INTEGRATED ANNUAL REPORT 2016 “So do not fear, for I am with you; do not be dismayed, for I am your God. I will strengthen you and help you; I will uphold you with my righteous right hand.” Isaiah 41:10 NIV Bible

ABOUT THIS REPORT

Our Commitment to Integrated Reporting

Our commitment to value creation for our stakeholders, innovation and sustainability leadership made this publication the natural evolution in our communication with stakeholders. This marks our fifth year of integrated reporting covering corporate social investment, environmental issues and ethical reporting.

Disclaimer - Forward-looking statements 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 release of this integrated report. Our business strategies are robust. We remain committed to taking the necessary decisions to protect and enhance value for the shareholders and other stakeholders.

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Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 CONTENTS

OVERVIEW 3 Performance Highlights 3 Stakeholder Value Creation 4 New Products and Services 9

CORPORATE AND LEADERSHIP 10 Our Business 10 Corporate Profile 12 Company Profile 13 Chairman’s Statement to Shareholders 14 Chief Executive Officer’s Operations Review 18 Board of Directors 20 From the Directors 23

GOVERNANCE 26 Governance Statement 26 Risk Report 30

OUR STAFF AND COMMUNITY 37 Corporate Social Investment 37 Our Staff 40 Econet Coverage Map - February 2016 43

COMPLIANCE AND FINANCIAL REPORTING 44 Certificate by the Group Company Secretary 44 Directors’ Responsibility for Financial Reporting 46 Independent Auditors’ Report 47 Consolidated Statement of Financial Position 48 Consolidated Statement of Comprehensive Income 49 Consolidated Statement of Changes in Equity 50 Consolidated Statement of Cash Flows 51 Notes to the Financial Statements 52 Infrastructure, Policy Notes to the Consolidated Financial Statements 90 Innovation, ADMINISTRATION 111 Cost optimisation & Strategic Business Partnerships 112 Shareholder Analysis 113 Social responsibility Corporate and Advisory Information 114

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Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 OVERVIEW

Performance Highlights

1. Earnings before interest, taxation, depreciation, impairment and amortisation (EBITDA). EBITDA for 2012 excludes once-off profit on disposal of investments. EBITDA includes share of profit/(loss) of associate. 2. Profit After Taxation 3. Average revenue per user per month 4. Capital expenditure

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Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Stakeholder Value Creation

Our Value Drivers Transformation of the operating model In the period under review, the Group The focus on customer experience completed its project to mordenise the Our focus remains on delivering a network. This has improved internet seamless and simplified user experience access through 4G/LTE coverage in major for our customers, unlocking revenues and cities, towns and resort areas. Operating inculcating customer loyalty. In this regard efficiencies were achieved through a number of self-care deployments were aggressive cost optimisation initiatives. made to bring customer convenience. The MyEconet app, EcoCash app , Data Growing overlay services usage thresholds and data calculator Developing overlay services in order provide the customer with a seamless to diversify from voice, SMS and data experience and access to our diverse remains a key focus for the Group. Associate and subsidiaries portfolio of services, without the need to Services such as EcoHealth, Connected The Group has an associate and subsidiaries remember numerous short codes. Car, EcoFarmer and EcoSure are expected in diverse industry sectors such as financial to sustain revenue growth into the future. services, fibre optic transmission delivery, Investment in infrastructure and resources These overlay brands are fully explained financial transaction processing and The Group continues to invest in on page 9. The Group continues to pursue switching, all of which support our revenue infrastructure to develop the network. mobile financial services as a potential diversification strategy. Liquid Zimbabwe’s This will increase our coverage, improve growth frontier. International remittances fibre network expansion continues to provide our customer experience, keep pace with have, therefore been added to the a stable platform for growing data and voice technological developments and support EcoCash menu to increase convenience traffic. Synergies between Steward Bank and new products and services. to the customer. EcoCash enable the Group to offer unique financial products and services.

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Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 OVERVIEW

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Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Infrastructure

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Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 7

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 EcoSure gives our customers the convenience and comfort of simple, affordable and reliable funeral cover. Customers access affordable funeral assurance packages via the phone with premiums ranging from as low as $0.50 (fifty cents) per month with pay outs ranging from $500 to $5 000 depending on the selected plan. Since its ground breaking launch in December 2014, EcoSure has transformed communities with more than one million previously underinsured Zimbabweans now having funeral insurance. EcoSure has gone even further and is increasingly attracting the interest of Burial societies and Corporates for the benefit of their members and employees respectively.

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EconetEconet Wireless Wireless ZimbabweZimbabwe LimitedLimited IntegratedIntegrated AnnualAnnual ReportReport 20162016 OVERVIEW

New Products and Services

During the year, the Group in partnership with various international entities successfully launched diverse products and services aimed at adding value to our customers. Notable among these new innovations are the following;

Ownai Ownai is a FREE Online market platform for Econet Wireless Zimbabwe subscribers to find, buy, place and sell a wide range of products and services online with ease and convenience. The zero-rated (free browsing) multi-channel platform offers a traditional website and mobile optimized site for smartphones. In future, it will also offer more sites for feature phones and USSD service and Android/iOS apps. Ownai will evolve into an online market with storefronts, EcoCash online payments, inventory management tools and order fulfilment.

Ruzivo Ruzivo Digital Learning is an online interactive digital learning platform targeted at primary and secondary students in Zimbabwe. All our content is aligned to the Zimbabwean curricula. Grade 4, 5, 6 and 7 Mathematics and Science education content has been endorsed by the Ministry of Primary and Secondary Education, Curriculum Development Unit (CDU).

Connected Home Econet Connected Home, is an innovative solution which enables customers to monitor, control and secure their homes and properties via their mobile phones. This service allows one to see live videos of what is going on in the home, using a cell phone from anywhere in the world. The system detects fire and water leaks that can damage or destroy property.

EcoFarmer In keeping with the pioneering spirit, the business launched EcoFarmer as a pilot project. The business seeks to serve over 67% of Zimbabwe’s population who reside in the rural areas and mostly depend on agriculture through offering products, which improve access to information, market and financial services. Projects and initiatives are at various stages of implementation.

EconetHealth EcoHealth leverages on the mobile phone platform to deliver innovative m-health solutions that transform lives of communities. EcoHealth Tips provides health information via the phone in selected languages. These innovative products have been positively received by consumers. The business will continue to innovate to make healthcare available to the majority of Zimbabweans at an affordable price.

Connected Car Econet Connected Car gives Econet customers the power to manage and maintain their vehicles from their tablets, smartphones, any web portal or through the Econet Connected Car Mobile Application. Econet Connected Car offers Fleet Management Service, Personal Vehicle Management and Roadside Assistance. Econet Connected Car is the perfect affordable vehicle tracking solution for both corporates and individuals who want to be in control of their vehicles.

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Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 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 way that makes them true stakeholders and willing participants in Econet Wireless.

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Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 CORPORATE AND LEADERSHIP

Econet Broadband subscriptions continue to grow and now stand at 6.5 million subscribers. The business continues to drive affordability by providing appealing data packages and low entry data enabled gadgets. The ZTE V795 and C310 handsets were introduced to meet this need. In the same period several exciting packages were launched namely Daily Bundles, Social Bundles, FUP policy, Free Twitter, amongst many others. 4G /LTE was also introduced on mobile devices whilst more sites were also rolled out.

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Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Corporate Profile

Econet Wireless Zimbabwe Limited

Core Enterprise Business Business

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Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 CORPORATE AND LEADERSHIP

Company Profile

ECONET WIRELESS ZIMBABWE LIMITED (EWZL) - ZIMBABWE HOLDING COMPANY This Integrated Annual Report incorporates the results of all the subsidiaries and associate of EWZL. 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.

SUBSIDIARY COMPANIES

CORE BUSINESS

Econet Wireless (Private) Limited Econet Wireless (Private) Limited is EWZL’s cellular network operator, offering voice and sms, broadband and overlay services.

ENTERPRISE BUSINESS

Steward Bank Limited Steward Bank Limited offers financial services in Zimbabwe. It plays a pivotal role in the Group, especially for EcoCash, as the bank holds the banking licence necessary for mobile money 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 Company’s beverages franchise in the eastern region of Zimbabwe.

Steward Health (Private) Limited Steward Health is a leading provider in tailor made medical insurance solutions.

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 overlay services that benefits from 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.

ASSOCIATE COMPANY

Data Control And Systems (1996) (Private) Limited T/A Liquid Telecom Zimbabwe The Group has a 51% interest in Liquid Zimbabwe. Liquid Zimbabwe is the leading provider of fibre optic infrastructure in Zimbabwe and to date has laid over 7,000 km of fibre optic cable. An extensive fibre network which has linkages within the major cities and towns as well as long distance links to the EASSy and Seacom cables has been established. The fibre network has been developed to provide alternative routes for connection to allow easy recovery in failure events which makes it a robust network. This fibre is used to provide backhaul infrastructure for the mobile network operator’s base stations and acts as a link to the outside world by providing a reliable transmission for internet traffic outside Zimbabwe.

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Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Chairman’s Statement to Shareholders

OVERVIEW The country has experienced the collapse of commodity prices and de-industrialisation, which have been compounded by the ongoing drought and liquidity challenges, putting considerable strain on an already fragile economy. The resultant effects, such as job losses, continued deflation and increasing informalisation has continued to negatively affect disposable income.

This is the first annual financial period since the 35% reduction in voice tariffs, combined with a 5% excise duty on airtime. We estimate that the adverse impact of the tariff reduction on the full year revenues was about US$ 95 million. Contrary to normal practice, where excise duties are levied on the customer, the excise duty on airtime, was levied on the Company. This position was, however, reversed on 1 January 2016, and the Company was allowed to levy the duty on its customers. The excise duty levied on the Company resulted in a revenue reduction of US$ 30 million, for the year under review.

In addition, the Postal and Telecommunications Regulatory Authority reduced inter-connection rates from 5 cents per minute to 4 cents per minute and increased the Universal Services Fund (USF) levy from 0.5% to 1.5%, with effect from 1 January 2016. The negative impact of these factors amounted to US$ 4.5 million on revenue and US$ 0.8 million on costs, respectively.

The Government issued Statutory Instrument 95 of 2014 which requires all subscribers to be registered. The business embarked on an intensive subscriber registration and validation exercise, a process that saw non-compliant customers being deregistered. However, in order to assist customers who were not compliant in the required time frame, we implemented | DR J. MYERS Chairman of the Board an aggressive program to support customers who had been deregistered to meet the requirements. This resulted in most of our deregistered subscribers being reconnected. The revenue lost from the deregistered subscribers amounted to US$ 2 million and the cost to reconnect these subscribers We continue to tailor our came to US$ 0.5 million. products and services to Availability of grid power remains a major challenge for the remain relevant to our business. To mitigate against these power outages and lessen customer inconvenience, the business continued to customers, understanding invest in alternative power sources through diesel generators, deep cycle batteries and solar power solutions. The business that they are under financial has invested over US$ 55 million towards the provision of strain and so are demanding alternative power and incurred an average of about $ 7 million per annum in ongoing operating costs to run diesel generators. ever greater value The adverse developments, described above, are beyond the for money control of the Company. Notwithstanding, we have adjusted our business model to protect key revenue segments and improve

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Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 CORPORATE AND LEADERSHIP

Chairman’s Statement to Shareholders (continued) efficiencies. As announced in the media, we embarked on consequent impact on consumers will continue to put a strain aggressive cost reduction measures, on a scale larger than on all businesses operating in Zimbabwe. what has ever been implemented in the Company’s history. Initiatives implemented included, a reduction in total gross In spite of these challenging operating circumstances, we compensation by 20%; retrenchment of over 150 employees continue to tailor our products and services to remain relevant and extensive negotiations with all suppliers to achieve a 15% to our customers, understanding that they are under financial reduction in costs across all line items. strain and so are demanding ever greater value for money. Consequently, we continue to review our product pricing, PERFORMANCE REVIEW bundle composition, marketing and selling strategies to offer Revenue for the year ended 29 February 2016 was US$ solutions based on clearly understood customer segments 641.0 million compared to US$ 746.2 million for last year. This and markets. The board and management continue to seek reduction in revenue was as a result of the regulatory price cost efficiencies, wherever possible, in order to deliver a lean reductions and increased levies as well as the deterioration in and agile operation. the economic environment. The Company’s operating model remains the foundation on The downward trend in voice revenue caused by the which we will deliver sustainable performance in the future. introduction of services such as WhatsApp is a universal Through relentlessly pursuing innovation, the Group will trend experienced by the industry globally. Econet has been continue to roll out products and services that are customer- pursuing various measures aimed at mitigating this revenue centric and technologically relevant. decline. The most advanced of these measures being the investment in and growth of broadband data services, as DIVIDEND DECLARATION well as the expansion of Mobile Financial Services, such as I am pleased to announce that the Company declared a cash EcoCash and EcoSure. All these new services experienced dividend of 0.90 US cents per share amounting to US$13.3 robust growth during this period. million, for the year ended 29 February 2016.

Average Revenue Per User (ARPU) declined from US$ 8.15 Payment of the dividend will be effected on or about 12 per month to US$ 6.84 and Earnings Before Interest, Taxation August 2016. Withholding tax will be deducted at a rate of Depreciation and Amortisation (EBITDA) closed at US$ 238.4 10%, where applicable. million compared to US$ 285.6 million for the prior year. Profit after tax was US$ 40.2 million compared to US$ 70.2 million Payments to foreign shareholders will be subject to for the prior year, impacted by high depreciation charge of exchange control approval and payment guidelines for foreign US$ 136.6 million, compared to US$ 126.3 million in the remittances. Dividend accounts will be funded on or about previous year. The debt to equity ratio continued to show 12 August 2016. Foreign shareholders should appoint and marked improvement, decreasing from 36% to 31%, after make their own arrangements with a local bank of their repaying a total of US$ 86.7 million to lenders for the period choice to receive dividend on their behalf and to facilitate the under review. foreign remittance for them.

CORPORATE SOCIAL INVESTMENT The shares of the Company will be traded cum-dividend on Over the past seventeen years, Econet has impacted over the Stock Exchange up to the market day of 29th July 2016 200 000 orphaned and vulnerable children whilst increasing and ex-dividend as from 1st August 2016. support to highly talented students to further their education at various tertiary institutions. APPRECIATION I thank our customers, staff, shareholders, regulators and BOARD APPOINTMENTS strategic partners, board members and management for their I am pleased to announce the appointment of Mr Roy continued support. Chimanikire to the position of Finance Director. I have all the confidence that he will contribute to the success of the business and I wish him every success.

OUTLOOK DR. J. MYERS The ongoing foreign currency shortages and general liquidity CHAIRMAN OF THE BOARD constraints have made it difficult for customers to spend on goods and services. The stagnation of the economy and the 23 May 2016

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Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Innovation

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Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 17

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Chief Executive Officer’s Operations Review

INTRODUCTION IIn line with global trends, the local telecom industry is experiencing a decline in voice revenues. We anticipated this trend hence over the years we invested in new infrastructure and created an innovation pipeline to create new revenue streams.

In a shrinking economy, we maintained our market value share at 70% of the total market value while aggressively growing broadband and mobile financial services. These new innovations have lower margins compared to voice margins but contribute to overall profitability in a meaningful way as they are developed, largely, using the existing cost base. The decision to invest in data infrastructure is critical as data services are expected to eclipse voice services as the mainstay product of telecommunications operators.

Our continued innovation through such platforms as the EcoCash mobile money service has laid the foundation for future growth in overlay services. EcoCash remains the largest mobile money service in Zimbabwe, and one of the largest in the region. As at 29 February 2016, EcoCash had 5.8 million registered users and recorded transactions of over US$ 6.6 billion, both within Zimbabwe and from Zimbabweans remitting money from outside the country.

The Company’s resilience through continued investment in infrastructure and introduction of innovative products is key to surviving and growing in an increasingly volatile and complex economic environment. The Company increased its focus on cost optimization to protect profitability.

Services such as EcoSure and EcoFarmer registered growth during the period under review. For example, EcoSure has covered over 1 million lives during the course of the year while EcoFarmer now has 900 000 clients. We see great potential in these two services and have exciting plans for our customers in the near future.

OPERATIONS REVIEW DOUGLAS MBOWENI | Chief Executive Officer In the last quarter of the financial year, it became increasingly difficult to make foreign payments as the country had low resources in its nostro accounts. We are monitoring the evolving macro-economic situation and we continue to take proactive measures to protect the business. We believe that EcoCash is the solution to the current liquidity challenges and can assist the Innovation, customer- country in mitigating the cash shortages. To support growth in new products and services, the business centricity and business invested in over 100 additional customer service channels. For customer convenience, all customer service channels offered a efficiency continue to be one stop shop facility including EcoCash and selected banking services. The Platinum Suite service centres introduced in 2014 the key drivers of continued to offer highly personalized and valuable services to clients. Econet won the overall Super Brand Award for the sixth year in a row in the Business-to-Business category of the business. the Marketers Association of Zimbabwe (MAZ), with Buddie scooping the award in Business to Consumer category.

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Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 CORPORATE AND LEADERSHIP

Chief Executive Officer’s Operations Review (continued)

Data usage continued to grow driven by our strategy to offer In November 2015, the business introduced an exciting attractive data packages, which come with data capable innovation, Ownai Online Market. The main goal of this devices. The business re-launched mobile data offload, an product is to drive mobile data usage and subscriber loyalty initiative that allows customers to offload their data to Wi-Fi in the market as part of our continued drive to grow revenues thereby reducing mobile network traffic and improving the on data. Ownai is a platform where buyers and sellers meet, customers’ browsing experience. To induce uptake of mobile providing the biggest online classified adverts in Zimbabwe, data and devices, we also introduced data bundling where a zero rated to all Econet broadband subscribers. device purchase attracts a free data bundle allocation of as much as 6GB, usable for the first 3 months before one can FINANCIAL RESULTS then get to purchase data bundles on their own. This has Profit after tax of US$ 40.2 million was supported by growth in significantly lowered the cost of our devices and subsequently EcoCash and Data revenues and aggressive cost containment increased device sales and mobile data uptake. initiatives implemented during the year under review. The decline in profit after tax was largely due to the reduction in We increased our 4G/LTE sites during this financial year. This tariffs by the regulator by 35% with effect from 1 January enhanced upload and download speeds. 2015 as well as the continued deterioration in the economic environment. Capital expenditure intensity reduced to 14% To ensure compliance of all Econet subscribers to the from the previous year of 16% due to the robust investment requirements of Statutory Instrument SI95-2014, the business made in our network in previous years. Our current investment embarked on an intensive registration validation exercise in focus is in 4G/LTE and network modernisation to deliver faster November and December 2015. Customers now have access browsing speeds, increased network capacity, coverage and to confirm and update their registration details online via a quality. Self-Care solution. Restructuring of the balance sheet of Steward Bank resulted in The Government is working on regulations to implement the Bank reporting a profit before tax of $6.2 million. The loan mandatory infrastructure sharing for all telecommunications to deposit ratio for the Bank averaged 58% reflecting cautious operators in Zimbabwe. We have submitted our concerns lending as a consequence of the current macro-economic with certain aspects of the draft regulations and we await the environment. outcome of the process. OUTLOOK My Econet Mobile App was launched in November 2015 Through our robust operating model, we are overcoming which, among other functionalities, enables customers to disruptive technology cycles and strong economic headwinds. activate on their own value added services, purchase airtime The declining voice revenues will be eased by incentives and and data bundles, check balances, access the Econet social packages that suit declining disposable incomes and growing media pages and access Econet Promotions. A USSD based our broadband through wider 4G/LTE coverage, offering PUK Self Care solution was launched in October 2015 to enable affordable smartphones and rolling out fibre to the home. customers to retrieve their PUK details at their convenience. Customer education support content was also developed to The ongoing cash shortages and the shortage of nostro value address awareness and education on the Self Care services. may impact on our ability to continously invest in the network. We will continue to be prudent in managing our external We continued to offer our customers exciting and innovative obligations. value propositions. This saw the introduction of a nationwide “Mangwanani Zimbabwe” campaign which resonated with Our focus will also be on growing mobile financial services almost 7 million customers. An improved version of “Family through promoting EcoCash as a premier mobile merchant and Friends” campaign was introduced in December 2015 and payment platform and broadening our mobile insurance this service is expected to be dynamic in the next two years. offering. We are entering the media services space to enable us to offer media and entertainment services for our clients Airtime Credit Service (ACS) which allows Econet customers creating further headroom for value growth. to borrow airtime loans, was revamped to include more denominations $0.30, $0.50 and $0.75. This has resulted in an increase of the number of customers actively using the service.

Customer experience continues to be an area of priority focus for the business. In this regard, the business embarked on a D. MBOWENI massive nationwide network modernisation exercise that has CHIEF EXECUTIVE OFFICER seen the network improve nationwide, for the convenience of 23 May 2016 our customers.

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Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Board of Directors

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Dr James Myers Mr Strive Masiyiwa Mr Douglas Mboweni Mrs Tracy Mpofu Mr Krison Chirairo Mr Roy Chimanikire Chairman of the Executive director Executive director - Non-executive director Executive director Executive director - Board of Directors Chief Executive Officer Finance director Independent Non-executive director

1 Dr James Myers 5 Mr Krison Chirairo Chairman Mr Chirairo joined the Group in 1998. He was appointed to Dr Myers was appointed to the board in May 2009. He the board in February 2007. He has an MBA and is a fellow was appointed as Chairman of the board in December member of both the Chartered Institute of Management 2012. Apart from chairmanship of the board, Dr Myers Accountants and the Institute of Chartered Secretaries chairs the board’s Remuneration Committee. and Administrators. He also heads some of the Company’s subsidiaries. 2 Mr Strive Masiyiwa Mr Masiyiwa is the founder of the Econet Group. His full 6 Mr Roy Chimanikire resume can be found on the Group’s website. Mr Chimanikire joined the Group in 2009 from Deloitte, where he was a Partner. Mr Chimanikire is a qualified 3 Mr Douglas Mboweni Chartered Accountant (Zimbabwe) and current President Mr Mboweni is the Chief Executive Officer of Econet of the Institute of Chartered Accountants of Zimbabwe. Wireless Zimbabwe Limited. He has been with the Group He was appointed to the board in February 2016 as the since 1996 and was appointed to the board in December Group’s Finance Director. 2003.

