evaluating and managing the significant risks faced by the Group. The Committee meets regularly with the Group’s external and internal auditors and executive management to consider risk assessment. The Audit Committee has a sub-committee in the form of the Related Party Sub-Committee. The external auditors and the Chief Risk Officer have unrestricted access to the committee and its chairman and attend audit committee meetings. Investments Committee The Investments Committee’s main responsibility is to review the Group’s existing and proposed investments and advise the Board on the viability or otherwise of the investments. It provides the Board with reports on the performance or potential performance of the investments so that the Board can take informed decisions on those investments. Loans Committee The Loans Committee’s role remained the same and that is to review the Group’s major loans obligations, both local and foreign, and put forward recommendations on the servicing of these obligations. The Committee appraises the Board of the Group’s performance in terms of meeting its loan obligations and compliance with the covenants attaching to those obligations. Related Party Transactions Sub-Committee The Related Party Transactions Sub-Committee is a sub-committee of the Audit Committee. Its function is to review all transactions between the Company and its related parties. The sub-committee reports to the Audit Committee. Investor Relations The Group continues to recognise the importance of communicating with the various stakeholders. To this end the Group holds analyst briefings at which investors and analysts are briefed on the Group’s performance up to the end of that period. The communication offers the Group the opportunity to receive valuable feedback on its performance and general perception of it by the investor community. Two meetings are held with investment analysts each year, one after the release of the Group’s half-year results and the other after the release of the full year results, at which a full briefing of the Group’s performance is given. Employment and equity practices The Group has in place policies and procedures to achieve good behaviour and conduct among its employees. In line with best practice the Group has adopted as part of its culture observance by its directors and employees of the highest standards of ethical behaviour. Directors and employees are expected to conduct themselves with integrity and professionalism, with a view to achieving excellence in customer satisfaction, quality of products and services, and generally maintain the good name of the business. A “whistle-blowing” programme is also in place to encourage employees to report any concerns, including any suspicion of violation of the Group’s financial reporting or environmental procedures. The Group is committed to equality of opportunity. Career development and promotion of disabled people is, as far as possible, the same as that of other employees. All employees are accountable for adherence to equal opportunity and anti-discrimination policies.
  32. 32. 30 The Group recognises the need to continuously develop skills and, accordingly, efforts towards providing employees with opportunities for growth and development are promoted, and in the process achieve team effectiveness. Human capital development remains part of the Group’s growth strategy. The Group also recognises its obligation to comply with health and safety legislation and through training and communication, encourages employees to create and secure a safe and healthy working environment Environmental Awareness Sending of e-waste back to suppliers is an initiative being pursued but authority to return imported equipment has still not been received from the relevant authorities. Directors and Employees dealings in shares The Group complies with the Zimbabwe Stock Exchange listing rules in relation to transactions by directors and employees in securities issued by the Group. Directors and employees or their nominees or members of their immediate family are prohibited from dealing, either directly or indirectly, in the Group’s securities at any time when they are in possession of unpublished, price- sensitive information regarding the Company’s business or activities. The Group operates a closed period prior to the publication of its interim and annual results. No director or employee of the Company may deal in the securities of the Company during the closed period. In terms of policy, directors and employees who wish to transact in the shares of the Group, even outside of the Group’s “closed or blocked period”, are required to obtain the clearance of the Chairman. Independence of Auditors The Group’s Audit Committee confirms the independence of the Auditors, Ernst & Young Chartered Accountants (Zimbabwe), who are engaged by the Group for audit- related services. Ernst & Young Chartered Accountants (Zimbabwe) have indicated their willingness to continue in office as auditors of the Group. A resolution to re-appoint them as auditors for the ensuing year will be proposed at the 2013 Annual General Meeting, members can either appoint them for the ensuring year or pass a resolution to appoint another firm of auditors. Whenever necessary the Group calls upon the services of other firms to assist with non-audit management consultancy work. By order of the Board Dr J. Myers CHAIRMAN OF THE BOARD D. Mboweni CHIEF EXECUTIVE OFFICER K.V. Chirairo FINANCE DIRECTOR 14 MAY 2013 GOVERNANCE STATEMENT (continued)
  33. 33. 31 Enterprise Risk Management (ERM) The risk management division within Econet Wireless Zimbabwe Limited (EWZL) is headed by the Chief Risk Officer who reports directly to the Audit Committee Chairman and administratively to the CEO. The risk management process is integrated within the day-to-day activities of Econet Wireless Zimbabwe Limited (EWZL). The Group has developed a system of risk management and internal control that delivers: documented risk communication strategies. profile. The risk division structure comprises of four independent and objective units: Internal Audit, Revenue Assurance and Fraud Management, Corporate Risk, Safety Health and Environment. The risk division system involves regular reporting of risks to the Board which assists the Board in fulfilling its risk management responsibilities. Commitment by Management Management demonstrates its commitment to the process by investing in the necessary technology, human resources and processes. A competitive human resources complement makes up the Risk team. These skills and technologies are augmented by robust processes which are well documented and tailored to align with organisational processes. Risk communication Interactions with various governance groups occurred as planned during the year. Within these interactions risk issues are discussed as part of the agenda. The risk division meets regularly with functional divisions on a monthly basis to discuss emerging risk issues and to make follow-ups on previously identified risk issues. The division attends and submits a Quarterly Risk Report to the Audit Committee of all its activities for information