4 Mrs Tracy Mpofu Mrs Mpofu joined Econet in February 2001 as Finance Director from Coca-Cola Central Africa. She holds a Bachelor of Accountancy Degree and an MBA, both from the University of Zimbabwe. Mrs Mpofu is a Chartered Accountant (Zimbabwe) and a Chartered Management Accountant and a Chartered Accountant (South Africa).

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Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 CORPORATE AND LEADERSHIP

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Ms Beatrice Mtetwa Mrs Sherree Shereni Mr Godfrey Gomwe Mr Martin Edge Mr Craig Fitzgerald Non-executive director Independent Non-executive Independent Non-executive Independent Non-executive Non-executive director director director director

7 Ms Beatrice Mtetwa corporate world, having held various executive positions A lawyer whose achievements in the legal field have in the last 27 years. earned her international recognition, Ms Mtetwa was appointed to the board in October 2010. 10 Mr Martin Edge Mr Edge is a UK CA and an Oxford MA, who joined the 8 Mrs Sherree Shereni board in June 2013. Mrs Shereni is an Economist with diverse corporate affairs experience in the soft drink beverage sector across Africa In his chosen field of corporate finance and M&A, he has and Southern Asia. Her accomplishments in this field been a corporate finance advisor to many institutions have been recognised internationally and have resulted in Europe and Africa over some 30 years, as well as in successful public-private partnerships and outcomes spending some time as a CFO. He has advised on some for business, governments and civil society throughout of the most important transactions in Africa’s telecoms Africa. An accomplished former central banker, Mrs sector. Mr Edge chairs the board’s Audit Committee. Shereni joined the Board in May 2013. 11 Mr Craig Fitzgerald 9 Mr Godfrey Gomwe Mr Fitzgerald is a Chartered Accountant (Zimbabwe), as Mr Gomwe was appointed to the board in May 2013. He well as an Associate Chartered Accountant (ICAEW). He is Chairman of the board’s Social and Ethics Committee. was appointed to the board in 2003, and has over 16 years He is a Chartered Accountant (Zimbabwe) and sits on a experience in the telecommunications industry regionally number of other boards. He has vast experience in the and internationally.

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Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Econet Premium offers the customer the sentimental feeling related with being on a post-paid package. The package comprises three categories Premium Unlimited, Premium and Premium Plus. Econet Premium packages are designed with corporates and individuals in mind as they come with flexible plans which allow customers to access the best device deals, personalised numbers, international roaming, data services and telemetry packages with a convenient 30 day post-paid billing cycle.

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Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 CORPORATE AND LEADERSHIP

From the Directors

The Directors have pleasure in presenting their report Pursuant to the authority granted by shareholders at the for the year ended 29 February 2016. As required by annual general meeting held on 31 July 2015, the Group the Companies Act (Chapter 24:03) the Directors also embarked on market purchases of its own shares. The present the audited financial statements as at the end of total number of shares purchased came to 163,992,435. the financial year. In the report “Group” refers to Econet Shareholders will be asked at the forthcoming annual Wireless Zimbabwe Limited and its subsidiary companies. general meeting to renew the authority for share buy backs.

Principal Activities and Operations Review Directors The Group’s main line of business is the provision of The names of the Directors who served during the year are telecommunication services. However, innovation has shown in the Board of Directors’ section. remained one of the Group’s strategic commitments. The commitment to innovation has seen the Group expanding As provided in Article 69 of the holding Company’s Articles into new areas and diversifying its services to boost of Association, Directors are not required to hold any revenue. Through its subsidiaries and associates, the shares in the company by way of qualification. Group introduced a number of new products during the year. There was one change to the Board composition during the year: the appointment of Mr R Chimanikire as Finance A comprehensive review of the Group’s operations and Director. Following the appointment, the Board consisted results for the year are to be found in the Chairman’s Report of eleven members: four executive, three non-executive and the Chief Executive Officer’s Operations Review. and four independent non-executive. In terms of Article 89.2 of the Company’s Articles of Association, Mr R As part of its oversight responsibilities, the Board, in Chimanikire will retire at the next annual general meeting conjunction with management, maintained a close watch and, being eligible, offers himself for re-election. on the impact of the regulatory environment. In terms of Article 81 of the Company’s Articles of Human Capital Association, at least one third of the Directors must retire The continuing harsh economic environment in the country and seek re-election at each annual general meeting. The led to the Group having to review and restructure its human following Directors will retire by rotation at the forthcoming resources capital. The Board reviewed and approved Annual General Meeting and being eligible, offer the findings made and authorised implementation of the themselves for re-election: Mr C Fitzgerald, Ms B Mtetwa recommendations put forward. Initiatives implemented and Mr K Chirairo. included, a resolution to reduce total gross compensation by 20% and retrenchment of over 150 employees. At the Annual General Meeting, shareholders will be asked to approve payment of the Directors’ fees and the re- Going forward the key focus area will be achieving appointment of the retiring Directors. continuous improvement in skills and productivity and remaining an employer of choice. To this end, the Group Directors’ Interests continues to provide career development opportunities, Details of Directors’ interest in the share capital of the competitive remuneration and performance management. Company are shown on Note 25 of the financial statements.

Consolidated Results The table on page 27 shows the number of meetings of Full details of the financial results of the Group are set out the Board and its committees held during the year and in the accompanying financial statements. the Directors’ attendance of those meetings. The table only covers the independent Directors. As a matter of Dividend policy, executive Directors attend meetings as required by The Company declared a cash dividend of 0.90 US cents the matters at hand and since they are not paid for their per share amounting to US$13.3 million, for the year ended attendance, only the attendance of independent Directors 29 February 2016. is reported on.

Share Capital The Group’s authorised and issued share capital remained the same during the year. Details of the share capital are outlined in Note 24 of the financial statements.

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Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 From the Directors (continued)

Register of Members Corporate Social Investment The register of members of the Company is open for During the year, the Group continued with its corporate social inspection to members and the public, during business investment activities. hours, at the offices of the Company’s transfer secretaries, First Transfer Secretaries (Private) Limited. Donations to Political Parties As a matter of policy, the Group does not make donations for Borrowing Powers political purposes. The Directors can exercise, on behalf of the Company, its powers to borrow money, as provided in Article 102 of the Auditors Company’s Articles of Association. The proposal will be made at the next annual general meeting for Deloitte & Touche to continue as the Group’s auditors for The details of the Group’s borrowing are set out in Note 30 to the ensuing year. the financial statements. By order of the Board Capital commitments Details of the Group’s capital expenditure and commitments are set out in Note 41 of the financial statements.

Staff Pension Fund Dr J Myers A Board of Trustees administers the Group’s pension fund CHAIRMAN scheme. 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. D Mboweni The recapitalization of the fund has been ongoing. CHIEF EXECUTIVE OFFICER

Special Resolutions The following special resolutions were approved and passed during the financial year at the Annual General Meeting held on 31 July 2015: - Special Resolution authorizing the Company to issue C A Banda shares in dematerialized form. GROUP COMPANY SECRETARY - Special Resolution authorizing the Company to deliver Directors’ Reports, Financial Statements and 23 May 2016 other documents in electronic form. - Special Resolution authorizing the payment of dividends through electronic means.

24

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Buddie, Zimbabwe’s leading prepaid package has lived up to its promise of offering subscribers a deep-rooted friendship. With offers such as the Buddie Friends and Family &‘Good Morning Zimbabwe’, Buddie is committed to fulfilling the emotional needs of its customers by giving them products and services that will keep them connected with friends and family anytime, anywhere. The brand was awarded the 2015 Superbrand accolade, an indication that Buddie has created a love-mark in the hearts of the consumers. The brand will endeavor to give its customers more personalized and bundled offers that will enhance value to the consumers.

25

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Governance Statement

The Group recognizes that good corporate governance is a critical aspect in terms of building shareholder value and giving assurance on the sustainability of the business. Accordingly, in the conduct of its business operations the Group ensures that the values of corporate governance, namely integrity, transparency and accountability, are observed and complied with. It acknowledges that an integral part of these values is to promote ethical, legal and transparent behavior in all its business dealings.

The Group continues to abide with the corporate governance principles set out in the King Codes and the recently promulgated Zimbabwe National Code on Corporate Governance as well as the mandatory principles of governance as contained in the Zimbabwe Stock Exchange listing requirements. The Group is also regulated by a number of regulatory authorities. Management maintains regular contacts with the regulators, the objective being to ensure the Group’s full compliance with the relevant laws and laid-down regulations.

THE BOARD OF DIRECTORS

Composition and appointment The Board has eleven members made up of four executive Directors, three non-executive Directors and four independent non- executive Directors. An independent non-executive director chairs the Board. The offices of the Chairman and Chief Executive Officer are separate. The Group recognizes how it is essential to separate the two offices. Apart from the good corporate governance aspect, the separation ensures that the Chief Executive Officer and the executive Directors focus on operational issues while the Chairman and the non-executive Directors concentrate on the oversight role. In particular, this clear division of responsibilities enables the board Chairman to exercise effective leadership of the board.

The non-executive Directors are drawn from a wide range of fields, thus ensuring that the Board has the right balance of skills and experience. 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 (Chapter 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 31 July 2015, the following Directors were re-elected: Dr J Myers, Mr M Edge and Mrs T Mpofu.

Accountability and delegated functions The Board is responsible for the overall conduct of the Group’s business in accordance with statutes and generally accepted principles of board duties. It is responsible for the Group’s vision and strategic direction, its values and its governance. The Board is accountable to shareholders for the performance of the business and the Group’s long-term success. It is the Board’s responsibility to provide the leadership required for the Group to meet its performance objectives.

The Board is responsible for the preparation of financial statements for each financial period that 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 Board monitors management’s performance and also ensures that prudent and effective controls are in place all the time. In particular, the Board ensures that financial managers conduct themselves with integrity and honesty and in accordance with the ethical standards of their profession.

Stakeholder Engagement The Board recognises the importance of engaging with stakeholders as a key aspect of good corporate governance. To this end, the Board has delegated to the Chief Executive Officer, the Finance Director and the Chairman the responsibility of communicating with stakeholders and the investment community. Regular briefing meetings are held with analysts, institutional investors and the media at which a wide range of areas are covered, among them the Group’s strategy, financial performance and corporate governance. The Board is kept fully appraised of the results of these engagements.

Rights All Directors have unhindered access to the services of the Group Company Secretary who ensures that all board members observe the administration protocols of board and board committee proceedings.

Directors’ Names The following are the Directors who served during the year: Dr J Myers (Chairman), Mr S T Masiyiwa, Mr K V Chirairo, Mr M Edge, Mr C Fitzgerald, Mr G Gomwe, Mr D Mboweni, Mrs T P Mpofu, Ms B Mtetwa, Mrs S Shereni and Mr R Chimanikire (appointed to the board on 1 February 2016).

Directors’ interests Directors’ interests are disclosed before any board meeting and Directors are requested to disclose their interests whenever these arise. This practice is in line with the requirements of good corporate governance.

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Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 GOVERNANCE

BOARD COMMITTEES

To ensure that the Board can devote as much time as possible to strategic matters, the Board has delegated some of its functions to board committees. This ensures that each specific area is subject to an appropriate level of scrutiny. The Board has four committees: Audit Committee, Risk Committee, Remuneration Committee and Social and Ethics Committee. The committees are each chaired by independent non-executive Directors.

The committees deal with specific matters delegated to them by the Board. Each committee operates under its terms of reference.

Audit Committee The Committee’s primary role is to oversee the management and effectiveness of the Group’s accounting and internal control systems. It provides, on behalf of the Board, effective control over the Group’s finances and financial results and reviews the activity of the internal audit function and the performance of the Group’s external auditors. In this regard, it holds regular meetings with the Group’s external and internal auditors to assess risk management and review accounting principles.

The Committee takes note of new legislation and new international reporting standards and ensures that these are implemented by the business.

The external auditors and the head of internal audit have unrestricted access to the Committee and its chairman and attend audit committee meetings. The Committee considers reports from the external auditors by way of assessing and evaluating the effectiveness of the Group’s internal controls over financial reporting and disclosures.

The following constituted the committee during the year: Mr M Edge (Chairman), Dr J Myers (Member), Mrs S Shereni (Member), Mr C Fitzgerald (Member), Mrs M Harris (External Member) Mrs T Mpofu (Attendee) and Messrs D Mboweni, K Chirairo, R. Chimanikire (Attendees). The Chairman and two members of the Committee are independent non-executive Directors.

Risk Committee The Committee’s primary function is to oversee the risk management of the Group and to identify and monitor the key risk factors that may affect the Group. The Committee is cognisant of the fact that not all risks are within the control of the Group; it nevertheless brings these to the attention of the Board.

Upon identification of the risks, the Committee reviews the risks and their potential impact on the Group and brings this to the attention of the Board, together with recommendations on what measures to undertake to mitigate the risks. A particular area of focus is to ensure compliance by the Group of all legal requirements relating to its line of business. As is the case with the other committees, the ultimate objective of the Committee’s function is to contribute to the building of a long-term sustainable business.

Members of the Committee are: Mrs S Shereni (Chairperson), Mr M Edge (Member) and Mr D Mboweni (Member).

The Committee met four times during the year. The Chief Risk Officer attends the meetings and presents reports outlining the Group’s risk profile and progress in addressing the identified risks.

MEETING ATTENDANCE: INDEPENDENT NON-EXECUTIVE DIRECTORS

AUDIT RISK REMUNERATION SOCIAL & ETHICS NAME EWZL COMMITTEE COMMITTEE COMMITTEE COMMITTEE TOTAL NUMBER OF MEETINGS 4 4 4 2 2 J. MYERS 4 4 N/A 2 N/A G. GOMWE 4 N/A N/A N/A 2 S. SHERENI 4 4 4 N/A N/A M. EDGE 4 4 3 N/A 1

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Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Governance Statement (continued)

Remuneration Committee The Committee advises the Board on, and handles on the Board’s behalf, issues relating to human resources, in particular remuneration, incentives and talent management. The ultimate objective is to attract into the Group, people with the right skills and thereafter retain and motivate those people.

During the year, in response to the continuing negative economic environment, the Committee oversaw a staff rationalization process that resulted in a restructuring of the Group’s operations.

The members of the Committee are: Dr J Myers (Chairman), Mr C Fitzgerald (Member), Mrs T P Mpofu (Attendee) and Mr D Mboweni (Attendee). The Chairman of the Committee is an independent non-executive director.

The Committee met twice during the year. The Chief Human Resources Officer attends the committee meetings and provides support and reports on matters for the Committee’s consideration.

Social and Ethics Committee The primary function of the Committee is to assist the Board in matters pertaining to sustainability, stakeholder management, good corporate citizenship, ethics management, employment equity and ensuring regulatory compliance. During the year, the Committee recommended to the Board the Group’s adoption of the United Nations Global Compact Principles and the Organization for Economic Co-operation and Development (OECD) principles regarding corruption. It also emphasized the importance of effective stakeholder management and pursuance by the Group of its social responsibility commitments.

Membership of the Committee is made up of three non-executive Directors, including the Chairman who is independent and one executive director. The following are the members of the Committee: Mr G Gomwe (Chairman), Mr K Chirairo (Member), Mrs T Mpofu (Member), Mrs B Mtetwa (Member).

Investor Relations The Group continues to recognize the importance of communicating with the various stakeholders. To this end, the Group holds analysts 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 highlight its plans going forward. The engagement also enables the Group 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 interim results and the other after the release of the full year results, at which a full briefing of the Group’s performance is given.

The Group’s Annual Report and other corporate publications are available on the corporate website www.econet.co.zw.

Employment and equity practices In terms of employment and equity practices the Group continues to instill in its people a culture of integrity, honesty and accountability. The overall objective is to ensure that the Group, through its people, performs well in terms of service and value delivery.

The Group is committed to equality of opportunity. It is the Group’s policy to ensure that recruitment, promotion and all other aspects of employee management are free from discrimination, whether on the grounds of gender, disability or religious belief. All employees are accountable for adherence to equal opportunity and anti-discrimination policies.

Leadership development remains one of the key focus areas, the aim being to strengthen leadership skills within the Group. The Group also has in place an intern and apprenticeship programme through which it prepares young people for entry into the labour market.

The Group recognises the importance of effective employee communication. Accordingly, a communication system is in place to keep employees informed of announcements and important developments in the Group.

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Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 GOVERNANCE

The Group also recognizes 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.

Independence of Auditors The Group’s Audit Committee confirms the independence of the Auditors, Deloitte & Touche, who are engaged by the Group for audit-related services. A resolution to re-appoint them as auditors for the ensuing year will be proposed at the 2016 annual general meeting. Whenever necessary, the Group calls upon the services of other firms to assist with non-audit management consultancy work.

Going concern The Directors have assessed, subject to the current and anticipated economic conditions, the Group’s ability to continue as a going concern and hereby confirm that they are satisfied that the Group has adequate financial resources to continue in operational existence for the foreseeable future.

By order of the Board

Dr J Myers CHAIRMAN

D Mboweni CHIEF EXECUTIVE OFFICER

C A Banda GROUP COMPANY SECRETARY

23 May 2016

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Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Risk Report

Risk Management • Risk culture entrenchment within the business. The business is exposed to a wide variety of risks across • Automation of the enterprise risk management the range of business operations. As a consequence, the system. Board has put comprehensive risk management and internal • Continued development and implementation of control structures in place that enable the business to identify business processes. and analyze risks early and take appropriate action. The risk • Updated Risk Registers. management and internal control system is designed to identify potential events that could negatively impact the Business Continuity Management Program Company and to provide reasonable assurance regarding The Business is rolling out a Business Continuity Management the achievement of the Company objectives, specifically the System (BCMS) that is aligned to the ISO 22301 Standard to ability to achieve financial, operational, or strategic goals as pursue certification once all the key processes are operational. planned. Major benefits of this programme will be business resilience, mitigating impact of disruptions, prioritisation of processes This system comprises of multiple control mechanisms and during recovery from a disruption and maintaining optimum is an important element of the corporate decision-making client delivery levels. Crisis Management Trainings were process. It is therefore implemented as an integral part of conducted for 99% of the staff. Business resilience testing business processes across the entire Group. Ensuring that our of some key Network components and systems that have global risk management efforts are effective and enable us failover capabilities already built have been carried during to aggregate risks and report on them transparently, we have the course of the year. Evacuation drills for key sites are also adopted an integrated risk management and internal control being carried out regularly to ensure that staff members are approach. prepared for site “denial of access” emergencies.

Risk Management Policy and Framework Security and Investigations The risk management policy issued by the Board governs The Security and Investigations unit is responsible for asset how we handle risk in line with the Company’s risk appetite protection and fraud prevention, detection and investigation. and defines a methodology that is applied uniformly across all The function conducts regular security risk assessments to parts of the Group. The policy stipulates who is responsible for ensure adequacy of security measures vis-à-vis security risks conducting risk management activities and defines reporting the business may be faced with. It also performs regular fraud and monitoring structures. The business routinely reviews and risk assessments on those areas within the business which updates the policy as necessary. are susceptible to the risk of fraud with the major areas being Procurement, Inventory, EcoSure, EcoCash, and Accounts The Risk Division structure comprises of six independent and Payable. objective units namely: Revenue Assurance and Fraud Control • Internal Audit, The Revenue Assurance and Fraud Control function carries • Corporate Risk, out activities aimed at timeous detection and closure of • Safety, Health and Environment identified revenue leakages ensuring all products are delivered • Business Continuity Management as expected, all services are correctly and completely charged • Security & Investigations and all revenues fully realised. • Revenue Assurance and Fraud Control The assurance processes ensure that customers consume The Risk Division conducts its activities in line with the excellent products and services that have been de-risked from recommendations of the ISO 31000 principles. technical frauds considering the huge volumes of transaction. Management has put in place a Fraud Control framework Commitment by Management that developed a continuous near-real time monitoring of Management continues to demonstrate its commitment to the emerging fraud issues, their effective detection, investigation risk management process by investing appropriate resources and prevention and closure thus ensuring customers enjoy a to facilitate effective risk management within the group. unique experience in a low risk network environment.

Internal Audit The key pillars are: Our audit function conducts regular audits to assess the • Product, Infrastructure, Process and Partner effectiveness of our risk management systems. The function Assurance: ensuring new products and services are assesses if the early risk identification system is adequate to integrated within the current revenue assurance and identify risks that may endanger the Group’s ability to continue fraud management framework and scope. as a going concern. • Billing Assurance: ensuring accuracy of rating and billing of products and services. Corporate Risk • Settlements and Accounting: to provide reasonable The role of corporate risk is to coordinate the Enterprise assurance that invoicing of services is accurate. Risk Management (ERM) across the Group. In 2015/16, the • Measurement and Reporting: to provide assurance corporate risk department focused on the following key areas: that reported revenue figures are accurate.

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Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 GOVERNANCE

• Usage Assurance: to provide assurance that all the Scope FY 2015 Percentage FY 2016 Percentage usage being generated is being captured and data is % % complete for reporting purposes. Scope 1 20 058 41% 22 781 37.5%

• Investigations and corrective actions implementation Scope2 29 315 59% 37 991 62.5% continue to enhance improvements. Total 49 373 60 772

Environment and Social Commitment Scope 1 and 2 emissions present the greatest opportunity Econet Wireless (Private) Limited recognises that its activities for improvement, with the following initiatives being could have both positive and negative impact on people, implemented: communities and the environment within which it operates.

It is therefore committed to conducting ethical business • Decreasing the use of diesel in generators to BTS sites practices which maintain and enhance the balance between through the use of hybrid energy solutions and external economic, environmental and social aspects. cooling. However, outages in electrical energy supply have played a significant role in the use of diesel run The environmental and social management programs are generators. based on ISO Standards 14001 Environmental Management, • The business has started reducing energy consumption 26000 Social Responsibility, 22301 Business Continuity through the implementation of the Hybrid Energy Management, Occupational Health and Safety Assessment management systems and network modernisation. Series 18001 and IFC Performance standards. These comprises of moving equipment from indoor to outdoor in the Network (Telecommunication Environmental and Social Systems and Programmes Infrastructure) which have a potential net reduction in The Company continues to invest in Environmental and Social power consumption of 30%. programmes with most of the expenditure going towards • The utilisation of e-conference telecommunication environmental, social and governance initiatives. systems such as teleconferencing, thus reducing travelling and consequent use of fuels. Carbon Footprint Reporting The thrust was to establish the emission levels of greenhouse Integrated Waste Management gases to facilitate the implementation of initiatives for energy There was focus on Integrated Waste Management systems consumption reduction in line with the business efficiency in line with best practices aimed at ensuring efficiencies in strategic pillar. resource utilisation, legal compliance and environmental management. Key objectives of this initiative was based The business continued to evaluate and manage the carbon on the 4 Rs which are Reduce, Reuse, Recycle and Resale footprint levels and energy utilization. which will go a long way in waste management and cost minimisation. The measurement focused mainly on Scope 1 + 2 (t CO2e) based on the GHG Protocol requirements. The business entered into Obsolete Equipment Take Back programmes with key equipment suppliers as part of ensuring • Scope 1 emissions (direct emissions from the environmental friendly methods of disposal for electronic combustion of fuel in BTS sites, buildings and company waste. vehicles and the use of refrigerants) account for 37.5% of the company Scope 1 + 2 (t CO2e) . Quantities of Waste Recycled From 2012 – 2015 • Scope 2 emissions (indirect emissions associated with the use of purchased electricity at EWZ controlled premises) account for 62.5% of the company Scope 1 158,500 + 2 (t CO2e).

Carbon foot print by Scope FY 2016 (tCO e/%)

53,088

14,750 12,315 3,789 Scope 1 37.5% Batteries Used Oil Feeder Cables Scrap Metal Paper (kgs) (Litres) (kgs) (kgs) (kgs)

Scope 2 62.5% Used batteries, oil, feeder cables, scrap metal and waste paper is being sold to legally certified companies for recycling.

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Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Risk Report (continued)

Employee Wellness Programmes and Engagement • Annual audits to ensure the evaluation of the environmental Employee wellness and engagement is core to our corporate and social management programme implementation. strategic pillar of creating people and cultural excellence. The • Continuous monitoring and tracking of legal compliance business continued to promote quality of working life through the and updating of legal registers. implementation of the following initiatives: • Investigation of accidents and incidents in order to identify • Staff engagement surveys to understand the stakeholder root causes and develop necessary interventions. expectations and needs. • Regular reporting on environmental performance in line • Safety Health and Environmental Champions trainings to with International Finance Corporation and regulatory ensure capacity for risk management. reporting requirements. • Emergency and disaster management programmes to • Regular engagement with regulatory authorities to ensure ensure effective response to crises in the business. effective stakeholder management. • Regular stakeholder engagement through Safety, health and environment committees. Accidents Statistics 2013 to 2016 Comparative Analysis • Providing regular medical counselling through the The reportable accidents and incidents increased by 40% from company doctor where necessary. 2015 to 2016. The motor vehicles accidents and incidents were • Investigation of occupational incidents and providing attributable to human error. The Vehicle Care Inquiry Committee necessary risk mitigation strategies. continues to interrogate all vehicle accidents for mitigation of fleet risks. Efforts currently being focused on intensifying defensive Environmental and Social Management Performance driver trainings. The management of environmental and social performance remains key to meeting operational obligations. The following Statistical variables 2013 2014 2015 2016 strategic initiatives were undertaken to ensure continual system improvements: Occupational fatalities - - - - • Monitoring and management of top key environmental and Occupational injuries 2 14 5 4 social risks which include: infrastructure, access roads, Environmental accidents 1 4 1 2 legal compliance, working at heights and management of Motor Vehicle accidents 67 85 39 77 hazardous substance and pollution, including contractor Other( Fires, supervision. Property damage) - - 3 5 • Periodic risk assessments to identify risks and improve intervention strategies. Grand Total 70 103 48 88

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Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 GOVERNANCE

Identified Key Stakeholders Environmental and Social Focus for 2017 The environmental and social management focus for the coming financial year will target the following strategic areas; • Environmental and social culture entrenchment • The finalisation of the differentiated Econet story and its full implementation. • Evaluation and review of the Stakeholder management programme. • Continuous implementation of the carbon footprint, energy management systems and green business initiatives. • The full implementation of Integrated Waste Management Systems.

Stakeholder Management The Company continued to engage with its stakeholders in order to ensure that their needs and expectations are addressed for guaranteed business sustainability and growth. The initiatives that were undertaken in 2016 included the: • implementation of a software to ensure stakeholder registry, interactions and reporting. • development of the differentiated Econet Wireless story to ensure stakeholders have a better understanding of the business.

3351

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Overlay services

34

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 35

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Since inception, the EcoCash subscriber base has been growing. Currently more than 5.5 million Zimbabweans are registered on the platform supported by over 21,000 agents countrywide. Customers are able to pay for their utility bills, pay for goods and services at one of the several registered EcoCash merchants, make secure online payments and pay at over 47 million MasterCard points worldwide with the Debit/Express Card, among other use cases.

36

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 OUR COMMUNITY

Corporate Social Investment

Econet Group acknowledges the tremendous support and goodwill it enjoys from the community in which it operates. As a result of this realization, Higherlife Foundation was formed with the sole mandate to drive the Group’s corporate social investment in the community.

Higherlife Foundation continues to strengthen its social impact investment through creating empowerment opportunities and supporting orphaned and vulnerable children by giving them access to education, improving the quality of education as well as lifelong development. Notable interventions for the year under review are as follows-

Access to Education Higherlife Foundation has transformed and impacted the lives of over 200 000 disadvantaged scholars and academically gifted students between 1996 and 2015. From 2006 to 2015, over 1 000 academically gifted children have been supported through affording them scholarships for education from high school through to tertiary. Over 4 000 tertiary students supported to date and a total of 155 supported on international scholarships. The international tertiary colleges include: Harvard, Yale, Morehouse, Luther. With the country experiencing severe food shortages, over 4 000 beneficiaries and households received food support to enable children to remain in school impacting over 30 000 individuals in families of the beneficiaries. Nutritional packs were distributed to vulnerable households. The aim being to ensure that vulnerable children continue to attend school and complete their studies successfully.

Quality of Education We have set up 30 learning hubs countrywide, which offer improved learning opportunities to over 400 000 people. This has enhanced exposure to the ‘Internet of Things’ to communites which ordinarily would not have such access. The Higherlife Foundation has strategically transformed the quality of education via digital solutions. Since the introduction of digital solution, challenges such as lack of textbooks, higher teacher-pupil ratios and poor pass rates have been alleviated.

Lifelong development We embarked on a drive to establish on-line mentorship platform through Higherlife Alumni. This strategy complements our access to education initiative. This platform created opportunities to beneficiaries to attain holistic personal development.

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Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Corporate Social Investment

38

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 39

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Our Staff

Employee engagement is a key enabler to business in line with modern recruitment trends. The annual training performance. Econet believes and ensures that the people and development calendar encompassing both classroom pillar of the business strategy is supported throughout the and e-learning interventions, is being executed to develop organisation. A bi-annual employee engagement survey technical and soft skills across all identified areas of need. is being used to motivate our people to contribute to Career succession planning is an integral process to ensure organisational success, with an enhanced sense of own the talent pipelines are highly profiled and developed for well-being. the future. An immensely competitive graduate trainee program is being facilitated across internal functions. The Targeted interventions are derived from the engagement Econet Young Professionals program includes thirty high survey reports to ensure that employee engagement is being performers from all areas of the organisation who are below supported across all levels in the organisation. The launch of the age of thirty years. This program has been designed to the Econet Games, a year-long internal sports league, has stimulate broad business administration skills and thinking been designed to build and sustain teamwork and friendship in our future leaders. The Millward Brown Cross Functional across the country. Quarterly, Lady in Leadership Forums Teamwork initiative stimulates collaboration across skill sets are being facilitated to supplement the career progression and the execution of initiatives across the value chain. The of our female management into executive positions. International Employee Exchange program has been designed Frequent video clip messages from the executive team, and to stimulate knowledge sharing across the regions. monthly news broadcasts are distributed to ensure unity in understanding and open communication. The organisation Through the performance management system, we have continues to support the Live to Love program whereby managed to create a culture of ownership, accountability and employees, their spouses and their children living with HIV perseverance for results. The alignment of individual outputs and AIDS are offered medical support. to the overall performance of the value chain is a fundamental premise. Individual performance is monitored through Econet maintains its employer of choice status through customised bi-annual appraisals which are calibrated based sustainable talent management interventions aimed at on functional and business performance. Recognition and attracting, developing and retaining talent. In terms of retention of individuals who deliver exceptional performance talent resourcing, Econet applies multiple tools to attract is a key outcome of the bi-annual performance management and select talent including web based social media tools process.

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Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 OUR STAFF

4151

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Econet Solar continues to roll out new high quality products that are transforming the lives of Zimbabweans through access to clean, safe and affordable renewable energy solutions for both the rural, off grid and urban areas. Econet Solar takes pride in providing unrivalled quality offering Africa true energy independence.

42

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 OUR FOOTPRINT

Econet Coverage Map - February 2016

Kanyemba

Hurungwe Angwa Bridge Marongora Mukumbura Chundu Bakasa Mavhuradonha Kariba

Magunje Mvurwi Madziwa Mudzi Siyakobvu Tengwe Mudzi Chinhoyi Caves Bindura Fombe Siabuwa Tchoda Mutoko Trelawney Binga Murehwa Nembudziya Harare Nyangombe Victoria Falls Kutama Nhowe Kariyangwe Sanyati Chakari Marirangwe Chiendambuya Gokwe Beatrice Zambara Nyanga Hwange Kadoma Manoti Lustleigh Rusape Hauna Hwange Safari Lodge Gwelutshena Munyati Mamina Hwedza Nyazura Stapleford Odzi Nkayi Kwekwe Chikomba Bomani Mutare Nyama Sipepa Siganda Chirumhanzu Dhlamini Insuza Gweru MuzokombaCashel Valley Shurugwi CharunduraMutero Chimanimani Nyamandlovu Chikwanda Ndolwane Pakame Nehanda BC Maitengwe Bulawayo Mabasa Masvingo Chipinge Zvishavane Matopos Jerera Syringa Shamba Range Sese Chikore Natisa Mtshabezi Zamuchiya Chisumbanje Sarahuru Chiredzi Rutenga Tamba Chambuta 2G COVERAGE Sun Yet Sen Mwenezi Zezani 3G COVERAGE Chikombedzi Ngulumbi Hills Malipati 4G COVERAGE Beitbridge

Our network coverage continues to expand year on year. We have 2G (GSM, GPRS, and EDGE) network connectivity in 70.6% of the land area of Zimbabwe. We also have 3G coverage in all urban centres and towns. 4G LTE service will continue to be rolled out to cover most of the urban centres of Zimbabwe.

4351

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 COMPLIANCE

Certificate by the Group Company Secretary

It is hereby certified in terms of the Companies Act (Chapter 24.03) that Econet Wireless Zimbabwe Limited has for the year ended 29 February 2016 lodged with the Registrar of Companies all such returns required by the Act and that all the returns are correct and up to date.

C. A. Banda GROUP COMPANY SECRETARY

23 May 2016

C. A. BANDA | Group Company Secretary

44

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 FINANCIAL REPORTING

Directors’ Responsibility for Financial Reporting 46

Independent Auditors’ Report 47

Consolidated Statement of Financial Position 48

Consolidated Statement of Comprehensive Income 49

Consolidated Statement of Changes in Equity 50

Consolidated Statement of Cash Flows 51

Notes to the Financial Statements 52

Policy Notes to the Consolidated Financial Statements 90

Infrastructure, Innovation, Cost optimisation & Social responsibility

45

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Directors’ Responsibility for Financial Reporting

The Directors are required by company law to prepare and present financial statements for each financial year and to ensure that these provide a true and fair view of the Group’s financial performance. Econet Wireless Zimbabwe Limited and its subsidiary companies’ independent external auditors, Deloitte & Touche, have audited the financial statements and their report appears in this annual report.

The Directors are also responsible for the systems of internal control. The systems are designed to provide reasonable, but not absolute, assurance as to the reliability of the financial statements, and to safeguard, verify and maintain accountability over the assets, and to prevent and detect material misstatements and losses. Directors are satisfied that appropriate accounting policies and applicable accounting standards have been followed.

The Directors have reviewed the performance and financial position of the Group to the date of signing of these financials and confirm that the financial statements give a true and fair view of the state of affairs of the Group at 29 February 2016. They further confirm that they are of the opinion that the Group has adequate financial resources to remain as a going concern in the forthcoming year.

The financial statements set out on pages 48 to 110 were approved by the Board of Directors on 23 May 2016 and signed on its behalf by:-

Dr J Myers CHAIRMAN

D Mboweni CHIEF EXECUTIVE OFFICER

R. Chimanikire FINANCE DIRECTOR

23 May 2016

46

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 FINANCIAL REPORTING +263 (0)4 852130

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P O Box 267 P O Box Harare Zimbabwe 47 Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Annual Report Limited Integrated Wireless Zimbabwe Econet to the Members of Econet Wireless Zimbabwe Limited Zimbabwe Wireless to the Members of Econet Report of the Independent Auditors Independent of the Report Harare 23 May 2016 Deloitte & Touche Chartered Accountants (Zimbabwe) requirements the of Companies Act (Chapter 24:03) and the relevant statutory instruments (SI 33/99 and SI 62/96). Report on other legal and regulatory requirements Inour opinion, thefinancial statements materialallin have, respects, been properly prepared compliancein with thedisclosure February 2016, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordancein ended then year the for flowsconsolidatedconsolidated cashfinancialperformanceitsits and Februaryand 2016, with International Financial Reporting Standards and in the manner required by the Companies Act (Chapter 24:03). Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of the Group as at 29 accounting estimates made by management, as well as evaluating the overall presentation the of financial statements. believeWe that the audit evidence have we obtained is sufficient and appropriate provide to a basis our for opinion. controls relevant to the entity’sthe controls preparationto relevant presentationandfair financialthe of statementsdesign order in to audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.financial the in disclosuresand amounts the aboutevidenceaudit obtain performing to proceduresinvolves audit An The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal accordance with International Standards on Auditing. Thosemisstatement. material standardsfrom free require are thatstatements financial we the whethercomplyassurance reasonable obtain with to auditethical theperform requirements and planand Auditor’s responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in and SI 62/96).SI and responsibilityThispreparationthe designing, includes; to implementing maintainingrelevantcontrols internaland and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that reasonable are in the circumstances. Directors’ responsibility for the financial statements The Directors are responsible for the preparationstatutory 33/99instruments(SIrelevant International Financial24:03)Companiesand (ChapterReporting Actthe Standardsand and fair presentation of these financial statements in accordance with theyearthen ended, andthenotes,comprising summarya significant of accounting policies andother explanatory information set out on pages 48 110. to We have audited the accompanying consolidated financial statements of Econet Wireless Zimbabwe Limited and its subsidiariesits and LimitedZimbabweWireless Econet accompanyingof consolidatedstatementsfinancialthe audited have We (the “Group”), which comprise the consolidated for statement flows cash of consolidatedstatementequityand inchanges of of consolidatedcomprehensiveincome,statement of statement financial position as at 29 February 2016, the consolidated REPORT ON THE FINANCIAL STATEMENTS Consolidated Statement of Financial Position As at 29 February 2016

All figures in US$ Note 2016 2015 ASSETS Non-current assets Property, plant and equipment 11 695,554,976 736,320,233 Investment property 13 5,419,906 4,167,267 Intangible assets 14 133,224,299 140,776,068 Deferred tax asset 15.1 10,896,633 19,000,816 Goodwill 43.3 6,090,632 6,090,632 Investment in associate 17.1 39,331,536 29,816,203 Financial instruments: -Held-to-maturity investments 16 19,231,953 40,177,977 -Available-for-sale investments 18 2,440,125 3,173,882 -Loans and advances - long term portion 23.6 43,952,830 20,676,622 -Other receivables - long term portion 22 - 12,954,603 Total non-current assets 956,142,890 1,013,154,303

Current assets Assets classified as held for sale 12 461,842 - Inventories 21 11,903,108 18,533,606 Financial instruments: -Held-to-maturity investments 16 34,861,056 - -Trade and other receivables 22 78,865,239 88,334,541 -Financial assets at fair value through profit or loss 20 1,026,402 408,820 -Loans and advances 23.6 13,928,070 40,821,466 -Cash and cash equivalents 32.4 99,715,542 95,238,733 Total currents assets 240,761,259 243,337,166

Total assets 1,196,904,149 1,256,491,469

EQUITY AND LIABILITIES

Capital and reserves Share capital and share premium 24.2 40,763,691 40,763,691 Retained earnings 614,225,287 614,111,627 Other reserves 26 2,545,732 5,894,089 Equity attributable to owners of Econet Wireless Zimbabwe Limited 657,534,710 660,769,407

Non-controlling interest 4,362,294 4,525,321 Total equity 661,897,004 665,294,728

Non-current liabilities Deferred tax liability 15.2 112,220,626 120,458,424 Financial instruments - long-term interest-bearing debt 30 112,343,137 165,757,698 Non-current provisions 28 3,487,561 1,386,349 Total non-current liabilities 228,051,324 287,602,471

Current liabilities Deferred revenue 29 17,833,806 18,381,526 Provisions 28 2,500,087 3,689,911 Financial instruments: -Trade and other payables 27 134,166,854 133,492,941 - Short-term interest bearing debt 30 110,734,999 98,175,726 - Deposits due to banks and customers 31.1 31,222,056 41,635,843 Income tax payable 10,498,019 8,218,323 Total current liabilities 306,955,821 303,594,270

Total liabilities 535,007,145 591,196,741 Total equity and liabilities 1,196,904,149 1,256,491,469

Dr J. Myers D. Mboweni R. Chimanikire CHAIRMAN OF THE BOARD CHIEF EXECUTIVE OFFICER FINANCE DIRECTOR

23 May 2016 48

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 FINANCIAL REPORTING 0.04 0.04 2015 208,631 (48,621) (48,621) 9,048,017 9,048,017 1,064,612 1,064,612 6,590,029 70,207,607 70,207,607 70,207,607 70,207,607 (3,765,725) 70,416,238 70,256,228 70,464,859 70,416,238 (37,076,496) (47,971,645) (41,401,294) (53,135,878) 285,644,564 159,355,369 123,343,485 500,315,875 746,182,640 746,182,640 (137,170,693) (126,289,195) (245,866,765) 0.03 0.03 2016 (163,027) (163,027) (723,533) 8,993,617 8,993,617 9,515,333 9,515,333 2,826,627 (4,197,126) 68,461,183 68,461,183 39,476,833 39,476,833 39,476,833 39,476,833 40,363,393 39,639,860 40,200,366 40,200,366 (37,579,676) 101,863,952 101,863,952 (28,260,817) 238,419,719 238,419,719 424,183,794 424,183,794 (34,929,723) (36,229,396) 640,988,500 (127,566,500) (136,555,767) (216,804,706) 2 8 4 6 7 9 5 10 10 10 17.2 17.2 Note Note 49 Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Annual Report Limited Integrated Wireless Zimbabwe Econet All figures in US$ All figures Cost of sales and external servicesCost of sales and external sold Revenue Gross profit Gross General administrative expenses General administrative Other income Share of profit of associate Marketing and sales expenses and sales Marketing Network expenses Other expenses Profit before net finance costs, taxation, depreciation and amortisation and amortisation depreciation taxation, net finance costs, before Profit Depreciation, amortisation and impairment Finance costs taxation before Profit Profit before net finance costs and taxation net finance costs before Profit Finance income Income tax expense the year for Profit Total comprehensive income for the year income for comprehensive Total Other comprehensive (loss)/income Other comprehensive be reclassified subsequently to profit or loss: Items that may sale investments -for- (loss)/gain on available value Fair Profit for the year attributable to: attributable the year for Profit Limited Wireless Zimbabwe Equity holders of Econet Non-controlling interest Total comprehensive income attributable to: income attributable comprehensive Total Limited Wireless Zimbabwe Equity holders of Econet Non-controlling interest Diluted earnings per share (dollars) per share earnings Diluted Basic earnings per share (dollars) per share Basic earnings Consolidated Statement of ComprehensiveStatement Consolidated Income 2016 ended 29 February the year For Consolidated Statement of Changes in Equity For the year ended 29 February 2016

Attributed to the equity holders of Econet Wireless Zimbabwe Limited Share capital Other Non- and share Retained reserves controlling All figures in US$ premium earnings (Note 26) Total interest To t a l Balance at 28 February 2014 37,448,131 561,884,250 462,848 599,795,229 3,924,078 603,719,307

Profit for the year - 70,256,228 - 70,256,228 (48,621) 70,207,607

Other comprehensive income - - 208,631 208,631 - 208,631 Fair value gain on available-for-sale investments - - 210,738 210,738 - 210,738 Taxation effect of other comprehensive income - - (2,107) (2,107) - (2,107)

Total comprehensive income - 70,256,228 208,631 70,464,859 (48,621) 70,416,238

3,315,560 (18,028,851) 5,222,610 (9,490,681) 649,864 (8,840,817) Sale of treasury shares 3,315,560 17,405,612 - 20,721,172 - 20,721,172 Dividend - (29,835,888) - (29,835,888) - (29,835,888) Incorporation of subsidiary - - - - 300,000 300,000 Transfer to regulatory reserves - (5,222,610) 5,222,610 - - - Acquisition of shareholding of non-controlling interest (note 43.2) - (375,965) - (375,965) 349,864 (26,101)

Balance at 28 February 2015 40,763,691 614,111,627 5,894,089 660,769,407 4,525,321 665,294,728

Profit for the year - 40,363,393 - 40,363,393 (163,027) 40,200,366

Other comprehensive loss - - (723,533) (723,533) - (723,533) Fair value loss on available-for-sale investments - - (733,757) (733,757) - (733,757) Taxation effect of other comprehensive loss - - 10,224 10,224 - 10,224

Total comprehensive income - 40,363,393 (723,533) 39,639,860 (163,027) 39,476,833

- (40,249,733) (2,624,824) (42,874,557) - (42,874,557) Utilisation of treasury shares - 2,201,664 - 2,201,664 - 2,201,664 Purchase of treasury shares - (40,065,949) - (40,065,949) - (40,065,949) Dividend - (4,981,117) - (4,981,117) - (4,981,117) Transfer to regulatory reserves - 1,617,656 (1,617,656) - - - Reclassification - 978,013 (980,312) (2,299) - (2,299) Revaluation loss on property, plant and equipment - - (26,856) (26,856) - (26,856)

Balance at 29 February 2016 40,763,691 614,225,287 2,545,732 657,534,710 4,362,294 661,897,004

50

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 FINANCIAL REPORTING

Consolidated Statement of Cash Flows For the year ended 29 February 2016

All figures in US$ Note 2016 2015

Operating activities

Cash generated from operations 32.2 244,681,258 226,962,021

Income tax paid 32.3 (25,565,711) (51,421,332)

Net cash flows from operating activities 219,115,547 175,540,689

Investing activities

Finance income (77,562) 984,551 Acquisition of intangible assets 14 (1,507,228) (6,841,825) Acquisition of financial assets at fair value through profit or loss 20 (626,255) (332,635) Acquisition of investment property 13 - (494,567) Acquisition of held-to-maturity investments (13,100,000) (30,722,081) Repayments on held-to-maturity of investments 16,089,157 2,360,205 Net cash inflow on acquisition of subsidiary 43.1 - 120,631 Incorporation of subsidiary - 300,000 (Decrease)/increase in deposits due to banks and customers (10,413,787) 22,272,479 Increase in loans receivable (450,000) - Increase in loans and advances (732,212) (12,393,019) Purchase of property, plant and equipment: - to expand operating capacity (81,340,595) (118,545,457) Proceeds on disposal of property, plant and equipment 326,487 175,702

Net cash used in investing activities (91,831,995) (143,116,016)

Financing activities

Finance costs (36,436,678) (36,593,731) Dividends paid (4,834,306) (29,815,016) Share (buy-back)/disposal (40,065,949) 34,721,172 Proceeds from borrowings 30 45,267,660 120,963,640 Repayment of borrowings 30 (86,737,470) (97,793,026)

Net cashflows used in financing activities (122,806,743) (8,516,961)

Net increase in cash and cash equivalents 4,476,809 23,907,712

Cash and cash equivalents at the beginning of the year 95,238,733 71,331,021

Cash and cash equivalents at the end of the year 32.4 99,715,542 95,238,733

51

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Notes to the Financial Statements For the year ended 29 February 2016

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.