as well as to guide the Committee in decision making. Risk report Risk mitigation activities Internal Audit The Group has an internal audit department which monitors and reports on internal control systems. The internal audit department adopts a risk-based audit approach guided by extensive risk assessment of business issues, particularly those issues identified by the Audit Committee and senior management. Whenever necessary, the Group calls upon the services of independent expert firms to assist with non-audit management consultancy work. These outsourcing arrangements add to the objectivity and independence of the internal audit work undertaken. Internal control and risk management During the year, internal audit efforts were focused on: performance. The planned audit assurance plan for the year was ninety percent (90%) fulfilled. The internal audit function has implemented an audit grading system which is used to gauge the performance of individual auditable units or areas against expectations and compares performance to previous audits. Focus will continue to be on the improvement of the quality and maturity of internal audit coverage through a combination of increasing allocation of resources within the internal audit department in addition to the continued outsourcing arrangements for some internal audit assignments. This will be measured in terms of the total number of man hours that the audit team will spend in the auditing activity for the various functions as well as measuring against target deliverables for outsourced arrangements. In 2013-14, the internal audit department intends to focus primarily on the following inherent fraud risk categories from both a fraud risk and an internal audit perspective: Mobile Money, Procurement, Inventory, Treasury, Customer Services and Network Services Peopleandcommunity
  34. 34. 32 On a quarterly basis the risk appetite of the business is reviewed and risk efforts are revised where appropriate, in line with changing priorities. Revenue Assurance The New Product and Value Added Services (VAS) Assurance function carry out all new product and existing product assessment activities. This ensures that all new product risks are addressed before launch and that existing products are continuously monitored. The Service Risk function minimises revenue leakage through reviewing the switch to billing and charging processes in order to facilitate complete and accurate billing of all call events on the network. Partner and product management activities ensure revenue collection is maximised. The Network Fraud Section ensures fraudulent activities are timeously detected and investigated. Adequate preventive measures are proactively implemented to plug any fraud leakages. Corporate Risk The business has a Corporate Risk department whose function is to implement an Enterprise Risk Management programme within the business. In 2013-14, the Corporate Risk department intends to focus primarily on the following areas: the business Management Systems Implementation We are continuously improving our environmental and social performance in an effort to attain excellent standards, particularly in the following areas: - Risk assessment system reviews and improvements. - Independent consultants are engaged to perform environmental and social impact assessments (EIAs) on all sensitive sites for new projects. - New GSM sites are outsourced to reputable companies with adequate technical capabilities, environmental and social management standards - Coastal and Environmental Services of South Africa has been appointed (through deutsche investitions- und Entwicklunggesellschaft mbH, Köln (DEG)) to assist Econet Wireless in the review, development and implementation of an Environmental and Social Management system based on International Finance Corporation (IFC) performance standards. Occupational Safety and Health (OHS) Econet Wireless has a SHE policy which clearly defines our commitment to providing a safe and healthy work place for all staff members. The following strategic interventions are being consistently implemented to ensure best practices and legal compliance: clothing and equipment delegated responsibility for the implementation of recommendations. through competent authorities. emergency care in case of accidents. with statutory requirements. effective knowledge, skills and attitudes necessary for implementation of programmes. assessments to ensure work and health compatibility. the impact of HIV/AIDS through the company-funded ‘Live to Love’ programme Environmental Health Econet Wireless has defined its Resources Efficiency and Pollution Prevention commitment designed to minimise and reduce the level of waste, to improve pollution prevention, and to enhance resource conservation. These strategic initiatives included the following: RISK REPORT (continued)
  35. 35. 33 Peopleandcommunity Resource Efficiency Programmes: Challenge: Currently Zimbabwe has electricity challenges forcing the use of stand-by generators to minimise network down time. This has resulted in the increased use of diesel and therefore carbon emission concerns. Response: Econet Wireless is investing in solar power solutions in order to supplement generator power in selected rural towers. In urban centres green hybrid power solutions with deep cycle batteries, have been implemented to reduce running time for generators thereby reducing their run-hours, minimising the use of non-renewable energy. Prevention of Green House Gasses (GHG): Challenge: Greenhouse gas emissions from generators. Response: (i) The Company has upgraded its procurement processes to ensure the acquisition of EU-certified low emission generators. (ii) Programmes to monitor greenhouse gasses in compliance with local legislation were carried out and results submitted to the Environmental Management Agency. Results achieved were in the blue zone, indicating normal acceptable levels. Waste-Management and Recycling: Challenge: Disposal of hazardous substances. Response: The Company has developed and implemented procedures on the management of hazardous substances Reforestation and rehabilitation: Challenge: Construction sites often require deforestation and some environmental modification which must be rectified. Response: (i) The Company ensures that, during tower construction, there is minimisation of interference with vegetation such as cutting down of trees and, where vegetation is removed, the business carries out reforestation and rehabilitation. (ii) The business has embarked on a project to put eco- friendly towers such as lamp posts and monopoles consistent with Good International Industry Practice. Future Programmes for 2013-14 Econet Wireless is currently strengthening the SHE system consistent with International Finance Corporation (IFC) guidelines and performance standards. This entails the development of the Environmental and Social Management System (ESMS) manual and its implementation. The focus will be on reviewing the existing SHE policy, conducting a gap analysis and development of a risk register based on detailed risk profiling of the business in order to align with the IFC requirements.