Financial Services Steward Bank Limited provides retail, corporate, and investment banking services in the key economic centres of Zimbabwe. EcoCash provides mobile money services, while 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. Econet Life provides funeral cover.

Beverages Mutare Bottling Company (Private) Limited provides beverages to both individual and corporate clients.

Investments and Administration Included in this segment is EW Capital Holdings (Private) Limited which is the investment vehicle through which the Group holds investments listed on the Zimbabwe Stock Exchange and Econet Wireless Zimbabwe Limited, the Group’s holding company.

Reporting 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.

52

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 FINANCIAL REPORTING

-

- 7,262,076 7,262,076 9,048,017 9,048,017 1,064,612 1,064,612 9,049,092 9,049,092 2,826,627 9,515,333 70,207,607 70,207,607 Group Total Total Group (4,339,219) Group Total Total Group (9,505,214) (3,521,977) 40,200,366 40,200,366 (9,400,373) 738,920,564 (37,076,496) 746,182,640 591,196,741 640,988,500

535,007,145 535,007,145 (53,135,877) 631,939,408 631,939,408 (28,260,817) (36,229,396) (89,689,157) (113,037,317) (125,882,552) (122,816,175) 1,256,491,469 1,256,491,469 1,196,904,149 1,196,904,149 ------and and and and (407,054) (407,054) 2,437,306 2,437,306 9,696,555 9,696,555 1,200,352 1,200,352 (1,040,886) (1,040,886) (1,040,886) (1,529,483) (2,858,322) (8,803,344) eliminations Adjustments Adjustments (423,417,303) eliminations Adjustments Adjustments (282,810,026) (530,213,166) (410,965,475)

Total Total Total Total 407,054 407,054 Segment 7,262,076 7,262,076 Segment 9,048,017 9,048,017 1,040,886 1,040,886 2,594,095 9,049,092 9,049,092 9,515,333 (4,339,219) 73,065,929 73,065,929 11,629,971 11,629,971 (9,505,214) (3,521,977) 39,000,014 39,000,014 (9,400,373) 738,920,564 747,223,526 641,395,554 874,006,767 874,006,767

(39,513,802) (53,135,878) 631,939,408 631,939,408 945,972,620 (28,260,817) (45,925,951) (89,689,157) (113,037,317) 1,727,117,315 1,727,117,315 (125,882,552) (122,816,175) 1,679,908,772 1,679,908,772 - -

- - - - -

- - - - - 2,137 2,137 2,150 2,150 832,406 (13,135) (10,039) 110,478 110,478 832,406 (13,876) All other All other All other All other (679,952) (821,255) 1,939,099 2,612,963 2,612,963 5,583,090 5,583,090 1,939,099 1,939,099 2,328,895 3,969,358 Segments Segments (1,395,886) (1,235,827) ------and and and (11,496) 971,420 971,420 (971,420) 9,048,017 9,048,017 7,703,075 7,703,075 9,045,328 9,045,328 9,515,333 9,515,333 179,937,084 179,937,084 193,637,230 193,637,230 Investments Investments 184,789,873 184,789,873 238,650,301 238,650,301 Investments Investments administration administration

- - - - -

- - - - - 47,131 47,131 61,486 61,486 197,822 197,822 241,189 241,189 699,445 699,445 (625,410) (492,975) Beverages Beverages Beverages Beverages 19,150,946 15,453,241 (1,514,200) 22,182,942 22,182,942 (1,592,441) (2,269,245) 19,150,946 19,172,513 19,172,513 33,525,937 33,525,937 (1,541,015) (1,139,870) 15,453,241 15,453,241 30,002,439 30,002,439 - - 53 179,678 179,678 (77,688) 407,054 407,054 (22,494) Services Services Financial (441,544) (183,279) 7,262,076 7,262,076 (358,781) (972,234) (293,911) Financial 1,040,886 1,040,886 9,049,092 9,049,092 5,538,479 71,402,995 (6,112,138) 93,605,481 (2,808,159) (3,536,254) 79,705,957 84,149,335 84,149,335 16,372,298 (3,786,882) (5,966,335) 178,060,323 178,060,323 248,251,256 248,251,256 (12,564,535) 293,443,624 293,443,624 203,505,629 ------Cellular Cellular Cellular Cellular (713,818) Network Network Network Network 1,379,374 1,379,374 6,042,211 6,042,211 (9,146,433) (3,897,675) 64,642,643 64,642,643 Operations (9,106,462) 16,653,443 16,653,443 647,534,217 Operations 530,397,733 (36,927,447) 647,534,217 (75,677,957) 491,213,455 491,213,455 530,397,733 530,397,733 (52,339,931) 480,674,819 480,674,819 (23,104,405) (44,708,393) (117,474,402) (107,973,728) (116,105,283) 1,207,758,616 1,207,758,616 1,207,705,127 1,207,705,127 (continued) Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Annual Report Limited Integrated Wireless Zimbabwe Econet

Segment assets Segment liabilities intangible assets Finance income Finance costs Share of profit of associate Income tax expense Segment profit(loss) Acquisition of segment non-current assets Revenue from transacting with other operating operating other with transacting from Revenue segments of the same entity Interest income from banking operations To t a l re v e n uDepreciation e Amortisation of intangibles & equipment and plant property, of Impairments Included in segment assets is an amount of $29 816 203 pertaining to an investment in associate accounted for equityusing method.the Revenue from external customers from external Revenue equity method. The*** amount excludes acquisition of financial instruments and deferred tax assets. *Revenue for all other segments includes medical aid subscriptions and gas operations. **Includedsegmentin assets amountanis $39of 331 536 pertaining investmentan to associatein accounted usingfor the Segment information for the year ended 28 February 2015 Segment assets** Segment liabilities Impairment of property, plant and equipment equipment and plant property, of Impairment Finance income Finance costs Share of profit of associate Income tax expense Segment profit/(loss) Acquisition of segment non-current assets*** Revenue from external customers* operating other with transacting from Revenue segments of the same entity Interest income from banking operations To t a l re v e n uDepreciation e Amortisation and impairment of intangibles OPERATING SEGMENTS Segment information for the year ended 29 February 2016

1 Notes to the Financial Statements (continued) For the year ended 29 February 2016

1 OPERATING SEGMENTS (continued)

All figures in US$ Note 2016 2015 Reconciliation of profit

Segment profit 39,000,014 73,065,929

Adjustments Revenue (407,054) (1,040,887) Cost of sales 11,090,311 6,416,934 Operating expenses 2,505,212 1,863,447 Other expenses (12,881,330) (8,568,333) Investment expense/(income) 893,213 (1,529,483)

Group profit 40,200,366 70,207,607

Reconciliation of assets

Segment operating assets 1,727,117,315 1,679,908,772 Investment in subsidiaries (127,881,312) (127,881,312) Inter-company receivables and investments (402,331,854) (295,535,991)

Group operating assets 1,196,904,149 1,256,491,469

Reconciliation of liabilities

Segment operating liabilities 945,972,620 874,006,767 Inter-company payables and bank deposits (410,965,475) (282,810,026)

Group operating liabilities 535,007,145 591,196,741

2 REVENUE

Revenue is made up of: Revenue from rendering of services: -Local airtime 268,359,683 362,375,773 -Interconnection fees and roaming 92,727,414 117,477,421 -Data and internet services 113,172,736 104,156,844 -Value added services and SMS 50,996,280 50,268,297 -Other service revenue (mobile money, life premiums and connected car) 77,230,656 61,069,854 Revenue from sale of goods (beverage sales, handset sales, accessories) 29,452,639 43,572,375 Interest income from banking operations 3 9,049,092 7,262,076 640,988,500 746,182,640

3 NET INTEREST INCOME FROM BANKING OPERATIONS

3.1 Interest income from banking operations Loans and advances to customers 9,049,092 7,262,076

3.2 Interest expense from banking operations Interest on deposits due to banks and other customers (1,210,169) (1,225,129)

Net interest income from banking operations 7,838,923 6,036,947

54

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 FINANCIAL REPORTING - - - - - Net 2015 2015 208,631 208,631 208,631 208,631 amount 472,169 472,169 592,443 (55,882) (747,283) (747,283) (7,147,774) 1,064,612 (1,166,076) (5,366,311) 11,683,306 11,683,306 (1,434,815) (3,166,091) (9,505,214) (8,582,589) (77,378,784) (72,012,473) (37,076,496) (115,812,011) Tax Tax effect effect (2,107) (2,107) 2015 2016 2016 13,365 13,365 760,580 760,580 312,757 312,757 (449,999) 2,919,642 2,919,642 1,753,290 2,826,627 (6,419,115) (7,755,337) (3,897,675) (6,208,972) (1,373,525) (1,336,222) 84,279,099 (5,320,691) (2,249,400) (1,022,500) (9,400,373) (56,709,455) (82,856,083) (64,291,952) Gross Gross (36,229,396) (123,257,719) 210,738 210,738 210,738 210,738 amount 11 11 11 11 11 22 14 33.3 23.4 Note Net amount (723,533) (723,533) Tax Tax effect effect 10,224 10,224 10,224 10,224 2016 55 Gross Gross amount (733,757) (733,757) Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Annual Report Limited Integrated Wireless Zimbabwe Econet The interest rate applied is based on an effective interest rate calculatedterms of the loans. using the cashflow obligations arising under the All figures in US$ All figures Items that may be reclassified subsequently to to subsequently reclassified be may that Items financial profit or loss available-for-sale on (loss)/gain value Fair assets Other comprehensive (loss)/income, net of tax tax of net (loss)/income, comprehensive Other Interest from held-to-maturity investments Interest from held-to-maturity All figures in US$ All figures Interest earned from bank deposits Interest earned from other receivables Compensation of directors and key management: Compensation of directors and key services- For as directors management services- For Fair value adjustment arising from network mordenisation network adjustment arising from value Fair plant and equipment property, of Other write-off benefits Employee - Short-term benefits benefits Termination - benefits - Post-employment Depreciation and impairment of property, plant and equipment Depreciation and impairment of property, Amortisation and impairment of intangible assets plant and equipment on disposal of property, Profit/(loss) plant and equipment of property, Write-off modernisation as a result of the network Write-off Impairment reversal on trade and other receivables Impairment reversal to customers advances Impairment of loans and Impairment of investment remuneration Auditors - Group audit fees All figures in US$ All figures taking the following at after arrived net finance costs is before year the for Profit into account: income/(expenditure) Interest on loans and bank overdrafts Interest FINANCE COSTS FINANCE INCOME DISCLOSURE OF TAX EFFECTS RELATING TO EACH COMPONENT OF OTHER COMPREHENSIVE INCOME COMPREHENSIVE OTHER OF COMPONENT EACH TO RELATING EFFECTS TAX OF DISCLOSURE PROFIT FROM OPERATIONS BEFORE NET FINANCE COSTS

7 6 5 4 Notes to the Financial Statements (continued) For the year ended 29 February 2016

8 OTHER INCOME

All figures in US$ Note 2016 2015 Sundry income 1,135,603 185,030 Other bank income 6,365,882 6,503,605 Fair value adjustment on investment property 13 352,639 (83,874) Foreign exchange gains/(losses) 1,139,493 (14,732) 8,993,617 6,590,029

Other bank income is mostly comprised of bank fees and commissions charged to customers for transacting.

9 INCOME TAX EXPENSE

Current income tax (22,014,714) (27,604,970) Deferred tax (415,410) (10,862,746) Withholding tax (5,830,693) (14,668,162) Income tax expense (28,260,817) (53,135,878)

Tax rate reconciliation

Profit before taxation 68,461,183 123,343,485

Reconciliation of tax charge:

Normal tax at 25.75% (17,628,755) (31,760,947)

Effect of share of profit from associate 2,450,198 2,329,864

Net dis-allowable expenses (7,251,567) (9,036,633) Tax from operations (22,430,124) (38,467,716)

Withholding tax (5,830,693) (14,668,162)

Income tax expense (28,260,817) (53,135,878)

10 EARNINGS PER SHARE

Profit for the year attributable to ordinary shareholders 40,363,393 70,256,228

Adjustment for capital items (gross of tax):

(Profit)/loss on disposal of property, plant and equipment (13,365) 55,882 Write off of property, plant and equipment 3,897,675 747,283 Impairment of property, plant and equipment and intangible assets 460,378 2,774,694

Tax effect on adjustments (1,118,757) (921,299)

Headline earnings attributable to ordinary shareholders 43,589,324 72,912,788

Basic earnings basis The calculation is based on the profit attributable to ordinary shareholders and the weighted average number of shares in issue for the year which participated in the profit of the Group.

Fully diluted earnings basis The calculation is based on the profit attributable to ordinary shareholders and the weighted average number of shares in issue after adjusting for conversion of share options not yet exercised and convertible instruments (as applicable). There were no instruments with a dilutive effect at the end of the financial year.

Headline earnings Headline earnings comprise of basic earnings attributable to ordinary shareholders adjusted for profits, losses and items of a capital nature that do not form part of the ordinary activities of the Group, net of their related tax effects.

56

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 FINANCIAL REPORTING - -

- Total 2015 0.04 0.05 0.04 0.05 46,223 187,645 187,645 303,791 (99,988) (44,695) (26,856) (535,374) 1,600,177 1,600,177 1,921,579 1,803,690 1,200,000 (2,774,694) (2,416,798) (5,524,150) (1,253,731) (2,668,862) 86,081,929 84,279,099 118,545,457 118,545,457 (113,037,317) (418,928,636) 1,040,006,108 1,079,898,836 1,155,248,869 (241,281,038) (305,341,995) - - - 1,581,784,694 ------

- - (WIP) 187,645 187,645 (33,465) (44,695) Work-in- progress 2016 0.03 0.03 0.03 0.03 78,878,132 80,369,696 (1,632,084) 57,985,942 57,985,942 (4,744,970) 79,080,031 104,632,267 104,632,267 (95,274,376) (103,062,543) ------

- - - - - 1,551,431,509 14,718 14,718 24,415 24,415 84,418 84,418 41,556 (72,116) 134,164 134,164 (20,371) Vehicles (148,161) (164,196) (512,963) (206,953) 1,041,432 12,503,441 13,442,312 12,827,201 12,827,201 (6,674,929) (5,086,248) (1,480,864) ------

- - - - - and Plant 51,212 190,717 190,717 Beverage Beverage 1,600,177 1,600,177 2,338,995 1,272,277 (1,000,750) (4,001,807) (5,002,557) (1,181,615) Equipment 21,160,801 21,160,801 25,432,564 23,499,796 - -

- - -

- - - - 4,769 4,769 Office Office 50,015 50,015 21,808 (51,212) (57,615) 213,750 213,750 (113,006) (328,171) 2,988,741 2,988,741 5,895,436 5,958,882 (2,567,741) (9,547,270) 48,627,758 48,627,758 72,627,813 72,627,813 11,589,027 11,589,027 65,692,852 (1,903,835) (17,071,782) Equipment (28,918,259)

- - -

------57 5,623 (4,769) Cellular (59,042) Network Network 2,127,540 2,127,540 3,435,774 3,435,774 3,629,894 1,856,846 87,932,804 87,932,804 89,520,169 89,520,169 (2,502,020) 84,279,099 Equipment (99,492,160) 831,439,787 863,325,552 922,028,788 (236,478,453) (368,134,105) (270,499,645)

------479,176 479,176 (99,988) (26,856) 1,007,433 1,007,433 1,911,791 1,911,791 Land and 1,191,973 1,191,973 Buildings 1,200,000 47,396,189 47,396,189 47,699,764 47,699,764 (1,516,273) 50,215,425 (5,359,954) (8,682,513) (10,198,786) (continued) Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Annual Report Limited Integrated Wireless Zimbabwe Econet Weighted average number of ordinary the purposes of basic shares for average Weighted share and diluted earnings per (dollars) per share Basic earnings (dollars) per share Headline earnings (dollars) per share basic earnings Diluted (dollars) per share earnings headline Diluted Transfers from inventories Transfers All figures in US$ in All figures PROPERTY, PLANT AND EQUIPMENT (PPE) EARNINGS PER SHARE Number of shares Transfers from other receivables Transfers At Cost 2014 At 28 February At 29 February 2016 At 29 February Acquisition of subsidiaries Acquisition Accumulated depreciation & depreciation Accumulated impairment 2014 At 28 February Additions Charge for the period Charge for Write offs Write Write offs Write Disposals Disposals Transfer to investment property to investment Transfer Transfers Transfer from WIP from Transfer Impairment Transfers to Intangible assets Transfers At 28 February 2015 At 28 February At 28 February 2015 At 28 February Additions Write offs Write Disposals Reclassification Fair value adjustment on PPE value Fair Revaluation of PPE Revaluation Transfer from investment property investment from Transfer Transfer from WIP from Transfer Transfers from /(to) intangible Transfers assets Transfers to assets held for sale to assets held for Transfers

11 11 10 10 Notes to the Financial Statements (continued) For the year ended 29 February 2016

11 PROPERTY, PLANT AND EQUIPMENT (continued)

Accumulated depreciation & impairment (continued) Beverage Cellular Plant Land and Network Office and Work-in- All figures in US$ Buildings Equipment Equipment Equipment Vehicles progress Total At 28 February 2015 (10,198,786) (368,134,105) (28,918,259) (5,002,557) (6,674,929) - (418,928,636) Charge for the period (1,511,109) (106,352,000) (12,602,133) (1,082,423) (1,268,510) - (122,816,175) Write offs - 153,057,588 46,676 - - - 153,104,264 Reclassification 3,981,850 - - - 5,882 - 3,987,732 Disposals - - 1,820,669 - 283,007 - 2,103,676 Transfer from intangible assets - (2,145,066) - - - - (2,145,066) Transfers to assets held for sale - - - 755,242 36,647 - 791,889 Impairment (44,981) - (396,563) - - - (441,544)

At 29 February 2016 (7,773,026) (323,573,583) (40,049,610) (5,329,738) (7,617,903) - (384,343,860)

CARRYING VALUE At 29 February 2016 39,926,738 539,751,969 32,578,203 20,102,826 5,209,298 57,985,942 695,554,976 At 28 February 2015 40,016,639 553,894,683 36,774,593 18,497,239 6,767,383 80,369,696 736,320,233

11.1 Network equipment & software Included in cellular network equipment additions is an amount of $27 million (2015: $24 million) relating to network software that is classified as part of Property, plant and equipment as it is integral to the network equipment.

11.2 Debt collaterisation and borrowing costs Debt is collateralised over network equipment. The carrying amount of the related debt is US$ 207 million (2015: US$ 242.5 million). Refer to note 30 for the breakdown of loan facilities with collateralised debt. The amount of borrowing costs capitalised during the year ended 29 February 2016 is US$ 3,7 million (2015:Nil). The rate used to determine the amount of borrowing costs eligible for capitalisation was 15% (2015: Nil) which is the effective rate of the specific borrowings.

11.3 Change in estimate IAS 16 - Property, Plant and Equipment requires the review of the residual value and the useful life of an asset at least at each financial year end. The Group revised the estimated useful life of computer equipment with effect from 1 June 2015. The revisions were accounted for prospectively as a change in accounting estimate and as a result, the depreciation charges of the Group for the current financial year end have been increased by $2,537,598 which results in a decrease in future depreciation expense by the same amount.

11.4 Network modernisation The cellular network operations segment carried out a network modernisation exercise during the year. This resulted in a write off of current network equipment amounting to $82,9 million and a fair value gain for the year ended 29 February 2016 of $84.3 million on the new equipment as a result of exchange of equipment which had commercial substance.

11.5 Impairment of assets During the financial year ended 29 February 2016, the financial services segment closed some of its branches and, as a result, certain leasehold improvements such as partitioning and furniture and fittings became unusable. The recoverable amount of the assets was therefore determined to be nil and hence an impairment of $395,595 (2015: $2,774,694) was recorded, being the difference between the carrying amount of these assets and their recoverable amounts. The recoverable amount was based on fair value less costs to sell. Other equipment with a value of $5.3 million was also written off during the year ended 29 February 2016.

58

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 FINANCIAL REPORTING - - - - - 2015 (703) 99,988 495,270 (83,874) 4,167,267 4,167,267 3,656,586 - - 2016 35,469 426,373 461,842 352,639 4,167,267 4,167,267 Range (weighted average) (weighted Range $5 - $9 $20 - $26 5,419,906 5,419,906 2,100,000 2,100,000 (1,200,000) Significant observable inputs Significant observable Comparable rentals per month, per square metre (sqm) Comparable rate per sqm 59 Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Annual Report Limited Integrated Wireless Zimbabwe Econet Implicit investment approach approach Implicit investment below) (Refer properties similar of value Market below) (Refer Valuation technique Valuation Transfer (from)/to property, plant and equipment (from)/to property, Transfer Closing balance Opening balance Additions from loans and advances Transfer Disposal property of investment value Gain/(loss) on fair All figures in US$ All figures plant related to old bottling Assets Motor vehicles Office property Office stands Residential Description of valuation techniques used and key inputs to valuation on investment property: Investment property pertains to commercial properties andvaluedwere independentanby professional valuer 29at February residential onthebasis 2016 open of marketvalue. Rental properties leased to income pertaining third the to investment property parties. recognised in profit and loss for the year amounted US$45 to The 253 Group’s investment (2015: US$53 000) and costs amounted $7 to 843 (2015: US$12 634). INVESTMENT PROPERTY ASSETS CLASSIFIED AS HELD FOR SALE During thethe year, Beverages segment reclassified some assets to “assets held for sale” in line with Directors’ intentions. No impairment was recognised on reclassification of the affected assets as at 29 February 2016. The Directors expectthe fair valuethat less costs sell to will be higher than the carrying amount. property. premises which are in the same category as regards the building elements. assessingIn residentialthevaluemarkettheof stands, variousvalues of properties thathad been recently sold whichor are comparablesituatedcurrentlysaleandin on residentialused.evidenceMarket estatewereagents areasotherlocal andfrom press was also taken consideration. into A change in the significant observable inputs will result in a corresponding direct impact of the fair values of investment In arriving at the market value for property, the income. implicitThis investmentmethod is approach based was on appliedthe principle based that on producedrentals the by a property,and capitalisation its capitalcapital value can therefore be of estimated.values Comparableare rentals inferred from inter- propertiesrelated. within the Hence given localitythe incomeof the property based on use, location, size and quality of squarefinishes meter the to lettablewere areas, used.being rentals achievedThe for comparable rentals properties were as at 29 thenFebruary adjusted 2016. The rentals areper comparableproperty,inferringonthe also of value market capitalisationa annualiseda arriveat thenandapplied to wasfactor

13 13 12 12

Notes to the Financial Statements (continued) For the year ended 29 February 2016

14 INTANGIBLE ASSETS

Computer Operating software All figures in US$ licence and other Total COST

At 28 February 2014: 137,500,000 16,475,026 153,975,026 Additions - 6,841,825 6,841,825 Transfer from property, plant and equipment - 44,695 44,695 At 28 February 2015: 137,500,000 23,361,546 160,861,546

Additions - 1,507,228 1,507,228 Reclassification from work in progress - 1,632,084 1,632,084 Transfer to property, plant and equipment - (3,435,774) (3,435,774) At 29 February 2016: 137,500,000 23,065,084 160,565,084

ACCUMULATED AMORTISATION AND IMPAIRMENT At 28 February 2014: (4,583,333) (5,996,931) (10,580,264) Amortisation and impairment (6,875,000) (2,630,214) (9,505,214)

At 28 February 2015: (11,458,333) (8,627,145) (20,085,478)

Amortisation and impairment (6,875,000) (2,525,373) (9,400,373) Transfer to property, plant and equipment - 2,145,066 2,145,066 At 29 February 2016: (18,333,333) (9,007,452) (27,340,785)

CARRYING AMOUNT At 28 February 2015: 126,041,667 14,734,401 140,776,068 At 29 February 2016: 119,166,667 14,057,632 133,224,299

Intangible assets pertain to licences and computer software held by Econet Wireless (Private) Limited and Steward Bank Limited. The Group uses the expected usage of the asset to determine the useful life of intangible assets. At 29 February 2016 the computer software had an average remaining useful life of three and a half years. The cellular segment holds a cellular operating licence with a carrying amount of US$119,2 million (2015: US$126,0 million) which will be fully amortised in seventeen years (2015: eighteen years).

Software integral to an item of hardware equipment is classified as property, plant and equipment (refer to note 11).

15 DEFERRED TAX

The following are the major deferred tax liabilities and assets recognised by the Group, and the movements thereon. Property, Assessed plant and Deferred Provisions All figures in US$ losses equipment revenue and other Total

15.1 Deferred tax asset

At 28 February 2014 6,542,597 (531,422) 8,740,712 4,486,570 19,238,457

Credit to profit for the year 485,450 (1,456,425) (1,427,660) 2,154,714 (243,921) Acquisition of subsidiaries - 6,280 - - 6,280

At 28 February 2015 7,028,047 (1,981,567) 7,313,052 6,641,284 19,000,816

Credit to profit for the year 3,906,272 1,355,630 (7,313,052) (6,053,033) (8,104,183)

At 29 February 2016 10,934,319 (625,937) - 588,251 10,896,633

60

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 FINANCIAL REPORTING - 2015 Total Total 6,280 2,107 2,107 (2,107) 10,224 10,224 123,391 123,391 472,169 472,169 (10,224) 40,177,977 40,177,977 (8,227,574) 40,177,977 40,177,977 40,177,977 11,736,041 11,736,041 (2,752,314) 10,618,825 10,618,825 30,722,081 (10,862,746) 109,837,492 109,837,492 112,220,626 112,220,626 (90,599,035) 120,458,424 (101,323,993) (101,457,608) - - - - 2,107 2,107 2016 (2,107) 10,224 10,224 28,998 (10,224) 4,457,572 4,457,572 8,037,839 8,037,839 3,582,374 and other 1,995,030 and other Provisions Provisions Provisions Provisions (1,427,660) (6,053,033) (1,406,779) (1,396,555) 2,904,189 2,904,189 27,100,000 27,100,000 40,177,977 40,177,977 19,231,953 19,231,953 34,861,056 54,093,009 54,093,009 (16,089,157)

------revenue revenue Deferred Deferred revenue revenue 7,313,052 7,313,052 Deferred Deferred 8,740,712 8,740,712 (7,313,052) (1,427,660) (1,427,660) ------6,280 plant and Property, Property, 9,583,204 plant and equipment Property, Property, (8,227,574) (13,502,910) equipment 12,046,485 12,046,485 (110,339,916) (114,253,342) 113,627,405 113,627,405 109,808,494 109,808,494 121,854,979 (123,836,546)

------61 losses losses 485,450 Assessed Assessed 7,028,047 7,028,047 6,542,597 3,906,272 10,934,319 10,934,319 Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Annual Report Limited Integrated Wireless Zimbabwe Econet (continued) Short-term held-to-maturity investments Short-term held-to-maturity Total Opening balance Additions on maturity received Repayments Interest accrued Closing balance investments held-to-maturity Long-term All figures in US$ All figures All figures in US$ All figures 2014 At 28 February At 28 February 2015 At 28 February the year Charge to profit for income Charge to other comprehensive 2016 At 29 February At 28 February 2014 At 28 February the year Charge to profit for income Charge to other comprehensive All figures in US$ All figures Net deferred tax asset/ (liability) Net deferred Deferred tax liability Deferred Credit /(charge) to profit for the year to profit for Credit /(charge) Charge to other comprehensive income Charge to other comprehensive Acquisition of subsidiaries Acquisition At 28 February 2015 At 28 February the year to profit for Credit /(charge) Charge to other comprehensive income Charge to other comprehensive At 29 February 2016 At 29 February Held-to-maturity investments include treasury bills with investments a with carrying local amount financial of US$47 institutions 422 amountinginvestments 948 yield interest at a rate to of 6.8% (2015: and 7.332% per US$6 $33annum respectively. The short 699 670 term portion of the 847) 061investments and (2015: are contracted US$6 be to repaid within the next year. 478 130). The treasury bills and The deferred tax liability arises mainly from the difference between accounting and tax treatment of depreciation. HELD-TO-MATURITY INVESTMENTS The unrecognised deferred tax assets arising from unused tax losses for subsidiaries of the Group amount $945 to 456 (2015 - $2 775 947). DEFERRED TAX TheGroup has accounted deferreda for tax asset pertaining deferred to revenue since the temporary difference isexpected to reverse in the foreseeable future. Further, the incurred Group by Steward Bank Limited in anticipation has of the bank’s return profitability. to also accounted for a deferred tax asset arising from losses

16 16 15.3 15.3 15.2 15.2

15 15 Notes to the Financial Statements (continued) For the year ended 29 February 2016

17 INVESTMENT IN ASSOCIATE

17.1 The Group has a 51% interest in Data Control & Systems (1996) (Private) Limited T/A Liquid Telecom Zimbabwe, which is involved in the provision of internet related services. Data Control & Systems (1996) (Private) Limited is a private entity that is not listed on any public exchange. The Group’s interest in Data Control & Systems (1996) (Private) Limited is accounted for using the equity method in the consolidated financial statements. The following table illustrates the summarised financial information of the Group’s investment in Data Control & Systems (1996) (Private) Limited:

Associate’s summarised statement of financial position All figures in US$ 2016 2015 Non-current assets 183,968,178 158,558,581 Current assets 36,925,856 35,269,098 Current liabilities (50,493,722) (48,222,473) Non-current liabilities (96,220,180) (90,082,590) Equity 74,180,132 55,522,616 Proportion of the Group’s ownership 51% 51% Group's ownership 37,831,867 28,316,534

Fair value adjustment 1,499,669 1,499,669

Carrying amount of the investment 39,331,536 29,816,203

Associate’s revenue and profit:

Revenue 84,130,419 74,095,310 Cost of sales (21,409,247) (14,366,543) Administrative expenses (31,010,878) (29,843,323) Finance costs (5,505,093) (5,522,299) Profit before tax 26,205,201 24,363,145 Tax expense (7,547,685) (6,621,928) Profit for the year (continuing operations) 18,657,516 17,741,217

Group’s share of profit for the year 9,515,333 9,048,020

Reconciliation of carrying amount of investment in associate Opening balance 29,816,203 20,768,186 Share of profit of associate 9,515,333 9,048,017 Closing balance 39,331,536 29,816,203

17.2 Share of profit of associate Share of profit of Data Control & Systems (1996) (Private) Limited 9,515,333 9,048,017

18 AVAILABLE-FOR-SALE INVESTMENTS

Opening balance 3,173,882 3,329,214 Disposals - (366,070) Fair value (loss)/gain (733,757) 210,738

Closing balance 2,440,125 3,173,882

The available for sale instruments comprise of investments in listed entities.

62

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 FINANCIAL REPORTING - - - - 2015 2015 2,072 (2,740) Level 3 Level 76,853 76,853 Level 3 Level 332,635 408,820 5,419,906 5,419,906 5,419,906 5,419,906 7,911,488 7,911,488 4,167,267 4,167,267 4,167,267 4,167,267 10,622,118 10,622,118 18,533,606 18,533,606 ------2016 2016 Level 2 Level Level 2 Level (8,673) 972,402 972,402 334,368 334,368 408,820 626,255 8,181,226 8,181,226 3,721,882 1,026,402 11,903,108 11,903,108 - - - - Level 1 Level 74,452 74,452 54,000 Level 1 Level 2,440,125 2,440,125 2,494,125 3,173,882 3,173,882 3,248,334 Total Total 408,820 4,167,267 4,167,267 7,749,969 7,749,969 2,440,125 2,440,125 5,419,906 5,419,906 8,886,433 1,026,402 3,173,882 3,173,882 63 Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Annual Report Limited Integrated Wireless Zimbabwe Econet During the reporting period ended 29 measurements, and no February transfers or into out of Level 3 fair value measurements. 2016, there were no transfers between Level 1 and Level 2 fair value Available-for-sale financial assets Available-for-sale Financial assets at fair value through profit or loss value Financial assets at fair At 29 February 2016 At 29 February property Investment All figures in US$ All figures The Group uses the following hierarchy for determining and disclosing technique;the fair value of financial instruments by valuation quoted (unadjusted)Level 1: prices in active markets for identical assets or liabilities othertechniques2:Level whichfor inputsall whichsignificant a have effect recordedtheon observable,fairvalueare either directly or indirectly Level 3: techniques which use inputs which observable market data. have a significant effect on the recorded fair value that are not based on The carrying amounts of financial instruments as disclosed in the statement of financialcarryingvalues.Thepositionstatementof financialfairapproximate thetheir disclosedinstruments amountsof asin All figures in US$ All figures at net realisable value Merchandise Spares, stationery and other Acquisition of subsidiaries Acquisition loss value Fair Closing balance All figures in US$ All figures Opening balance Additions measurements, and no transfers or into out of Level 3 fair value measurements. During the reporting period ended 28 February 2015, there were no transfers between Level 1 and Level 2 fair value Available-for-sale financial assets Available-for-sale Financial assets at fair value through profit or loss value Financial assets at fair At 28 February 2015 At 28 February property Investment The cost of inventories recognised as an expense during the year amounted US$24 to 337 231 (2015: US$29 835 702). realisablevalue.net carried inventories at forexpense anrecognised wasas US$382945 391) (2015: 217 US$1 During2016, This is recognised in cost of sales. Inventories written off during the course of the year amounted to US$2 161 994US$723 (2015: 214). TheDirectors arethe of opinion that the inventory amounts are recorded at values that are not in excess theirof recoverable amounts. All inventories are expected be to recovered within twelve months. (12) Investments held at fair value through profit or loss comprise of equity investments as well as money market investments.The fair value of the equity investments is based on the Zimbabwe Stock Exchange published share prices. INVENTORIES FINANCIAL ASSETS THROUGH FAIR VALUE PROFIT AT OR LOSS All figures in US$ All figures FAIR VALUES OF FINANCIALFAIR VALUES INSTRUMENTS value hierarchy Fair

21 20

19 19 Notes to the Financial Statements (continued) For the year ended 29 February 2016

22 FINANCIAL INSTRUMENTS: TRADE AND OTHER RECEIVABLES

All figures in US$ 2016 2015 Trade receivables and other receivables 53,079,998 59,837,628 Interconnect debtors 30,773,931 39,666,016 Intergroup receivables 9,970,576 6,709,805 Impairment losses recognised (14,959,266) (17,878,908) 78,865,239 88,334,541 There is a concentration of credit risk associated with interconnect debtors.

Interconnect debt is split between current and non-current as follows: Receivable within 1 year 30,773,931 39,666,016 Receivable after a year - 12,954,603 30,773,931 52,620,619

Impairment losses recognised Pertaining to prior year balances (17,878,908) (29,562,214) Impairment reversed during the year 2,919,642 11,683,306

(14,959,266) (17,878,908)

Trade receivables are non-interest bearing and are generally on terms of 30 to 90 days.

In determining the impairment losses disclosed above, the Group considers any change in the credit quality of a trade receivable from the date the credit was initially granted up to the end of the reporting period. At the end of the year, all the impaired trade receivables were aged as follows:

All figures in US$ 2016 2015 Ageing of impaired trade receivables 60 days 496,595 - 90+ days. 14,462,671 17,878,908 14,959,266 17,878,908

Ageing of trade and other receivables that are past due but not impaired 30 days 3,379,565 6,144,566 60-90 days 3,257,072 4,001,324 90+ 20,160,794 26,642,863 Total 26,797,431 36,788,753

Before accepting any new individual customer, the Group conducts trade reference checks to establish the credit history of the applicant. The Group also conducts due diligence assessments on individuals, companies and their Directors.

The Group considers the trade and other receivables past due to be recoverable and thus has not impaired these amounts.

23 LOANS AND ADVANCES TO BANK CUSTOMERS

All figures in US$ 2016 2015

23.1 Total loans and advances to bank customers Corporate lending 38,845,767 47,152,417 Small-to-medium enterprise lending 2,492,097 291,602 Consumer lending 19,235,686 18,618,158 60,573,550 66,062,177

Less: Allowance for impairment losses (2,285,276) (6,130,123) Less: Suspended interest (2,029,972) (1,726,018) 56,258,302 58,206,036

64

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 FINANCIAL REPORTING % 9% 4% 6% 4% 28% 49% 2015 2015 Total 100% 672,577 2,107,766 2,107,766 5,257,134 5,257,134 2,249,400 2,768,796 2,768,796 3,292,052 3,166,091 3,166,091 2,285,276 2,285,276 37,529,414 37,529,414 (1,726,018) (6,130,123) 15,419,488 39,836,416 39,836,416 18,752,539 18,752,539 66,062,177 66,062,177 20,676,622 20,676,622 58,206,036 45,385,555 20,150,538 20,150,538 23,316,629 (23,280,753) (15,460,487) 2015 - - US$ 2016 2016 lending 2,614,206 1,005,613 1,005,613 1,782,985 1,562,799 2,568,412 Consumer (3,399,633) 2,413,259 2,413,259 5,725,605 2,772,970 3,900,345 1,801,469 1,801,469 1,622,598 1,622,598 2,296,603 1,359,985 1,698,924 18,609,343 18,609,343 66,062,177 66,062,177 32,640,655 11,265,208 11,265,208 (2,285,276) 42,151,361 42,151,361 56,258,302 16,620,720 (2,029,972) 12,305,472 43,952,830 60,573,550 SME % 1% 5% 1% lending 137,037 137,037 12% 33% 48% 388,058 (667,388) (421,260) 100% 1,476,706 1,476,706 1,339,669 2016 lending 114,233 114,233 (420,439) 3,811,024 3,811,024 2,259,184 2,259,184 Corporate 1,551,840 (3,276,352) US$ 829,015 829,015 331,895 7,659,810 7,659,810 (continued) - 2,823,439 28,927,409 28,927,409 20,001,982 20,001,982 60,573,550 65 476,893 (85,585) Furniture Furniture 15,546,072 15,546,072 15,460,487 (15,937,380) book lending Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Annual Report Limited Integrated Wireless Zimbabwe Econet There is a material concentration of loansand advances in the manufacturing category constituting 48% (2015: 49%) of gross loans and advances. Individuals Services Distribution Agriculture Manufacturing Mining At 28 February 2015 At 28 February the year for Net impairment charge/(reversal) off written and advances Loans 2016 At 29 February A reconciliation of the allowance for impairment on loans and advances, by class, is as follows: in US$ All figures 2014 At 28 February the year for Net impairment (reversal)/charge Gross furniture loans Gross furniture credit losses for Allowance loans Net furniture All figures in US$ All figures Gross loans and advances due after 1 year due after loans and advances Gross loans gross Total losses loans net of impairment Total Less: Allowance for impairment losses for Allowance Less: Suspended interest Less: due within 1 year Total 1 year Due after 1 to 5 years 5 years Over Due within 1 year than one month Less 1 to 3 months 3 to 6 months 6 months to 1 year 1 year due within loans and advances Gross All figures in US$ All figures Loans and advances relating to furniture Loans Maturity analysis Allowance for impairment on loans and advances Allowance Sectorial analysis of utilisations Sectorial LOANS AND ADVANCES TO BANK CUSTOMERS

23.5

23.4 23.3 23.2 23 Notes to the Financial Statements (continued) For the year ended 29 February 2016

23 LOANS AND ADVANCES TO BANK CUSTOMERS (continued)

All figures in US$ Note 2016 2015

23.6 Total loans and advances Total loans and advances to bank customers 23.1 56,258,302 58,206,036 Loans and advances relating to furniture 23.5 1,622,598 3,292,052 57,880,900 61,498,088

The amount above is broken down into current and non-current as follows: Non-current portion 43,952,830 20,676,622 Current portion 13,928,070 40,821,466 57,880,900 61,498,088

24 SHARE CAPITAL

Group and company

Authorised 3 000,000,000 (2015: 3 000,000,000) Shares consisting of: -2 000,000,000 (2015: 2 000,000,000) Ordinary shares of $0.001 each 2,000,000 2,000,000 - 1 000,000,000 (2015: 1 000,000,000) Class "A" ordinary shares of $0.001 each 1,000,000 1,000,000

3,000,000 3,000,000

24.1 Issued and fully paid 1 640 021 430 (2015: 1 640 021 430) Shares consisting of: 909 325 280 (2015: 909 325 280) 909,325 909,325 Ordinary shares of $0.001 each -730 696 150 (2015: 730 696 150) 730,696 730,696 Class "A" ordinary shares of $0.001 each 1,640,021 1,640,021

Unissued shares are under the control of Directors, subject to the Companies Act (24:03) and the Memorandum and Articles of Association.

24.2 Movement in share capital and share premium Share Share Number capital premium Total of shares US$ US$ US$ Balance at 28 February 2014 1,640,021,430 1,640,021 35,808,110 37,448,131 Utilisation of treasury shares - - 3,315,560 3,315,560

Balance at 28 February 2015 1,640,021,430 1,640,021 39,123,670 40,763,691 Utilisation of treasury shares - - - -

Balance at 29 February 2016 1,640,021,430 1,640,021 39,123,670 40,763,691

24.3 Class “A” shares On 1 July 2003, Econet Wireless Zimbabwe Limited (“EWZL”) entered into an arrangement with Dunstone (Private) Limited, to acquire its 100% owned subsidiary Econet Wireless Capital Holdings (Private) Limited (“EWCH”). Under the arrangement, EWZL issued 73,984,368 (739,843,680 after share split) Class “A” ordinary shares in exchange for 999,000 EWCH shares. These shares rank parri passu in all respects with the existing issued ordinary shares with the exception that, in the event of EWZL becoming the owner of Econet Wireless Limited (“EWL”) shares, and deciding to distribute the shares.