  36. 36. 34 BROADBAND ECONET BROADBAND Econet Wireless Zimbabwe launched Econet Broadband in October 2010 and since then it has revolutionised the way people communicate, work and socialise. It allows subscribers to communicate and keep in touch with the rest of the world unhindered by geography. The Econet Broadband On the Go package is tailor- made for individual users so that they can access the internet on their handheld device. On the Go connectivity is available any time and anywhere. People can be on the move, certain they will receive their communication unhindered by their location. This can be their cell phone, iPad or on their dongle. Econet Broadband On the Go currently has over 3 million subscribers. So you can connect to the office from your favourite coffee shop, send an email while visiting your parents in the rural areas or download your favourite song while you take a jog. Econet Broadband has brought a world of endless possibilities. With this efficiency comes greater opportunities for the transformation of critical areas of our economy like health, education and manufacturing. Econet Broadband, Discover Endless Possibilities!
  37. 37. 35 Inspiring Innovations
  38. 38. 36 The Group remains committed to the principles of good corporate governance. In addition to observing generally accepted best practice standards, the Group applies and complies with the principles enunciated in the King Code, the listing rules of the Zimbabwe Stock Exchange, and the Companies Act (Chapter 24:03). The Group recognises that implementation of, and compliance with, all legal and statutory requirements is in the best interests of the Group and is crucial to the sustainable growth of the business. Employee Benefits Retirement funding All full-time employees are members of the Group’s defined contribution pension fund and of the compulsory defined benefit National Social Security Authority (NSSA) fund. The Group’s fund requires 5% of pensionable earnings from the employee which is matched with 7% of pensionable earnings by the Group. The NSSA fund requires 3.5% of pensionable earnings, up to a ceiling of $700 per month from employees and the same from the Group. Incentives In acknowledgement of the importance of incentivising employees, the Group is in the process of enhancing its incentive schemes and linking them to performance. Remuneration Industrial Relations The Group seeks to achieve the highest level of good industrial relations as evidenced by no industrial action by employees against Group companies. At the reporting date, there had been no industrial action during the year and there was none in progress at that date. Directors’ Remuneration The Board oversees remuneration matters which are confirmed by the shareholders. Executive Remuneration Executive remuneration is deemed to be an important element in the sustainability of the Group and is linked to the nature and responsibilities of the executive’s position as well as on market benchmarks and individual performance. Non-executive Remuneration Non-executive directors remuneration is subject to shareholder approval. Remuneration of directors and other members of key management during the year is disclosed in note 34.3 of the financial statements.
  39. 39. 37 Our people and our community Human Capital (HC) Econet Wireless attained employer of choice status through its strong employer brand equity in the market. We are competitive in attracting and retaining talent both locally and abroad as evidenced by our strong leadership team, and our exceptionally low staff attrition rate of <2%. Our guiding principles of Pioneering, Professionalism and Personal form the foundation of our culture. We celebrate our successes, which we have achieved mostly through teambuilding events and Customer Service Excellence Awards whereby the Company recognises staff members who succeed in offering excellent customer experiences. Key HC Deliverables We strive to: sound HR systems and processes; characteristics; relations environment that enhances productivity; merit; to attract and retain talent locally, regionally and internationally; and encouraging, coaching, attracting and retaining talented leaders. Deliverable - Operational efficiencies The business strives to continuously improve its organisation structures, systems, and policies in line with business goals and objectives. exercise and the grading of all jobs was completed during the period under review. for the business to review its organisation structures, and bring clarity on roles and responsibilities throughout each staff member’s job value chain. the implementation of a results-based performance management system. The implementation of a new Performance Management System is set for the Financial Year 2013-14. Employee Relations The business recognises each employee as an individual and promotes open and harmonious employee relations. The employee relations climate has been exciting and peaceful as the business did not experience any collective industrial actions from its staff members. The business attrition rate remains insignificantly low at <2% as compared to the international benchmark figure of <5%. Deliverable - Equal employment opportunities based on merit The organisation promotes a working environment where all staff members feel valued in order for them to fully contribute to the success of the business. The business does not discriminate against anyone on the basis of race, tribe, gender, age, disability, religion, marital status, colour, ethnicity or national origin. Staff Analysis The charts presented below show staff analysis as at February 2013. Headcount Distribution by Gender as at February 2013. The chart shows that 71% of the staff members are male, whilst 29% are female. The organisation shall continue to make concerted efforts towards the engagement of females, based on merit. PeopleandCommunity
  40. 40. 38 ONLY BUDDIE GIVES YOU MORE! Buddie, our prepaid package keeps you in touch with friends and family in so many ways. Only Buddie gives you more value for money, more talk time, more convenience when you travel and so much more fun, ensuring that you stay connected always. Buddie offers a wide range of products and services. Buddie unveiled a massive campaign dubbed “Buddie Gives You More” which explains the various services and benefits that a customer enjoys on their Buddie line. There are many exciting services under the Buddie brand, which are aimed at making the lives of customers more convenient whilst offering the VALUE, CONNECTIVITY AND TALK TIME. BUDDIE
  41. 41. 39 Inspiring Innovations
  42. 42. 40 person for the year, a figure slightly above the international benchmark of five (5) training days per staff member per year according to the Chartered Institute of Personnel Development (CIPD). Our objective is to achieve at least eight (8) training days per staff member per year. Learning Return-on-Investment methodology We have implemented a Learning Return-on-Investment Methodology to ensure that we validate the added value of people development initiatives. To support this initiative, we have partnered with leading service providers in developing and implementing training and development interventions. Achievements 100% pass rate on a public exam administered by the Zimbabwe Institute of Management. substantive positions within the various divisions. trainee chartered accountants to go through their articled clerk training under the supervision of qualified chartered accountants within Econet. 100 % pass rate in their final qualifying examination. overall student nationally. Objectives for 2013-14 through training the entire organisation and conducting external customer satisfaction surveys. business’ Performance Management System in line with the newly implemented Paterson Job Evaluation System. line with business strategic objectives and target 1:1 cover ratio for identified critical positions. culture - consistent with our pioneering value. to manage head count in the FY 2013-14 in line with the business’ strategic objectives. Age Distribution The Age Distribution graph shows that the organisation’s manpower lies between the range of 26 to 45 years. The young vibrant workforce has assisted the business in achieving its strategic objectives through professionalism and pioneering. Deliverable - Continuous employee engagement The CEO embarks on roadshows so as to reach out to all staff members. Econet Wireless believes it is vital to keep staff informed about issues that affect the Group and themselves. As a result, the Group has established a range of communication processes that will