66

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 FINANCIAL REPORTING

4,080 2,200 2,200 17,168 17,168 13,277 13,277 13,287 20,851 84,400 7,014,684 7,014,684 7,014,684 10,699,010 10,699,010 10,699,010 28,207,169 28,207,169 10,376,420 10,376,420 10,380,580 10,380,580 28,134,682 Ordinary shares shares Ordinary shares Ordinary 67 Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Annual Report Limited Integrated Wireless Zimbabwe Econet (continued)

Share buy-backs S. Shereni S. Total *Mr. MasiyiwaS.T. is a beneficial shareholder of Econet Global Limited. Econet 630,673,303Global Limited shares (2015: 630holds 579 551 shares) in Econetdirectly Wireless Zimbabweor Limited. indirectly 28 February 2015 28 February Masiyiwa* S.T. C. Fitzgerald Mboweni D. Mpofu T.P. K Chirairo Myers J. D. Mboweni Mboweni D. Mpofu T.P. K Chirairo Myers J. Shereni S. Total At 29At February 2016, there wereno outstanding share options granted the to Directors. thatAt date, the following Directors held directly and indirectly the following number ordinary of shares in the Company. 2016 29 February Masiyiwa* S.T. C. Fitzgerald value of the retrenchment benefit was determined on Septemberwas used 2015 derive to a the total number sharesof be to issued. basisThe total effect theof transaction agreedon the profit with the employees and or loss for the period the was $2,201,664 share and an equivalent amount price affected the equity of the Group. as at 30 The employees are not entitled deal to in the shares until after the expiry of 24 months from October 31 2015. the holding company, Econet Global Limited (EGL). Proceeds from disposal of treasury shares for the year ended 29 Februaryended29 year GlobaltheEconet Limited(EGL).treasuryholdingProceeds disposalcompany,for the shares fromof 2016 amounted to US$ nil (2015: US$53,580,596). Treasury shares on hand at 29 February The cost 2016 of the sharewere buy-backs61,162,109). 217,584,436 (treasury(2015: stock) has been debited reserves. to During the year, as part of the Group restructuring 7,863,088exercise, the shares were Groupoffered to retrenchedthe retrenched moreemployees from than the previously100 bought employees.back shares A of the company.total The of undertake the purchase of its own ordinary shares in such manner or on such terms as the Directors may from time to time determine,marketweightedprovidedabovethetheaverage price of repurchases thatthegreatera madethan5% notat are the providedthatalso repurchase and the of immediatelydatebusinessdayspreceding the five the securitiesfor the for value maximumnumber sharesof authorized be to acquired shall (tennot percent)exceed 10% theof Company’s issued ordinary the frommonths 15 beyondextendAnnualcapital.nextGeneralshare not Meeting,the shall authorityThis and at expire shall date of this resolution. Treasuryshares with marketvaluea US$40 of 065 949 US$32(2015: 859 424) boughtwere back fromthe market and from Under the authority granted at the Annual General Meeting of 31 Julythe Company’s own shares2015 on the market.the The Company, as dulyDirectors authorized by Articlewere of its Articles10 authorised of Association, to mayre-purchase DIRECTORS’ SHAREHOLDING Issue of shares SHARE CAPITAL

24.4

25

24.5

24 Notes to the Financial Statements (continued) For the year ended 29 February 2016

26 OTHER RESERVES

Available-for All figures in US$ Other sale Total

Balance at 28 February 2014 4,920 457,928 462,848

Transfer to regulatory reserves 5,222,610 - 5,222,610 Fair value gain on available-for-sale investments - 210,738 210,738 Deferred tax arising out of reserves - (2,107) (2,107)

Balance at 28 February 2015 5,227,530 666,559 5,894,089

Transfer to regulatory reserves (1,617,656) - (1,617,656)) Reclassification (980,312) - (980,312)- Revaluation loss on property, plant and equipment (26,856) - (26,856) Fair value loss on available-for-sale investments - (733,757) (733,757) Deferred tax arising out of reserves - 10,224 10,224

Balance at 29 February 2016 2,602,706 (56,974) 2,545,732

Available for sale reserve This reserve records fair value changes on available-for-sale financial assets.

Other reserves relate to Steward Bank Regulatory Reserve which caters for excess credit loss provisions that result from calculation of impairments on loans and receivables according to the expected loss model as required per Reserve Bank of Zimbabwe regulations.

27 TRADE AND OTHER PAYABLES

All figures in US$ 2016 2015 Local trade accounts payable 65,506,937 48,478,069 Foreign trade accounts payable 4,253,244 17,598,645 Short term inter-group payables 18,068,948 19,954,822 Other payables 46,337,725 47,461,405 134,166,854 133,492,941

Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs together with credit granted on equipment purchases. The average credit period on purchases is between 7 and 30 days. The Group has financial risk management policies in place to ensure that all payables are settled within the agreed credit timeframe.

Other payables comprise of the accrual of certain operational expenses.

68

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 FINANCIAL REPORTING 2015 Total 109,622 109,622 138,635 138,635 166,530 166,530 (243,665) 3,487,561 3,487,561 5,987,648 5,987,648 5,987,648 5,987,648 3,689,911 3,689,911 2,261,138 2,261,138 5,076,260 5,076,260 5,076,260 5,076,260 1,386,349 5,043,773 2,500,087 18,381,526 18,381,526 (1,488,385) - - - - 2016 (243,665) 2,101,005 2,101,005 3,689,911 3,689,911 3,689,911 3,689,911 3,689,911 3,689,911 Employee Employee 3,933,576 3,933,576 1,802,444 4,302,531 4,302,531 2,500,087 17,833,806 17,833,806 (1,488,385) benefits (ii) - - - - cost (i) 160,133 160,133 109,622 109,622 138,635 138,635 166,530 166,530 1,685,117 1,685,117 1,110,197 1,110,197 1,685,117 1,685,117 1,685,117 1,685,117 1,386,349 1,386,349 1,386,349 dismantling Provision for for Provision 69 Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Annual Report Limited Integrated Wireless Zimbabwe Econet Non-current As at 28 February 2015 As at 28 February Current Non-current Split between current and non-current current Split between 2016 As at 29 February Current Balance at 29 February 2016 Balance at 29 February Additional provision raised provision Additional Reduction as a result of payments/settlements Reduction Unwinding of interest Unwinding Balance at 28 February 2015 Balance at 28 February Reduction as a result of payments/settlements as a result Reduction Additional provision Additional Unwinding of interest Unwinding Balance at 28 February 2014 Balance at 28 February All figures in US$ All figures prepaid airtime Deferred All figures in US$ All figures cashoutflow economic of benefit that will be required under obligationthe Group’s pay theforto loyalty itsof employees in service in line with the policy. Group’s Theprovision dismantlingfor costs represents presentDirectors’thethevalue of bestestimate futurethecash of outflow of network Group’s thewhich environmentin the obligationrestore Group’s to therequiredundereconomic be benefitswillthat equipmentlocatedis its originalto state after its useful lives. environmentalanisIt requirement that after decommissioning of the network equipment, the land be restored its to original state as much aspossible. The provision for employee benefits represents annual leave and vested long service award entitlements accrued. Thevestedlong service awardentitlement amount represents thepresenttheDirectors’value of best estimatethefuture of The deferred revenue arises from the unused prepaid airtime. The approximateDirectors the fair values of the servicesare be to provided.of Deferred revenue willthe be recognisedopinion within the months. next 12 that the carrying amounts DEFERRED REVENUE PROVISIONS Provisions comprise of the following:

(ii) (i)

29 28 Notes to the Financial Statements (continued) For the year ended 29 February 2016

30 FINANCIAL INSTRUMENTS: INTEREST-BEARING DEBT

All figures in US$ 2016 2015 Opening balance 263,933,424 240,280,045 Additions during the year 45,267,660 120,963,640 Net repayments (86,737,470) (97,793,026) Accrued Interest 614,522 482,765 Closing balance 223,078,136 263,933,424

Long term portion 112,343,137 165,757,698 Short term portion 110,734,999 98,175,726 223,078,136 263,933,424

Loan repayment structure Effective Value at Borrowing Effective Initial Facility Acquisition Amounts Finance cost To t a l l o a n Short term Long term rate as at 29 Security Financier date Limit date paid to date accrued obligation portion portion Feb 16 terms $US $US $US $US $US $US $US

African Export and Import Bank/ Econet Guarantee by Econet Global Global Limited 24-May-12 75,000,000 64,741,635 59,210,527 10,071,158 15,602,266 15,602,266 - 11.4% Limited African Export and Import Bank/ Econet Guarantee by Steward Bank Global Limited 27-Dec-13 28,000,000 27,440,000 27,440,000 - - - - 9.0% Limited Ericsson Credit AB 24-May-12 39,900,000 37,115,392 39,900,000 2,784,608 - - - 5.0% Guarantee by Econet Global Limited China Development Bank 11-May-12 135,000,000 125,171,774 95,271,882 9,843,288 39,743,180 31,846,779 7,896,401 6.4% Guarantee by Econet Global Limited Industrial Development Corporation 28-Sep-12 20,000,000 17,151,454 12,000,000 2,288,605 7,440,059 3,608,054 3,832,005 6.4% Guarantee by Econet Global Limited PTA 15-Jan-13 20,000,000 19,820,000 20,000,000 180,000 - - - 6.2% Guarantee by Econet Global Limited PTA 4-Apr-13 8,800,000 8,190,051 3,601,118 2,690,647 7,279,580 1,558,648 5,720,932 10.0% Equipment Purchased

Ericsson Credit AB 30-Jun-14 14,763,973 14,763,973 11,811,178 3,049,037 6,001,832 6,001,832 - 7. 4 % Guarantee by Econet Global Limited Ericsson Credit AB 30-Jun-14 50,562,449 49,388,819 18,529,076 8,339,767 39,199,510 15,297,761 23,901,749 4.4% Guarantee by Econet Global Limited China Development Bank 30-Jun-14 93,000,000 90,712,044 - 596,306 91,308,350 20,678,222 70,630,128 5.7% Guarantee by Econet Global Limited Coca Cola International 22-Aug-15 360,000 360,000 - 1,922 361,922 - 361,922 3.3% Unsecured

Sub Total 485,386,422 454,855,142 287,763,781 39,845,338 206,936,699 94,593,562 112,343,137 7. 1 %

Bank working capital facility 22-Jul-13 21,500,000 21,482,994 5,341,557 - 16,141,437 16,141,437 - 8.0% Unsecured

To t a l 506,886,422 476,338,136 293,105,338 39,845,338 223,078,136 110,734,999 112,343,137

The weighted average interest rate on long-term borrowings for the Group as at 29 February 2016 was 7.1% (2015: 7.3%). In addition to the all inclusive rate of borrowing of 7.1% the Group pays guarantee fees of 6% per annum to Econet Global Limited for the guarantee provided on the multi-creditor loan facilities. The borrowing powers of the Directors are as disclosed in Note 40. Summary of borrowing covenants African Export and Import Bank (Afrexim Bank) / Econet Global Limited Econet Wireless (Private) Limited and Econet Global Limited signed an agreement with Afrexim on 24 November 2011 for a facility of US$130 million. US$75 million of this loan facility was applied to Econet Wireless (Private) Ltd to refinance an existing bridging facility of US$63 million from the same bank and at the same time increase the loan facility by a further US$12 million. This loan is part of the multi-creditor loan facilities detailed below. CDB The facilities in the schedule above have been applied to the expansion of the cellular network. In May 2012, US$135 million of the facilities was refinanced through a loan from the China Development Bank, as part of the multi-creditor loan facilities detailed below. Multi-creditor loan facilities The Company secured multi-creditor loan facilities of US$307 million prior to 28 February 2014 and US$158.3 million in the 2014 financial year, from a group of financial institutions namely; Industrial Development Corporation of South Africa (IDC), Eastern and Southern African Trade and Development Bank (PTA Bank), China Development Bank (CDB) and Ericsson Credit AB (Ericsson) and a syndicate led by African Export Import Bank (Afrexim Bank), which also includes DEG, PROPARCO, FMO, Steward Bank and CBZ Bank. The terms of the security package are detailed in an Inter-creditor Security Sharing Agreement, which provides for the sharing of security between the financial institutions.

70

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 FINANCIAL REPORTING

% 2015 1.3% 1.0% 9.8% 0.1% 0.4% 2.3% 100% 11.4% 10.1% 34.7% 28.9% 17,924,600 17,924,600 23,711,243 23,711,243 41,635,843 41,635,843

2015 US$ 2016 17,355 17,355 417,577 417,577 936,906 554,742 554,742 181,461 181,461 4,223,936 4,077,478 4,077,478 4,738,484 14,455,715 12,032,189 41,635,843 14,521,333 16,700,723 31,222,056 31,222,056 10,396,703 20,825,353 % 7.9% 1.0% 1.9% 1.1% 0.6% 0.3% 0.2% 100% 12.5% 35.2% 39.3% 2016 US$ 48,803 84,500 601,444 310,145 310,145 203,211 203,211 353,198 353,198 3,896,976 2,465,565 71 10,983,686 12,274,528 12,274,528 31,222,056 Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Annual Report Limited Integrated Wireless Zimbabwe Econet

Econet Global Limited and Mr. MasiyiwaS.T. (in his personal capacity)lenders participating have in the Inter-creditorprovided and Securityirrevocable Sharing Agreement.guarantees to the An Econet Wireless (Private) Limited (EWPL) Notarial General Covering Bond (NGCB); The Security Agent be to the loss payee on proceeds of All-Risk Insurance policy covering the EWPL assets; A charge over escrow accounts established as part of the facility agreements; and Debt service coverage ratio (DSCR) of greater than or equal 1.5 to Net interest bearing indebtedness (NIBFI) EBITDA to ratio of less than or equal 1.5 to liabilities/totalTotal assets ratio less than or equal 0.67 to Shareholders’ funds/total assets ratiogreater than or equal 0.4 to

FINANCIAL INSTRUMENTS: INTEREST-BEARING DEBT (CONTINUED) Less than 1 month Less 1 to 3 months All figures in US$ All figures Current account Current deposit Term Maturity analysis of deposits Due to customers Sectoral analysis of deposit Sectoral • DEPOSIT DUE TO BANK AND CUSTOMERS Afrexim Bank was appointed the “Security Agent” in terms of the Inter-creditor and trustSecurity security Sharingon behalf Agreementof the syndicated to hold creditors. in The role of the security agent being, inter alia, to mobiliselenders, holdingthe securitysyndicate behalfon lenders,the of managing collectionthe debtserviceof payments behalfonlendersthe of and enforcing securities while under instruction of the lenders. Barclays Bank of and EcobankZimbabwe Burundi Limited, SA are the “Local Steward Administrative Bank Agents” assist to Limited the security agent. The security pool includes the following: • • • long term interest bearing debt for that relevant period less cash and cash equivalents. The Group was in compliance with such covenants as at 29 February 2016. Inter-creditor and Security Sharing Agreement In terms of the agreements for the multi-creditor loan facility between the ZTE,Group companiesIndustrial andDevelopment the Corporationlenders listed of Southabove Africa,- China Development Bank, Ericssonlenders Credit haveAB, agreed Afrexim Bankto a - poolthe arrangement for security of their facilities. The SecurityInter-creditor Pool and Securityarrangement Sharing is Agreement.contained in the 1. 1. 2. 3. 4. Debt service means in respect of a relevant period, the short term portion of long plusterm borrowingsinterest (aspaid defined forunder IFRS)that relevant period (as defined under operationsIFRS). for the relevantThe period, debt to DSCR service is for that period.therefore the ratio of cash generated from NetInterest Bearing Financial Indebtedness means inrespect relevantany of period, all short term interest bearing debt and Themulti-creditor refinancefurtherloanexistingfacilitiestheloans forused to and network were expansion. atThe loansare multi-creditoryears.Thefive maturity to and ratesupperiodscovenants,various interestfacilitiesloannumber of of contain a representations, and events of default typicalcovenants relating consolidatedto of debt (as defined) a including: credit facility arrangements of this size and nature, including financial

31.3 31.2 31.1 31

30 Others Distribution Services and parastatals Government Individuals Transport and telecommunications Transport Mining Manufacturing Agriculture Financial Notes to the Financial Statements (continued) For the year ended 29 February 2016

32 CASH FLOW INFORMATION

32.1 Cash generated from operations before working capital changes All figures in US$ Note 2016 2015 Profit before tax 68,461,183 123,343,485

Adjustments for: Depreciation and impairment of property, plant and equipment 11 123,257,719 115,812,011 Write off of property, plant and equipment 4 &11 3,897,675 747,283 Amortisation and impairment of intangible assets 14 9,400,373 9,505,214 Impairment of goodwill 43.3 - 224,685 Bad debts written off 10,192,720 303,936 Bad debts recovered (1,136,364) - (Profit)/loss on disposal of property, plant and equipment (13,365) 55,882 Fair value gains on financial assets 458,672 2,740 Impairment reversal of trade receivables (2,919,642) - Share based payments 2,201,664 - Increase in other provisions - 48,506 Impairment of loans and advances 2,249,400 3,166,091 Share of profit of associate 17.1 (9,515,333) (9,048,017) Gain/(loss) on fair value of investment property (352,639) 83,874 Net finance costs 6 & 7 33,402,769 36,011,884 (Decrease)/increase in deferred revenue 29 (547,720) 4,272,470 Inventory write-off 21 3,379,939 1,105,605 Increase in provision for inventory write-off 805,341 860,138

Cash generated from operations before working capital changes 243,222,392 286,495,787

32.2 Adjustments for working capital changes Decrease in inventories 845,041 5,404,107 Increase in trade and other receivables (824,665) (34,227,663) Increase/(decrease) in trade and other payables 527,102 (30,986,362) Increase in provisions 911,388 276,152

1,458,866 (59,533,766)

Cash generated from operations 244,681,258 226,962,021

32.3 Income tax paid Opening balance of liability 8,218,323 17,366,523 Add: current taxation charge for the year 9 22,014,714 27,604,970 Add: withholding taxes 9 5,830,693 14,668,162 Less: closing balance of liability (10,498,019) (8,218,323) 25,565,711 51,421,332

32.4 Cash and cash equivalents Short term investments 520,368 875,104 Bank balances and cash 99,195,174 94,363,629 99,715,542 95,238,733 Included in cash and cash equivalents is the following: Reserved and restricted cash balances 75,154,008 69,030,205

Restricted and reserved cash balances represent debt service reserve amounts which are secured to lenders and amounts held in trust for the EcoCash customers.

72

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 FINANCIAL REPORTING

-

2015 997,908 800,000 7,147,774 7,147,774 4,145,258 1,181,520 5,903,067 1,434,815 1,434,815 8,582,589 (4,114,764) (4,286,313) (1,449,340) 53,868,337 (4,250,505) (41,210,466) (62,085,371) (45,171,694) -

2016 297,521 800,000 4,145,258 1,151,578 3,580,259 6,419,115 6,419,115 7,755,337 7,755,337 1,336,222 10,048,253 45,460,173 (5,258,052) (1,996,671) (52,538,115) (11,021,526) (40,951,784) (39,842,771) 73

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Annual Report Limited Integrated Wireless Zimbabwe Econet the year was as follows: was the year services management Short-term-benefits-for servicesFor as directors Amounts owed to associate Amounts owed from associate Amounts receivable Fund Wireless Group Pension Econet by Amounts owed Net amount receivable management during remuneration of directors and other members of key The Amounts owed to the parent Amounts owed from the parent Amounts receivable subsidiaries to fellow Amounts owed subsidiaries from fellow Amounts receivable All figures in US$ All figures Compensation of key personnel management Other related parties Other related Fund Wireless Group Pension with Econet Transactions Balances Transactions Group: with Members of Econet Global Limited Transactions of goods and services the parent from Purchase subsidiaries Sales of goods and services to fellow Sales of goods and services to associate of goods and services associate from Purchases subsidiaries of goods and services fellow from Purchases and remitted the to Fund. National Social Security Authority Scheme This is a defined contribution scheme promulgated under the National Social Security Act of 1989. The Group’s obligation under the scheme are limited specific to contributions legislated from time time. to Guarantees by Econet Global Limited Details of guarantees provided by the parent company are disclosed in note 30. GROUP EMPLOYEE BENEFITS Econet Wireless Group Pension Fund Contributions are made to the defined contribution scheme through monthly deduction by the Group on members’ salaries Terms and conditionsTerms of transactionstransactions,length with relatedarm’s in partiesprevail that those to equivalentterms on made partiesare related frompurchases and to sales The whereverpossible. For the year ended 29 February 2016, the Group has notrecorded impairmentany receivablesof relating undertakenassessmentThispartiesUS$relatedisNil). financialeach thethroughexamining (2015:by yearamounts owed to financial position of the related parties and the market in which the related parties operate. Terms of balancesTerms with fellow subsidiaries Includedamountsin receivable frommembers theEconetof Global Limited Groupbalances are accruing 10-12%. interestat RELATED PARTY TRANSACTIONS

34

33.3 33.2 33.1 33 Notes to the Financial Statements (continued) For the year ended 29 February 2016

35 FINANCIAL RISK MANAGEMENT

35.1 Capital risk management The Group’s objectives when managing capital are: • to safeguard the entity’s ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders, and • to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.

The Group sets the amount of capital in proportion to risk. The Group manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt.

Consistent with others in the industry, the Group monitors capital on the basis of the debt-to-adjusted capital ratio. This ratio is calculated as net debt divided by adjusted capital. Net debt is calculated as total debt (as shown in the statement of financial position) less cash and cash equivalents. Adjusted capital comprises all components of equity other than amounts accumulated in equity relating to cash flow hedges, and includes some forms of subordinated debt.

The debt-to-adjusted capital ratios were as follows:

All figures in US$ Note 2016 2015 Total debt (i) 30 223,078,136 263,933,424 Less: cash and cash equivalents 32.4 (99,715,542) (95,238,733) Net debt 123,362,594 168,694,691

Total equity (ii) 661,897,004 665,294,728

Adjusted debt-to-capital ratio 19% 25%

(i) is defined as long- and short-term borrowings, as detailed in note 30. (ii) Equity includes all capital and reserves of the Group. (iii) Steward Bank Limited has Reserve Bank of Zimbabwe Capital requirements as detailed in note 37.

35.2 Financial risk management objectives The Group’s Corporate Treasury function provides services to the business, coordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the group through internal risk reports which analyse exposures by degree and magnitude of risks. These risks include market risk (including currency risk, interest rate risk and price risk), credit risk, liquidity risk and cash flow interest rate risk.

The Group’s Audit Committee, consisting of executive and non-executive Directors, meet on a regular basis to analyse, amongst other matters, currency and interest rate exposures and re-evaluate treasury management strategies against revised economic forecasts. Compliance with Group policies and exposure limits is reviewed at quarterly Board meetings.

The Group has a dedicated committee of the Board which reviews the loan exposures on a regular basis and monitors repayment plans. The Group has been able to meet its obligations in the current financial period and the Directors believe that appropriate measures have been implemented to ensure that the Group has the ongoing capacity to meet its obligations arising from these exposures.

35.3 Interest rate risk management Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group invests in money market instruments which are subject to changes in interest rates on the local money markets. The Group’s policy is to adopt a non-speculative approach to managing interest rate risk. Approved funding instruments include; bankers acceptances, call loans, overdrafts, foreign loans and where appropriate, long-term loans.

The Group has borrowings that are subject to both fixed interest rates and floating interest rates. Details of the Group’s borrowings are described in note 30. The Board of Directors has a committee that is dedicated to reviewing the loan exposures and repayment plans for the Group’s external borrowings.