ensure open and effective two-way communication throughout the Group. We aim to achieve an Engagement index of over 70% as this is considered a good result for high performing organisations. Deliverable - Reward management philosophy The business will continue to pay market competitive remuneration in line with our Total Cost to Employer remuneration model. Our objective is to pay above the 75th percentile of the market, as a way of attracting and retaining talent locally, regionally and internationally. The business shall always seek to ensure that it does not lose talent on the basis of remuneration. The strong reward philosophy has played a pivotal role in the significant progress made by the business in retaining staff as evidenced by the low attrition rate of <2%. Leadership development “Developing leaders with global impact” Our investment in training and development continued to enhance our bench-strength through on and off-the-job training and development activities. During the year under review, we realised 5 445 participant training days (PTDs), ultimately achieving an average of six (6) training days per HUMAN CAPITAL (HC) (continued)
  43. 43. 41 Corporate social investment – Community andTrusts Higher Life Foundation As part of its community involvement and bringing community transformation, Econet Wireless has established the Higher Life Foundation which actively manages the three corporate responsibility vehicles. marginalised children socially responsible and academically gifted students. of the nation 1. CapernaumTrust The Trust was established in 1996 with the vision of transforming the lives of the disadvantaged and orphaned children into ‘history makers’ with a ‘leadership mind-set for Global Impact.’ Since inception, Capernaum Trust has positively changed the lives of more than 70 000 children in Zimbabwe. The Trust provides a holistic approach in the care of the children including scholarships, needs-based food and health support, and counselling services. There are visits which are conducted on a regular and planned basis. All the students under this program are profiled and known by name and face under the “Know your Flock” banner. During the year, the Trust embarked on an innovative project of establishing and resourcing 15 state-of-the- art Academic Resource Centres and libraries in selected schools across Zimbabwe. These Centres are equipped with internet facilities, computers and e-learning facilities. In addition, a wide selection of study books covering primary, secondary and tertiary levels were also distributed to the Resource Centres. 2. National HealthcareTrust Zimbabwe The Trust was established in 2008 with the objective of being the ‘Partner of choice’ in all programmes aimed at responding to national health care crisis such as cholera, as well as building and maintaining capacity in the national healthcare delivery system. In the period under review, the NHT significantly contributed to health delivery systems in Zimbabwe through: responding to a typhoid crisis; health information systems development; mobile health solutions; health infrastructure development; human resources for health development; special surgical procedures and other health delivery related activities. Of special mention is the College of Health Sciences, University of Zimbabwe project- Virtual Learning Hall. The National Health Care Trust continued to support the Virtual Learning Hall it established in the previous year at the College of Health Sciences with bandwidth for effective and efficient connectivity. To date the facility has eleven (11) regular partnering universities in France, England, United States of America, South Africa, Germany, India, Tanzania and the Netherlands. Over 500 students have accessed the learning hall for lectures and research seminars in subjects ranging from Anatomy, Physiology, Dentistry, Pharmacy, Veterinary Sciences, Computer Sciences, and Biochemistry. Over 52 lectures have been held excluding short courses, seminars and once-off lectures. The lectures are stored for later access by students on the server that came with the video conferencing equipment and are available through the University of Zimbabwe website. Another important project to highlight is the Mobile Health Clinics initiative- The Trust piloted Mobile Health Solutions where integrated primary healthcare services were provided through the use of a mobile health clinic. Nine (9) medical outreach clinic sessions were carried out. 3.The Joshua Nkomo Scholarship Fund The scholarship fund was established in 2005 to support academically gifted and socially responsive students on a full scholarship basis. The vision of the JNSF is to promote and equip students who demonstrate high academic excellence and community involvement to help them transform their communities and the nation at large. Over 700 students are currently benefiting from this prestigious and transformational scholarship scheme. The scholarships are awarded to students drawn from all provinces of Zimbabwe based on their record of educational performance and community leadership .Leadership and mentoring courses are periodically held to equip the students with skills. A numbers of these students ,’Joshualites’, have been enrolled in international universities such as Yale, Harvard, Massachusetts Institute of Technology, Columbia & University of Pennsylvania. PeopleandCommunity
  44. 44. 42 CORPORATE SOCIAL RESPONSIBILITIES Econet believes its future depends on the sustainable development of our communities. We remain firm in our belief that a company’s success cannot be measured on financial performance alone. We believe the true measure of a successful company is its ability to positively transform its community. Joshua Nkomo Scholarship Fund is the initiative that gives scholarships to the top ten students from all the ten provinces of Zimbabwe to go and study in tertiary institutions each year. Over 100 academically gifted and socially responsible students benefit from it. To date over 650 ‘ Joshualites’ have benefited from this life changing programme. Capernaum Trust provides scholarships, food-packs and life changing skills to the disadvantaged and the underprivileged children in the community. CT has established 15 state- of-the-art resource centres and libraries in selected schools with complete e-learning facilities. National Health Care Trust is an institution collaborating with the Ministry of Health, WHO, UNICEF, OXFAM and Hellen Keller Foundation to build capacity in health delivery. NHCT financed the re- opening of the UZ Medical School. ECONET CORPORATE SOCIAL RESPONSIBILITIES
  45. 45. 43 Inspiring Innovations
  46. 46. 44 Econet is getting everyone connected everywhere. Econet has the widest voice and data coverage as a result of the massive investment in network infrastructure. Inspiring Innovations
  47. 47. 45 From humble roots, Econet today is one of the largest companies on the Zimbabwe Stock Exchange. Through our pioneering innovation, we are inspiring budding entrepreneurs and large companies to fulfil their own dreams. With our integrated range of product and services, Econet provides innovative business solutions to every business model, from the growing home industry to the conglomerate. 46 Directors’ responsibility for financial reporting 47 Certificate by the Group Company Secretary 48 Independent Auditor’s Report 49 Consolidated Statements of Financial Position 50 Consolidated Statements of Comprehensive Income 51 Consolidated Statements of Changes in Equity 52 Consolidated Statements of Cash Flows 53 Notes to the Consolidated Financial Statements 130 Administration Detachable Proxy Form for Annual General Meeting 2013 Consolidated financial statements
  48. 48. 46 Directors’ responsibility for financial reporting The Board of Directors is responsible for the integrity and objectivity of the financial statements and related information contained in this annual report. The Board considers that the financial statements have been prepared in accordance with applicable accounting standards and is satisfied with the integrity of the information provided. The Group’s independent external auditors, Messrs Ernst & Young Chartered Accountants (Zimbabwe), have audited the financial statements and their report appears on page 48 of this annual report. In the discharging of this responsibility, the Directors ensure that the Group maintains effective systems of internal control. The systems seek to provide reasonable assurance as to the accuracy and reliability of the financial systems as well as safeguard and maintain accountability over the Group’s assets. The Directors have reviewed the performance and financial position of the Group up to the point of signing of the financial statements and are satisfied that it is a true reflection of the Group’s position. The Board has concluded that the Group has adequate resources to continue as a going concern for the foreseeable future. The financial statements set out on page 49 to 129 were approved by the Board of Directors on 14 May 2013 and signed on its behalf by: Dr J. Myers D. Mboweni K. V. Chirairo CHAIRMAN OF THE BOARD CHIEF EXECUTIVE OFFICER FINANCIAL DIRECTOR 14 MAY 2013
  49. 49. 47 In my capacity as the Group Company Secretary, I hereby confirm, in terms of the Companies Act (Chapter 24:03), that, for the year ended 28 February 2013, Econet Wireless Zimbabwe Limited has lodged with the Registrar of Companies all such returns as are required of a public company in terms of the Companies Act and that all such returns are, to the best of my knowledge and belief, true and correct and up to date. C. A. Banda GROUP COMPANY SECRETARY 14 MAY 2013 Certificate by the Group Company Secretary CHARLES A. BANDA - Group Company Secretary FinancialStatements
  50. 50. 49 Consolidated Statements of Financial Position As at 28 February 2013 All figures in US$ Note 2013 2012 ASSETS Non-current assets Property, plant and equipment 12 690,805,885 605,846,714 Investment property 13 951,517 411,000 Intangible assets 14 9,492,568 7,991,004 Deferred tax asset 15.1 5,642,613 2,686,315 Goodwill 44.1 6,090,632 - Investment in associate 18.1 14,061,120 8,974,389 Financial instruments: -Held-to-maturity investments 17 9,896,415 14,161,138 -Available-for-sale investments 19 3,010,797 4,692,566 Total non-current assets 739,951,547 644,763,126 Current assets Inventories 22 14,443,786 12,054,662 Financial instruments: -Trade and other receivables 23 63,105,361 54,763,082 - Financial assets at fair value through profit or loss 21 58,006 52,976 - Loans and advances to bank customers 24.1 119,321,627 - - Cash and cash equivalents 33.4 78,229,628 100,792,971 Total current assets 275,158,408 167,663,691 Total assets 1,015,109,955 