74

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 FINANCIAL REPORTING equity: 5,046,032 6,603,456 Impact on gain/(loss) (5,046,031) (6,789,654) Tax effect 1,749,971 1,749,971 2,290,088 (1,749,971) (2,354,661) 8,893,544 6,796,003 Impact on (9,144,315) (6,796,002) gain / (loss) gain profit or loss: profit payable 18,247,922 18,247,922 18,247,922 18,247,922 27,034,204 27,034,204 27,034,204 27,034,204 at current rate at current Future interest interest Future 75

interest Adjusted Adjusted 11,451,919 11,451,919 36,178,519 36,178,519 18,140,660 18,140,660 25,043,924 (continued) Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Annual Report Limited Integrated Wireless Zimbabwe Econet All figures in US$ All figures If interest rate goes up by 2% to 9.1% If interest rate goes up by 2016 If interest rate goes down by 2% to 5.1% 2% by If interest rate goes down 2015 2% to 9.3% If interest rate goes up by If interest rate goes down by 2% to 5.3% 2% by If interest rate goes down network segment. Refer note 22. to The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in the statement of financial position. financial institutions. Trade receivables are presented net of the allowance for to impairmentdebtors is limitedlosses. due Creditto the widespreadrisk withcustomer baserespect and ongoing credit evaluations to maintainthe credit customers.worthiness of Where appropriate, trade receivables are converted interconnectpayablesregulatedby contracts.are Intercarrieronto receivables cellularpayablesforeignandtrafficmanaged thefor are prepaid service. Intercarrier receivables and monthlyoutstandingforeigncollectednet the reputable theamountsfromarefinance ensureswhich houseforeignthrougha interconnect partners. At the reporting date, there was significant concentration of credit risk on the interconnect balances owing to the cellular Group. The Group has adopted a policy of only dealing with credit worthy counterpartieswhere appropriate,and obtaining as sufficienta collateralmeans of mitigating the risk of ratingsfinancial of its counterparties loss are continuously monitoredfrom and the credit exposuredefaults. is controlled by counterpartyThe limits thatGroup’s are exposure and the creditreviewed and approved regularly. Financial assets, which potentially subject the term deposits, group to trade concentrations receivables and of intercarrier credit receivables. risk, The consist Group’s principally cash equivalents of cash, are placed short- with high quality At the reporting date, the exposure to listed equity securities sharepriceat couldimpactan haveapproximately of fairUS$159 000 valueincometheon equity or attributable was Group,thedepending to US$ 3 173 882. A decrease of 5% on whetheron the declinethe is significant or prolonged. An increase of in5% the value of the listed securities would only impact equity, but would not have an effect on profit or loss. Credit risk management Credit risk refers to the risk that the counterparty will default on its contractual obligations resulting in financial loss to the Other price risk is the risk that the fair value of future cash flows of a financiala cashinstrumentfutureof flows fluctuatevalueof will fairthebecause that riskOther changesthe price isof riskin currencyandrisk risk) ratewhetherprices thosethoseinterestarisingchanges thanmarketfactorscaused(otherfrom by are specificthe to individual financial instrument itsor to issuer or factors affecting all similar financial instruments traded inthat market. The Group invests in tradable securities that are quoted on the Zimbabwe Stock Exchange and maintains two portfolios thesefor investments, a trading portfolio and a long-term investment portfolio. Other price risks Interest rate sensitivity analysis The following table demonstrates the sensitivity to a reasonably possible change in interest rates Theon interest rate sensitivityinterest (2015:bearing 7.3%). is applied on andebt. effective interest rate of 7.1% FINANCIAL RISK MANAGEMENT Interest rate risk management (continued) term sheets for such borrowings,and ensures that the interest rate exposure of the Group isappropriately managed. Thesensitivity statementthe Group’s of comprehensiveof income thechanges to interestin rates onits material exposures isdisclosed in note35.3.1 below. The Directors, at the reporting date, werenot aware anyinformationof or events that may significanta have impact reportedtheon Groupprofitthethatlossandwouldormaterial of result in changes structurethein of the statement Group’s of comprehensive income. The Committee that reviews the loan exposures meets on a regular basis and uses various models to project the Group’s riskvariousTheregularCommittee usesproject basisGroup’s andmodelsloan a theexposures the to onmeetsreviews that exposures and proposes methods to deal with the risk arising in an appropriate manner. This committee also approves the

35.5

35.4 35.3.1 35 35.3

Notes to the Financial Statements (continued) For the year ended 29 February 2016

35 FINANCIAL RISK MANAGEMENT (continued)

35.6 Foreign currency risk management The schedule below shows the composition of the monetary assets, by currency at the respective year end in United States dollars at the reporting date.

Bank and cash balances All figures in US$ AUD JPY BWP Euro Rand USD GBP To t a l

2016 Bank and cash balances - 7,546 595,511 1,425,864 91,488,749 3,465 93,521,135 Short term deposits - - - - - 520,368 - 520,368 Closing balance - - 7,546 595,511 1,425,864 92,009,117 3,465 94,041,503

2015 Bank and cash balances 2,168 495 14,132 741,017 599,645 92,990,625 15,546 94,363,628 Short term deposits - - - - - 875,104 - 875,104 Closing balance 2,168 495 14,132 741,017 599,645 93,865,729 15,546 95,238,732

Foreign currency risk is the risk that the Group may be affected adversely as a result of foreign currency fluctuations on the various currencies that the entity holds. The Group maintains cash and bank balances in various currencies so that payments can be made in the currency of the respective invoices. This covers the entity against short-term foreign currency fluctuations. In addition to this the bulk of the Group’s bank and other monetary balances are United States Dollar denominated thereby minimising this risk.

As at year end, the converted values of the non USD denominated bank and other monetary balances were minimal and insignificant to the Group hence a sensitivity analysis has not been performed for foreign currency fluctuations.

35.7 Liquidity risk management Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has built an appropriate liquidity risk management framework for the management of the Group’s short, medium and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.

The table below summarises the maturity profile of the Group’s financial liabilities based on contractual undiscounted payments.

On Less than 3 to 12 1 to 5 All figures in US$ demand 3 months months years Total Year ended 29 February 2016

Interest-bearing debt 16,141,437 22,842,373 71,751,189 112,343,137 223,078,136 Trade and other payables - 134,166,854 - - 134,166,854 Deposits due to banks and other customers 16,700,723 14,521,333 - - 31,222,056

32,842,160 171,530,560 71,751,189 112,343,137 388,467,046

Year ended 28 February 2015

Interest-bearing debt 21,482,994 20,585,193 56,107,539 165,757,698 263,933,424 Trade and other payables - 133,492,941 - - 133,492,491 Deposits due to banks and other customers 23,711,243 17,924,600 - - 41,635,843

45,194,237 172,002,734 56,107,539 165,757,698 439,061,758

The disclosed financial instruments in the above table are the gross undiscounted cash flows.

76

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 FINANCIAL REPORTING 2015 788,389 5,032,108 5,032,108 3,815,499 3,815,499 3,292,051 3,430,267 3,959,860 5,692,934 8,840,300 11,687,315 11,687,315 59,547,175 59,547,175 87,685,312 87,685,312 14,538,537 14,538,537 23,755,668 33,699,848 63,506,263 164,635,763 164,635,763 164,635,763 2016 279,755 223,340 4,647,906 4,647,906 1,622,598 4,866,821 6,222,347 3,565,302 3,362,879 13,511,567 13,511,567 10,896,185 10,896,185 24,553,452 56,258,302 45,834,053 92,649,977 68,891,488 168,692,986 168,692,986 77 Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Annual Report Limited Integrated Wireless Zimbabwe Econet The Bank has established a credit quality review processworthiness of counterparties, to provide including regular collateralearly revisions. Counterpartyidentification limits are establishedof by the use of a creditpossible changes creditTherevision.regular subject to classificationin riskratingsare counterparty assignseachwhichRiskrating.system, risk the a credit quality review process aims to allow the bank to assess the potential loss as a result of the risks to which it is exposed and take corrective action. maintaining a diversified portfolio. Identified concentrations of credit risks are controlled and managed accordingly. CreditriskthattheBanktheriskwilllossis incur because a itscustomers counterpartiesor discharge to fail theircontractual obligations. The Bank manages and controls credit individual risk counterparties by and settingfor geographical limits and industry on concentrations, the and by amountmonitoring exposures of in relationlimits. risk to such it is willing to accept for Concentrations arise when a number of counterparties are engaged in similar business geographicalactivities, region,or activitiesor have in similar the economicsame features that would cause their ability similarly to affected meetchangesby economic,in contractualpolitical orother conditions. obligationsConcentrations to indicate bethe relative sensitivity theof Bank’s performance developments to affecting a particular industry or geographical location. Inorder avoid to excessive concentrations risk,of the Bank’s policies and procedures include specific guidelines focus to on and other governance committees which have the responsibility for the development of the risk strategy and implementing principles,frameworks, policies andlimits. The Bank also hasfully embedded Bankthe wide RiskManagement Framework with all significant risk types allocated the to risk control owners. Information compiled from all the businesses is examined and processed in order to analyse, control and identify risks on a timely basis. The Board receives a comprehensive risk report once a quarter which is designed to provide all the necessary information in order for them exercise to their oversight role. monitoring, subject to risk limits and other controls. This profitabilityprocess of and eachrisk individualmanagement within is the criticalBank is to accountablethe for Bank’s the risk continuingThe exposuresBank is exposedrelating to credit to risk,his liquidityor her risk,responsibilities. strategic risk, reputational risk and market risk. It is also subjectrisk and to variouscountry operating risks. The Board of Directors is responsible for the overall strategies, risk policies management and approachprinciples. andThe for Board approvinghas establishedthe riskthe Assetsmanagement and Liabilities Management Committee (ALCO) Risk is inherent in the Bank’s activities, but is managed through a process of ongoing identification, measurement and Credit Risk Excessiverisk concentration Risk measurement and reporting systems Risk management structure Risk management DISCLOSURES IN RESPECT OF BANKING SUBSIDIARY Statement of financial position for Steward Bank Limited Provisions Other liabilities Equity Property and equipment Intangible assets tax asset Deferred AND LIABILITIES EQUITY Deposits due to banks and customers and borrowings Loans ASSETS Cash and cash equivalents through profit or loss value Financial assets at fair to customers and advances Loans loans relating to furniture and advances Loans maturity Financial assets held to Other receivables properties Investment All figures in US$ All figures

36.2.1

36.2 36 36.1 Notes to the Financial Statements (continued) For the year ended 29 February 2016

36 DISCLOSURES IN RESPECT OF BANKING SUBSIDIARY

36.2 Risk management (continued)

Impairment assessments For accounting purposes, the Bank uses an incurred loss model for the recognition of losses on impaired financial assets. This means that losses can only be recognised when objective evidence of a specific loss event has been observed. Triggering events include the following:

- Significant financial difficulty of the customer - A breach of contract such as a default of payment - Where the bank grants the customer a concession due to the customer experiencing financial difficulty - It becomes probable that the customer will enter bankruptcy or other financial reorganisation - Observable data that suggests that there is a decrease in the estimated future cash flows from the loans

This approach differs from the expected loss model used for regulatory capital purposes in accordance with Basel II.

Individually assessed allowances: The Bank determines the allowances appropriate for each individually significant loan or advance on an individual basis, including any overdue payments of interest, credit rating downgrades, or infringement of the original terms of the contract. Items considered when determining allowance amounts include the sustainability of the counterparty’s business plan, its ability to improve performance if it is in a financial difficulty, projected receipts and the expected pay-out should bankruptcy ensue, the availability of other financial support, the realisable value of collateral and the timing of the expected cash flows. Impairment allowances are evaluated at each reporting date, unless unforeseen circumstances require more careful attention.

Collectively assessed allowances: Allowances are assessed collectively for losses on loans and advances and for held-to-maturity debt investments that are not individually significant (including residential mortgages, government debt and unsecured consumer lending) and for individually significant loans and advances that have been assessed individually and found not to be impaired.

The Bank generally bases its analysis on historical experience. However, when there are significant market developments, regional and/or global, the Bank would include macroeconomic factors within its assessments. These factors include, depending on the characteristics of the individual or collective assessment: unemployment rates, current levels of bad debts, changes in laws, changes in regulations, bankruptcy trends, and other consumer data. The Bank may use the aforementioned factors as appropriate to adjust the impairment allowances.

Allowances are evaluated separately at each reporting date with each portfolio.

The collective assessment is made for groups of assets with similar risk characteristics, in order to determine whether provision should be made due to incurred loss events for which there is objective evidence, but the effects of which are not yet evident in the individual loans assessments. The collective assessment takes account of data from the loan portfolio (such as historical losses on the portfolio, levels of arrears, credit utilisation, loan to collateral ratios and expected receipts and recoveries once impaired) or economic data (such as current economic conditions, unemployment levels and local or industry–specific problems). The approximate delay between the time a loss is likely to have been incurred and the time it will be identified as requiring an individually assessed impairment allowance is also taken into consideration. Local management is responsible for deciding the length of this period, which can extend for as long as one year. The impairment allowance is then reviewed by credit management to ensure alignment with the Bank’s overall policy.

Financial guarantees and letters of credit are assessed in a similar manner as for loans.

Credit related commitments risks: The Bank makes available to its customers guarantees that may require that the Bank makes payments on their behalf and enters into commitments to extend credit lines to secure their liquidity needs. Letters of credit and guarantees (including standby letters of credit) commit the bank to make payments on behalf of customers in the event of a specific act. Such commitments expose the Bank to similar risks to loans and are mitigated by the same control processes and policies.

78

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 FINANCIAL REPORTING Net Total 279,755 5,032,108 5,032,108 Credit Risk Credit 829,015 829,015 21,866,417 21,866,417 331,895 57,461,200 57,461,200 13,511,567 13,511,567 84,191,141 84,191,141 14,538,537 14,538,537 18,650,991 18,650,991 45,834,053 33,699,848 Exposure to Exposure 7,659,810 7,659,810 156,112,625 156,112,625 138,952,992 2,823,439 28,927,409 28,927,409 20,001,982 20,001,982 60,573,550 ------To t a l 4,241 5,158,947 5,158,947 4,734,947 5,158,947 4,734,947 14,541 14,541 95,451 388,058 impaired 2,285,276 2,285,276 1,782,985 Individually ------Other 744,250 744,250 744,250 744,250 485,250 485,250 90,717 90,717 68,367 but not 185,582 185,582 Past due Past impaired 3,198,110 3,198,110 1,888,175 1,888,175 5,430,951 ------Property Sub- 4,414,697 4,414,697 4,249,697 4,414,697 4,249,697 787,569 787,569 Grade C Grade 543,787 standard ------30,163,314 28,831,958 credit - - - - Letters of Letters /Guarantees grade 14,773 14,773 96,480 79 Grade B Grade 228,498 963,493 ------Standard Standard 1,303,244 Listed - - Securities Fair value of collateral and credit enhancements held enhancements and credit of collateral value Fair

Neither past due nor impaired

Grade A Grade 532,412 532,412 248,755 2,116,166 2,116,166 3,913,672 3,913,672 14,579,760 14,579,760 High grade 279,755

21,390,765 21,390,765 5,032,108 5,032,108 Maximum Credit Risk Credit 13,511,567 13,511,567 62,196,147 62,196,147 21,866,417 21,866,417 14,538,537 14,538,537 18,650,991 18,650,991 45,834,053 89,350,088 33,699,848 Exposure to Exposure 143,687,939 143,687,939 161,271,572 Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Annual Report Limited Integrated Wireless Zimbabwe Econet Manufacturing Agriculture Distribution Services Mining All figures in US$ All figures All figures in US$ All figures by industrial sector for all financial assets exposed amounts presented to are gross of impairmentcredit allowances. risk, based on the Bank’s internal credit rating system. The in place covering the acceptability and valuation of each typecompanies for loansof their to subsidiaries.collateral. The Bank also obtains guarantees from parent Management monitors the market value of collateral, and will request additional collateral in accordance with the underlying agreement. TheBankmanages creditthequality financialof assetsusinginternal credit ratings. Thetable belowcreditshowsthequality The amount and type of collateral required depends on an assessment of the credit risk of the counterparty. Guidelines are Analysis of maximum exposure to credit risk and collateral or other credit enhancements held DISCLOSURES IN RESPECT OF BANKING SUBSIDIARY Risk management (continued) Credit quality per industrial sector Collateral and other credit enhancements Financial assets: equivalents cash and Cash value Financial assets at fair through profit or loss to customers and advances Loans At 29 February 2016: At 29 February At 29 February 2016: At 29 February Individuals Financial assets held to maturity Other receivables Financial assets held to maturity Other receivables exposure risk credit Total Total credit risk exposure risk credit Total 2015: At 28 February Financial assets: Cash and cash equivalents value Financial assets at fair through profit or loss to customers and advances Loans

36 36.2

Notes to the Financial Statements (continued) For the year ended 29 February 2016

36 DISCLOSURES IN RESPECT OF BANKING SUBSIDIARY

36.2 Risk management (continued)

Credit quality per industrial sector (continued)

Neither past due nor impaired Grade B Grade C Past due Grade A Standard Sub- but not Individually All figures in US$ High grade grade standard impaired impaired Total At 28 February 2015: Individuals 14,952,872 888,042 725,895 815,261 2,568,412 19,950,482 Mining 89,133 2,159,276 - - 524,561 2,772,970 Manufacturing 26,122,567 52,145 - 5,711,818 754,125 32,640,655 Agriculture 1,367,404 1,280,384 - 300,412 952,145 3,900,345 Distribution 1,706,100 164,848 - - 542,311 2,413,259 Services 3,010,517 - 200,501 - 2,514,587 5,725,605 47,248,593 4,544,695 926,396 6,827,491 7,856,141 67,403,316

Commitments and guarantee To meet the financial needs of customers, the Bank enters into various irrevocable commitments giving rise to contingent liabilities. Even though these obligations may not be recognised on the statement of financial position, they do contain credit risk and are therefore part of the overall risk of the Bank.

The table below shows the Bank’s maximum credit risk exposure for commitments and guarantees.

The maximum exposure to credit risk relating to a financial guarantee is the maximum amount the Bank would have to pay if the guarantee is called upon. The maximum exposure to credit risk relating to a loan commitment is the full amount of the commitment. In both cases, the maximum risk exposure is significantly greater than the amount recognised as a liability in the statement of financial position.

All figures in US$ 2016 2015

Financial guarantees - 40,313,388 Commitments to lend 231,681 - 231,681 40,313,388

Included in Financial Guarantees at 28 February 2015 is an amount of $23.3 million extended to Econet Wireless Zimbabwe Limited, the Bank’s holding company and Econet Wireless (Private) Limited, the Bank’s fellow subsidiary. The guarantee expired in the current year.

36.2.2 Liquidity Risk and Funding Management Liquidity risk is defined as the risk that the Bank will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. Liquidity risk arises because of the possibility that the Bank might be unable to meet its payment obligations when they fall due under both normal and stress circumstances. To limit this risk, management has arranged diversified funding sources in addition to its core deposit base, and adopted a policy of managing assets with liquidity in mind and monitoring future cash flows and liquidity on a daily basis. The Bank has developed internal control processes and contingency plans for managing liquidity risk. This incorporates an assessment of expected cash flows and the availability of high grade collateral which could be used to secure additional funding if required.

The Bank maintains a portfolio of highly marketable and diverse assets that are assumed to be easily liquidated in the event of an unforeseen interruption of cash flow. The Bank places emphasis on lines of credit that it can access to meet liquidity needs. In accordance with the Bank’s policy, the liquidity position is assessed and managed under a variety of scenarios, giving due consideration to stress factors relating to both the market in general and specifically to the Bank. The most important of these is to maintain limits on the ratio of net liquid assets to customer liabilities, to reflect market conditions.

80

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 FINANCIAL REPORTING

Total 72% 50% 279,755 period during during 3,565,301 3,565,301 1,622,598 13,511,567 13,511,567 24,553,452 60,573,550 45,834,053 92,649,977 96,215,278 50,159,697 Minimum 146,374,975 146,374,975 ------Over Over 57% 105% 5 years period during during 2015 1,801,469 1,801,469 1,801,469 1,801,469 1,801,469 1,801,469 Maximum ------years 56% 1 to 5 1 to At 28 105% 180,086 180,086 180,086 180,086 4,378,242 February 46,529,603 42,151,361 42,151,361 46,349,517 46,349,517 ------62% 55% period during during to 1 year to 1,203,092 1,203,092 3 months 27,562,383 27,562,383 12,964,132 12,964,132 40,526,515 39,323,423 Minimum ------80% 105% period during during 682,623 2016 1,359,985 3 months Less than 21,507,976 21,507,976 11,948,492 11,948,492 10,588,507 10,588,507 20,825,353 (9,559,484) Maximum On 81 67% 80% At 29 279,755 demand 2,296,603 1,622,598 3,304,921 1,499,500 February 13,511,567 13,511,567 24,553,452 45,568,896 71,824,624 73,324,124 (27,755,228)

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Annual Report Limited Integrated Wireless Zimbabwe Econet Cash and cash equivalents not reflect the expected cash flows indicated bythe Bank’s deposit retention history. in US$ All figures 2016: At 29 February Financial assets: Thetable belowsummarises maturitythe undiscountedtheprofile of Bank’scashthe flowsfinancial of assetsliabilities.and Repayments which are subject to notice are treated as if notice were to be given immediately. However, the Bank expects that many customers will not request repayment on the earliest date the Bank could be required to pay and the table does Liquidity Risk and Funding Management (continued) The ratios key during the year were, as follows: Analysis of financial assets and liabilities by remaining contractual maturities DISCLOSURES IN RESPECT OF BANKING SUBSIDIARY Risk management (continued) Financial assets at fair value through value Financial assets at fair profit or loss The Bank defines liquid assets for the purposes of the liquidity ratio highly-ratedas cash debt securities availablebalances, for immediate sale andshort–term for which a liquid market exists. interbank deposits and Net liquid assets to customer liabilities ratio The Bank stresses the importance of current customers. accountsThey are monitored and using the savings advances to accountsdeposit ratio, as which compares sources loans and of a percentageadvances of core funds to customercustomers current and to savingsas accounts, finance together with term funding lending with a remaining term to to maturity in excess of one year. Loans to customers that are part of reverse repurchase arrangements, and where the Bank receives securities which are deemed be to liquid, are excluded from the advances deposits to ratio. Advances to deposits ratio Advances Loans and advances to customers and advances Loans Loans and advances relating to furniture loans relating to furniture and advances Loans Financial assets held to maturity Other receivables Total undiscounted financial assets undiscounted Total Financial liabilities: Deposits due to banks and customers Loans and borrowings Loans Total undiscounted financial liabilities undiscounted Total Net undiscounted financial assets/(liabilities) Net undiscounted

36 36.2

Notes to the Financial Statements (continued) For the year ended 29 February 2016

36 DISCLOSURES IN RESPECT OF BANKING SUBSIDIARY (continued)

36.2 Risk management (continued)

Analysis of financial assets and liabilities by remaining contractual maturities (continued)

On Less than 3 months 1 to 5 Over All figures in US$ demand 3 months to 1 year years 5 years Total At 28 February 2015:

Financial assets: Cash and cash equivalents 23,755,668 - - - - 23,755,668 Financial assets at fair value through 14,538,537 - - - - 14,538,537 profit or loss Loans and advances to customers 39,836,416 2,768,796 2,780,343 16,760,627 5,257,134 67,403,316 Loans and advances relating to furniture loans 18,752,538 - - - - 18,752,538 Financial assets held to maturity - - 15,522,683 18,177,165 - 33,699,848 Other receivables 5,032,109 - - - - 5,032,109 Total undiscounted financial assets 101,915,268 2,768,796 18,303,026 34,937,792 5,257,134 163,182,016

Financial liabilities: Deposits due to banks and customers 58,180,228 29,505,084 - - - 87,685,312 Loans and borrowings 181,500 4,600,800 2,517,000 1,541,000 - 8,840,300 Total undiscounted financial liabilities 58,361,728 34,105,884 2,517,000 1,541,000 - 96,525,612

Net undiscounted financial assets/(liabilities) 43,553,540 (31,337,088) 15,786,026 33,396,792 5,257,134 66,656,404

The table below shows the contractual expiry by maturity of the bank’s contingent liabilities and commitments. Each undrawn loan commitment is included in the time band containing the earliest date it can be drawn down. For issued financial guarantee contracts, the maximum amount of the guarantee is allocated to the earliest period in which the guarantee could be called.