812,426,817 EQUITY AND LIABILITIES Capital and reserves Share capital and share premium 26.2 35,697,496 33,124,930 Retained earnings 453,138,968 345,478,251 Other reserves 27 568,775 1,342,726 Equity attributable to owners of Econet Wireless Zimbabwe Limited 489,405,239 379,945,907 Non-controlling interests 3,477,998 2,847,008 Total equity 492,883,237 382,792,915 Non-current liabilities Deferred tax liability 15.2 85,493,429 70,667,055 Financial instruments - Long-term interest-bearing debt 31.1 202,799,895 103,338,155 Total non-current liabilities 288,293,324 174,005,210 Current liabilities Provisions 29 - 3,466 Deferred revenue 30 10,127,617 10,515,168 Financial instruments: -Trade and other payables 28 118,871,498 90,661,877 - Short-term interest-bearing debt 31 61,771,039 145,800,362 - Deposits due to banks and customers 32.3 36,350,711 - Income tax payable 33.3 6,812,529 8,647,819 Total current liabilities 233,933,394 255,628,692 Total liabilities 522,226,718 429,633,902 Total equity and liabilities 1,015,109,955 812,426,817 Dr J. Myers D. Mboweni K. V. Chirairo CHAIRMAN OF THE BOARD CHIEF EXECUTIVE OFFICER FINANCE DIRECTOR 14 May 2013 FinancialStatements
  51. 51. 50 Consolidated Statements of Comprehensive Income For the year ended 28 February 2013 All figures in US$ Note 2013 2012 Revenue 2 694,843,608 611,115,533 Cost of sales and external services sold (182,955,954) (159,156,746) Gross profit 511,887,654 451,958,787 Net interest income from banking operations 3.2 926,513 - Net fees and commission income from banking operations 8 20,504 - Other income 9 1,534,333 1,580,889 Gain on disposal of available-for-sale investments 19.1 - 11,693,274 Gain on disposal of interest in former subsidiary 43.3 - 2,941,972 Gain on financial assets at fair value through profit or loss 21 5,030 - 514,374,034 468,174,922 Operating expenses -General administrative expenses (140,686,551) (124,170,919) -Marketing and sales expenses (17,961,279) (13,969,662) - Network expenses (45,434,962) (35,450,814) - Other expenses (4,947,261) (3,689,201) Profit before interest, taxation, depreciation, impairment and amortisation 305,343,981 290,894,326 Depreciation and amortisation (71,563,248) (46,497,440) Profit from operations 4 233,780,733 244,396,886 Finance income 6 2,653,217 2,105,472 Finance costs 7 (28,600,048) (10,202,838) Share of (loss)/profit of associate 18.3 (2,930,659) 2,830,389 Profit before taxation 204,903,243 239,129,909 Income tax expense 10 (64,965,023) (73,388,821) Profit for the year 139,938,220 165,741,088 Other comprehensive income Available-for-sale reserve recycled to profit or loss 19.1 - (3,885,824) Loss on available-for-sale investments 19 (781,769) (696,996) Taxation effect of other comprehensive income 5 7,818 159,652 Other comprehensive income for the year, net of tax 5 (773,951) (4,423,168) Total comprehensive income for the year 139,164,269 161,317,920 Profit for the year attributable to: Equity holders of Econet Wireless Zimbabwe Limited 139,593,292 165,734,129 Non-controlling interests 344,928 6,959 139,938,220 165,741,088 Total comprehensive income attributable to: Equity holders of Econet Wireless Zimbabwe Limited 138,819,341 161,310,961 Non-controlling interests 344,928 6,959 139,164,269 161,317,920 Basic earnings per share (dollars) 11 0.09 0.10 Diluted basic earnings per share (dollars) 11 0.09 0.10
  52. 52. 51 Consolidated Statements of Changes in Equity For the year ended 28 February 2013 All figures in US$ Share capital and share premium Retained earnings Other reserves Total Non- controlling interests Total Balance at 28 February 2011 22,980,326 258,891,276 5,765,894 287,637,496 2,840,049 290,477,545 Profit for the year - 165,734,129 - 165,734,129 6,959 165,741,088 Other comprehensive income - - (4,423,168) (4,423,168) - (4,423,168) Realisation to profit or loss on disposal of available- for-sale investment (Note 19.1) - - (3,885,824) (3,885,824) - (3,885,824) Fair value loss on available-for-sale investments - - (696,996) (696,996) - (696,996) Taxation effect of other comprehensive income - - 159,652 159,652 - 159,652 Total comprehensive income - 165,734,129 (4,423,168) 161,310,961 6,959 161,317,920 Transactions with equity holders of Econet Wireless Zimbabwe Limited 10,144,604 (79,147,154) - (69,002,550) - (69,002,550) Issue of shares 10,144,604 - - 10,144,604 - 10,144,604 Dividend in specie - (10,535,742) - (10,535,742) - (10,535,742) Cash dividend - (40,160,937) - (40,160,937) - (40,160,937) Share buy-back (Note 16.4) - (28,450,475) - (28,450,475) - (28,450,475) Balance at 29 February 2012 33,124,930 345,478,251 1,342,726 379,945,907 2,847,008 382,792,915 Profit for the year - 139,593,292 - 139,593,292 344,928 139,938,220 Other comprehensive income - - (773,951) (773,951) - (773,951) Fair value loss on available-for-sale investments - - (781,769) (781,769) - (781,769) Taxation effect of other comprehensive income - - 7,818 7,818 - 7,818 Total comprehensive income - 139,593,292 (773,951) 138,819,341 344,928 139,164,269 Transactions with equity holders of Econet Wireless Zimbabwe Limited 2,572,566 (31,932,575) - (29,360,009) 286,062 (29,073,947) Issue of shares 1,684,577 - - 1,684,577 - 1,684,577 Cancellation of shares bought back (731,008) - - (731,008) - (731,008) Share buyback (Note 16.4) - (31,932,575) - (31,932,575) - (31,932,575) Acquisition of subsidiary - - - - 286,062 286,062 Disposal of treasury shares 1,618,997 - - 1,618,997 - 1,618,997 Balance at 28 February 2013 35,697,496 453,138,968 568,775 489,405,239 3,477,998 492,883,237 Other reserves - Other reserves are detailed in Note 27 and consist of reserves arising from the valuation of available- for-sale financial assets. Where a revalued financial asset is sold the portion of the reserve that relates to that financial asset is effectively realised and recognised in profit or loss. Where a revalued financial asset is impaired the portion of the reserve that relates to that financial asset impairment is also recognised in profit or loss. FinancialStatements
  53. 53. 52 Consolidated Statements of Cash Flows For the year ended 28 February 2013 All figures in US$ Note 2013 2012 Operating activities Cash generated from operations 33.2 216,176,544 315,327,155 Income tax paid 33.3 (53,096,888) (36,465,392) Net cash flows from operating activities 163,079,656 278,861,763 Investing activities Finance income 2,653,217 1,834,505 Acquisition of intangible assets (Note 14) (565,570) (3,860) Acquisition of available-for-sale investments (134,406) (2,994,047) Proceeds on disposal of available-for-sale financial assets - 5,285,524 Acquisition of held-to-maturity investments (1,872,598) (3,212,410) Acquisition of associate 18.2 (20,000,000) - Net cash inflow on acquisition of subsidiary 44.1 16,597,539 - Purchase of property, plant and equipment - to expand operating capacity (147,043,725) (216,010,394) Proceeds on disposal of property, plant and equipment - 2,326,522 Net cash outflow on disposal of interest in former subsidiary 43.2 - (1,639,442) Net cash used in investing activities (150,365,543) (214,413,602) Financing activities Finance costs (33,359,941) (10,202,838) Dividends paid - (36,371,846) Share buy-back (25,413,484) (28,450,475) Proceeds from borrowings 52,000,000 132,910,541 Repayment of borrowings (31,807,690) (56,231,257) Issue of shares 3,303,659 - Net cash flows (used in)/from financing activities (35,277,456) 1,654,125 Net (decrease) / increase in cash and cash equivalents (22,563,343) 66,102,286 Cash and cash equivalents at the beginning of the year 100,792,971 34,690,685 Cash and cash equivalents at the end of the year 33.4 78,229,628 100,792,971
  54. 54. 53 FinancialStatements Accounting Policy IFRS/IAS reference Content note note 4-9, 39, 40 A IAS 1 Presentation of financial statements: General information and functional currency B IFRS 1 (revised) First-time adoption of IFRS C IAS 8 Change in accounting policies, adoption of new and revised Standards 37.2 D IAS 21 Effects of changes in foreign exchange rates 16,34,43,44,47 E IFRS 3, IAS 27 Business combinations, basis of consolidation 18 F IAS 28 Investment in associates 14 G IAS 38 Intangible assets 12 H IAS 23 Borrowing costs 12, 25, 41 I IAS 16 Property, plant and equipment 13 J IAS 40 Investment properties 36 K IAS 36 Impairment of property, plant and equipment, investment property, and intangible assets 38 L IAS 17 Leases 22 M IAS 2 Inventories 2, 3, 30 N IAS 18 Revenue 5, 10, 15 O IAS 12 Income taxes 35 P IAS 19, 26 Employee benefits and retirement benefits 26.6 Q IFRS 2 Share-based payment 17, 19, 20, 21, 23 R IAS 32, 37, 39, IFRS 7, 9 Financial instruments 24, 28, 31, 32, 36 37, 42 16 S IAS 32 Treasury shares 1 T IFRS 8 Operating segments 29 U IAS 37 Provisions V IFRS 5 Non-current assets held-for-sale and discontinued operations 36, 37 W Financial Guarantees 37 X Fiduciary Assets 37.3 Y IAS 1 (Revised) Significant assumptions and key sources of estimation uncertainty 11 IAS 33 Earnings per share 34 IAS 24 Related party disclosures 45 IAS 10 Events after the reporting period Notes to the Consolidated Financial Statements For the year ended 28 February 2013
  55. 55. 54 1 OPERATING SEGMENTS The principal activities set out below are the basis on which the Group reports its primary segment information. For management purposes, the Group is organised into business units based on their products and services and has the following reportable segments: Cellular network operations Econet Wireless (Private) Limited provides cellular network services which form the main business of the Group. Banking operations TN Bank Limited provides retail, corporate, and investment banking services in the key economic centres of Zimbabwe. Transaction processing systems Transaction Payment Solutions (Private) Limited provides financial transaction switching, point of sale and value added services that exploit the convergence of banking, information technology and telecommunications. The company provides local and international financial institutions and telecommunications operators access to cutting edge technology. Beverages Mutare Bottling Company (Private) Limited provides beverages to both individual and corporate clients. Investments EW Capital Holdings (Private) Limited is the investment vehicle through which the Group holds a variety of investments listed on the Zimbabwe Stock Exchange. Reporting No operating segments have been aggregated to form the above reportable operating segments. Management monitors the operating results of its business units separately for the purposes of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit and is measured consistently with operating profit or loss in the consolidated financial statements. NOTESTOTHE CONSOLIDATED FINANCIAL STATEMENTS (continued)