On Less than 3 months 1 to 5 Over All figures in US$ demand 3 months to 1 year years 5 years Total At 29 February 2016:

Commitment to lend 231,681 - - - - 231,681 Total commitments and guarantees 231,681 - - - - -

At 28 February 2015:

Financial guarantees - - 40,313,388 - - 40,313,388 Total commitments and guarantees - - 40,313,388 - - 40,313,388

The Bank expects that not all of the commitments will be drawn before expiry of the commitments.

36.2.3 Market Risk Market risk is the risk that the fair value or future cash flows of financial instruments will fluctuate due to changes in market variables such as interest rates, foreign exchange rates and equity prices.

Interest rate risk Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or the fair values of financial instruments. The Board has established limits on the non–trading interest rate gaps for stipulated periods. The Bank’s policy is to monitor positions on a daily basis and hedging strategies are used to ensure positions are maintained within the established limits.

Interest rate sensitivity The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variables held constant, of the Bank’s statement of comprehensive income.

The sensitivity of the statement of comprehensive income is the effect of the assumed changes in interest rates on the profit or loss for a year, based on the variable and fixed rate financial assets and financial liabilities held.

82

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 FINANCIAL REPORTING - - - - Total US$ 279,755 223,340 4,647,906 4,647,906 3,565,301 3,565,301 1,622,598 4,866,821 6,222,347 3,362,879 13,511,567 13,511,567 10,896,184 10,896,184 3,914,104 24,553,452 56,258,303 45,834,053 1,304,701 92,649,977 68,891,488 2,609,402 (3,914,104) 168,692,986 168,692,986 (1,304,701) (2,609,402) ------profit or loss profit Sensitivity of bearing 279,755 223,340 4,647,906 4,647,906 1,801,469 1,801,469 4,866,821 6,222,347 3,362,880 13,511,567 13,511,567 72,477,708 72,477,708 10,896,184 10,896,184 66,779,501 66,779,501 24,553,452 68,891,488 (5,698,207) -2 -4 -6 % Non-interest +6 +4 +2 ------rates years 1 to 5 1 to At 28 February 2015 At 28 February 180,086 180,086 180,086 180,086 4,378,242 5,698,207 37,836,114 37,836,114 42,214,356 42,034,270 ------Change in interest in interest Change to 1 year to 3 months 1,203,092 1,203,092 US$ 27,562,383 27,562,383 12,964,132 12,964,132 40,526,515 39,323,423 (36,336,063) - - - 796,479 ------(796,479) 2,389,437 1,592,958 (1,592,958) (2,389,437) (continued) profit or loss profit Sensitivity of 682,623 3 months Less than 1,359,985 21,507,976 21,507,976 11,948,492 11,948,492 10,588,507 10,588,507 20,825,353 (9,559,484) (75,659,486) ------2 -4 -6 % On 83 +6 +4 +2 demand 7,224,122 7,224,122 At 29 February 2016 At 29 February 2,296,603 1,622,598 3,304,921 1,499,500 71,824,624 73,324,124 Change in Change (66,100,002) (66,100,002) interest rates interest Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Annual Report Limited Integrated Wireless Zimbabwe Econet USD USD USD USD USD Currency: USD The table below analyses the Bank’s interest rate risk exposure on assets and liabilities.assetsandexposureThe tableonrisk belowThefinancialanalyses rate Bank’s interestliabilitiesthe assetsand are categorised by the earlier of contractual repricing or maturity dates. in US$ All figures Interest rate repricing and gap analysis Interest rate sensitivity (continued) DISCLOSURES IN RESPECT OF BANKING SUBSIDIARY Risk management (continued) At 29 February 2016 At 29 February Assets: Cash and cash equivalents TOTAL POSITION TOTAL Financial assets at fair value through profit or loss value Financial assets at fair Loans and advances to customers advances and Loans Loans and advances relating to furniture loans relating to furniture advances and Loans Financial assets held to maturity Other receivables Investment properties Investment Property and equipment Intangible assets Deferred tax asset Deferred Liabilities and equity: Deposits due to banks and customers Loans and borrowings Loans Provisions Other liabilities Equity Interest rate repricing gap Cumulative gap Cumulative

36 36.2 Notes to the Financial Statements (continued) For the year ended 29 February 2016

36 DISCLOSURES IN RESPECT OF BANKING SUBSIDIARY (continued)

36.2 Risk management (continued)

Interest rate repricing and gap analysis (continued)

On Less than 3 months 1 to 5 Non-interest All figures in US$ demand 3 months to 1 year years bearing Total TOTAL POSITION

At 28 February 2015 Assets: Cash and cash equivalents - - - - 23,755,668 23,755,668 Financial assets at fair value through profit or loss - - - - 14,538,537 14,538,537 Loans and advances to customers 39,836,416 2,768,796 672,577 2,107,766 14,161,620 59,547,175 Loans and advances relating to furniture loans 3,292,051 - - - 3,292,051 Financial assets held to maturity - - 15,522,683 18,177,165 - 33,699,848 Other receivables - - - - 5,032,109 5,032,109 Investment properties - - - - 3,959,860 3,959,860 Property and equipment - - - - 3,430,267 3,430,267 Intangible assets - - - - 5,692,934 5,692,934 Deferred tax asset - - - - 11,687,314 11,687,314 43,128,467 2,768,796 16,195,260 20,284,931 82,258,309 164,635,763 Liabilities and equity: Deposits due to banks and customers 58,180,228 29,505,084 - - - 87,685,312 Loans and borrowings 181,500 4,600,800 2,517,000 1,541,000 - 8,840,300 Provisions - - - - 788,389 788,389 Other liabilities - - - - 3,815,499 3,815,499 Equity - - - - 63,506,263 63,506,263 58,361,728 34,105,884 2,517,000 1,541,000 68,110,151 164,635,763

Interest rate repricing gap (15,233,261) (31,337,088) 13,678,260 18,743,931 14,148,158 -

Cumulative gap (15,233,261) (46,570,349) (32,892,089) (14,148,158) - -

Foreign currency exchange rate risk Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. In accordance with the Bank’s policy, positions are monitored on a daily basis and hedging strategies are used to ensure positions are maintained within established limits. In view of the Bank’s minimal exposures to other currencies in the financial periods presented, the impact of currency fluctuations with the United States Dollar are not anticipated to have a significant impact on the Bank’s profit or loss and capital.

36.2.4 Operational Risk Operational risk is the risk of loss arising from systems failure, human error, fraud or external events. When controls fail to operate effectively, operational risks can cause damage to reputation, have legal or regulatory implications, or lead to financial loss. The Bank cannot expect to eliminate all operational risks, but it endeavours to manage these risks through a control framework and by monitoring and responding to potential risks. Controls include effective segregation of duties, access, authorisation and reconciliation procedures, staff education and assessment processes, such as the use of internal audit.

36.2.5 Compliance Risk Compliance risk is the current and prospective risk to earnings or capital arising from violations of, or non-conformance with, law, rules, regulations, prescribed practices, internal policies, and procedures, or ethical standards. This risk exposes the institution to fines and payment of damages. Compliance risk can lead to diminished reputation, limited business opportunities, reduced expansion potential, and an inability to enforce contracts. The Internal Audit and the Risk department ensure that the Bank fully complies with all relevant laws and regulations.

36.2.6 Reputational Risk Reputational risk is the current and prospective impact on earnings and capital arising from negative public opinion. This affects the institution’s ability to establish new relationships or services or continue servicing existing relationships. This risk may expose the institution to litigation, financial loss, or a decline in its customer base. The Bank has a Business Development department whose mandate is to manage this risk.

84

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 FINANCIAL REPORTING 4% 2% 35% 12% 30% 2015 2015 4,077 26,856 624,786 (88,389) 5,227,519 5,227,519 2,400,917 2,400,917 5,983,462 6,241,007 5,200,663 17,951,563 17,951,563 42,327,127 42,327,127 47,554,646 (1,774,997) 24,559,811 24,559,811 (2,400,917) 49,955,563 46,591,430 (11,687,314) 106,317,629 106,317,629 28 February 141,325,266 (48,042,962) - - - 4% 2% 37% 12% 31% 2016 2016 4,077 776,119 776,119 2,399,213 2,399,213 6,328,596 5,631,821 4,949,664 4,949,664 10,524,491 10,524,491 (2,399,213) 16,932,431 38,575,952 43,525,616 45,924,829 53,045,640 106,317,629 106,317,629 29 February (10,896,184) (12,070,475) 124,996,437 (42,379,882) 85 Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Annual Report Limited Integrated Wireless Zimbabwe Econet Operating leases include leases of certain buildings and sites where the Group’s base lease stationsterms vary are betweenlocated. 4 months and 8 Theyears. Various remainingoptions exist for the Group to renew the leasing arrangements on expiry. of total risk weighted assets. - Tier 3 Capital (“tertiary capital”) relates an to allocation of capital meet to market and operational risks. The Bank’s regulatory capital position was as follows: determined by the RBZ to the monetary value of the position. various assets as they appear on the Bank’s statement of financial Regulatory capital consists of: CapitalTiercapital”),1 core- (“the whichcomprises capital,share of premium,share retained earnings (including currentthe year profit or loss), the statutory reserve and other equity reserves. - Tier 2 Capital (“supplementary provisions.capitalThecore capital thecompriseshall 50%lessthanportfolioof baseandnot 1.25% provisions limitedto are capital”), which includes subordinated term debt, revaluation reserves and portfolio The objective of the Bank’s capital management is to ensure that requirements.it Incomplies implementingwith the the currentReserve capitalBank requirements,of Zimbabwethe RBZ(RBZ) requires theof totalBank capital to maintain to a total prescribedrisk weighted ratio assets. Risk weighted assets are arrived at by applying the appropriate risk factor as CAPITAL MANAGEMENT - IN RESPECT OF BANKING OPERATIONS Not later than one year years and not later than five Later than one year years Later than five All figures in US$ All figures Minimum lease payments Tier 3 ratio capital adequacy ratio Total RBZ minimum requirement Tier 3 capital (sum of market and operational risk capital)Tier 3 capital (sum of market Capital Base Total assets weighted risk Total Tier 1 ratio Tier 2 ratio Tier 1 capital Tier 2 capital Non-distributable reserve provisions Portfolio 1 and 2 capital Tier Total Retained earnings tax asset Deferred and operational risk market Capital Less: allocated for to insiders Advances Guarantees to insiders* All figures in US$ All figures Share capital Share premium Non-cancellable lease commitments Payments recognised as an expense Payments OPERATING LEASE ARRANGEMENTS Leasing arrangements

38.2 38.3 38.1 38

37 Notes to the Financial Statements (continued) For the year ended 29 February 2016

39 GOING CONCERN

The Directors have assessed the ability of the Group to continue operating as a going concern and believe that the preparation of these financial statements on a going concern basis is still appropriate.

40 BORROWING POWERS

In terms of the Company’s Articles of Association, the Directors may exercise the powers of the Company to borrow up to 200% of the aggregate of: -the issued share capital and share premium or stated capital of the Company and: -the distributable and non-distributable reserves, including unappropriated profits of the Company reduced by any adverse amount reflected in the statement of comprehensive income, excluding: - goodwill; - revaluation reserves arising prior to 28 February of each year; and - provision for taxation, deferred tax, and any balance standing to the credit of the tax equalisation account.

The current borrowings are within the limit.

41 CAPITAL COMMITMENT

All figures in US$ 2016 2015 Authorised and contracted for 18,577,352 72,378,031 Authorised and not contracted for 1,500,000 3,325,270

20,077,352 75,703,301

The capital expenditure is to be financed from internal cash generation, extended supplier credits and bank credit.

42 CONTINGENT LIABILITIES

The Group is regularly subject to an evaluation by tax authorities on its direct and indirect tax filings. The consequence of such reviews is that disagreements can arise with tax authorities over the interpretation or application of certain tax rules applicable to the Group’s business. Such disagreements may not necessarily be resolved in a manner that is favourable to the Group. Additionally, the resolution of the disputes could result in an obligation to the Group.

43 ACQUISITION OF SUBSIDIARIES

No subsidiaries were acquired in the financial year ended February 2016.

43.1 Acquisition of Steward Health (Private) Limited The Group acquired 100% of the shares of Steward Health (Private) Limited on 1 March 2014. As a result, Steward Health (Private) Limited was consolidated as a subsidiary from that date. The Group acquired Steward Health (Private) Limited because it enlarges the range of products that can be offered to its clients.

Assets acquired and liabilities assumed The fair values of the identifiable assets and liabilities of Steward Health (Private) Limited as at the date of acquisition were:

Fair value recognised on All figures in US$ acquisition Assets Property, equipment and vehicles 46,223 Inventory 1,582 Available for sale investments 2,072 Trade and other receivables 160,332 Deferred taxation 6,280 Cash and cash equivalents 120,631 337,120 Liabilities Trade and other payables (61,805) (61,805)

Total identifiable net assets at fair value 275,315 Non controlling-interest - Goodwill 224,685 Purchase consideration 500,000

The fair values of trade and other receivables at acquisition date were US$160 332. The gross contractual amounts of trade and other receivables at acquisition date were US$160 332. 86

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 FINANCIAL REPORTING

- - - 26,101 26,101 375,965 133,930 133,930 120,631 349,864 224,685 366,070 120,631 500,000 (224,685) Fair value Fair 6,090,632 6,090,632 6,090,632 acquisition recognised on recognised 87 (continued) Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Annual Report Limited Integrated Wireless Zimbabwe Econet Acquisition of Steward Health (Private) Limited (continued) As at 28 February 2015 As at 28 February of subsidiaryAcquisition Impairment of goodwill 2016 As at 29 February Difference recognised in retained earnings Difference 2014 As at 28 February of subsidiaryAcquisition Impairment of goodwill On 1 November 2014, the Group acquired an additional 15.7% interest in the voting shares of interest in the voting acquired an additional 15.7% the Group 2014, On 1 November Cash interest to 100%. Limited, increasing its ownership Solutions (Private) Payment Transaction of is a schedule Following paid to the non-controlling shareholders. was consideration of $26 101 Limited: Solutions (Private) Payment Transaction additional interest acquired in Cash consideration paid to non-controlling shareholders Limited Solutions (Private) Payment Transaction Carrying of the additional interest in value Analysis of cash flows on acquisition: Analysis of cash flows activities) Net cash acquired with the subsidiary from investing (included in cash flows of subsidiary in cash on acquisition Consideration paid for on acquisition of subsidiary Net cash inflow All figures in US$ All figures consideration Purchase Consideration paid: treasury by for shares Paid Limited Health (Private) Steward by of debt owed Take-over consideration Total Goodwill Acquisition of additional interest in Transaction Payment Solutions Solutions Payment Transaction Acquisition of additional interest in (Private) Limited of impairment. The pre-tax discount rate applied to cash flow projections is 10.6% As(2015: 15%). a result of this analysis, management did not identify an impairment of goodwill. The Group performed its annual impairment test as at 29 Februaryrelationshipbetween subsidiaryinvestmentthein 2016 booknetitsand value,among factors,other and whenreviewingindicators for 28 February 2015. The Group considers the A rise in pre-tax would discount not result (i.e. in rate +2%) an 12.6% to impairment. Impact of acquisition on results of the Group Included in the profit for the year ended 28 February 2015, is a loss of US$375 660 attributable Limited. to Steward Revenue for theHealth year includes (Private) US$710 359 relating Steward to Health (Private) Limited. Discount rates Discountratesrepresent thecurrent assessmentmarket therisksspecificof theGroup, takingto consideration into thetime valuemoneyof and individual risks theof underlying assets that have not been incorporated in the cash flow estimates. The discount rate calculation is based on the specific circumstances of the Group and is derived from its weighted average cost of capital (WACC). The WACC takes into account both debt and borrowingsequity. the Group is Theobliged to service.cost Adjustmentsof debtto the discount rateis are made to basedfactor in the specificon amountthe and interest-bearing timing of the future tax flows in order reflect to a pre-tax discount rate. Key assumptions used in value in use calculations and sensitivity to changes in assumptions The calculation of value in use is most sensitive the to following assumption: - Discount rates ACQUISITION OF SUBSIDIARIES

43.4

43.3 43.2 43 43.1 Notes to the Financial Statements (continued) For the year ended 29 February 2016

44 EVENTS AFTER THE REPORTING DATE

Zimbabwe is currently experiencing liquidity shortages as a result of a continued negative balance of payments position over several years which has depleted its nostro account balances. In the face of insufficient nostro account balances, it has become increasingly difficult for local companies to make payments outside Zimbabwe. The Group currently has foreign debt amounting to US$ 206.9 million as at 29 February 2016, as well as obligations to its foreign equipment vendors and other foreign suppliers. The Directors continue to monitor this situation and its impact on the Group and have been reviewing various strategies to ensure that the Group is able to meet its obligations as they fall due.

45 APPROVAL OF FINANCIAL STATEMENTS

The financial statements were approved by the board of Directors and authorised for issue on 23 May 2016.

46 COMPANY STATEMENT OF FINANCIAL POSITION

All figures in US$ Note 2016 2015 ASSETS

Non-current assets Property, plant and equipment 622,500 622,500 Investment in subsidiaries 47.1 127,881,312 127,881,312 Available-for-sale investments - - Investment in associate 17.1 39,331,536 29,816,203 Long term intercompany receivable 47.2 1,886,351 1,886,351 Total non-current assets 169,721,699 160,206,366

Current assets Other receivables 4,296,057 4,296,056 Cash and cash equivalents 567,449 501,669 Total currents assets 4,863,506 4,797,725

Total assets 174,585,205 165,004,091

EQUITY AND LIABILITIES

EQUITY Share capital and reserves (52,452,353) (12,654,949)

LIABILITIES

Non current liabilities Intercompany payables 47.3 226,206,817 177,242,771

Current liabilities Other payables 830,741 416,269

Total equity and liabilities 174,585,205 165,004,091

Note Amounts advanced to the Company by Econet Wireless (Private) Limited, its subsidiary, for the purposes of funding payments are accounted for as intercompany loans. This has resulted in the Company reporting a negative equity position.

Dr. J. Myers D. Mboweni R. Chimanikire CHAIRMAN OF THE BOARD CHIEF EXECUTIVE OFFICER FINANCE DIRECTOR

23 May 2016

88

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 FINANCIAL REPORTING 2015 2015 26,209 500,000 1,886,351 3,133,903 3,133,903 2,885,350 6,220,598 97,317,584 97,317,584 17,797,668 17,797,668 127,881,312 127,881,312 (16,611,898) (47,475,108) (177,242,771) (160,630,873) 2016 2016 26,209 500,000 1,886,351 3,133,903 3,133,903 2,885,350 6,220,598 97,317,584 97,317,584 17,797,668 17,797,668 127,881,312 127,881,312 (16,611,898) (96,439,154) (209,594,919) (226,206,817) 85% 100% 100% 100% 100% 100% 100% Percentage 89 Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Annual Report Limited Integrated Wireless Zimbabwe Econet Total investments in subsidiaries investments Total (Medical aid company in Zimbabwe) (Medical aid company (Funeral assurance company in Zimbabwe) assurance company (Funeral Limited Health (Private) Steward (Banking operations in Zimbabwe) (Banking Limited (Private) Econet Life (Investment company in Zimbabwe) company (Investment Limited Bank Steward (Investment company in Zimbabwe) company (Investment Limited (Private) Investments Pentamed E. W. Capital Holdings (Private) Limited Capital Holdings (Private) W. E. (Computer data service processing provider) (Cellular network operator in Zimbabwe) operator (Cellular network Limited Solutions (Private) Payment Transaction COMPANY Econet Wireless Capital Holdings Limited Econet companies and loans in group Net investments All figures in US$ All figures Limited (Private) Investments Pentamed Limited Wireless (Private) Econet Econet Wireless (Private) Limited Wireless (Private) Econet All figures in US$ All figures Inter-company receivables Inter-company payables Inter-company Cost of investments On 27th June 2014, the Company incorporated a new subsidiary, Econet Life (Private) Limited assurance.whichThe capital is injected Econet into Life involved(Private) Limited inwas $2 885 funeral350. The Company also acquired theremaining 15.7% stake in Transaction Payment Solutions (Private) LimitedCompany resultingalso acquired in Steward it Health becoming (Private) a Limited. 100% Refer owned to Limitednote and the acquisition subsidiary.43 of the minority interestfor in Transaction The Payment Solutionsthe (Private)acquisition Limited. of Steward Health (Private) Econet Renewable Energy Systems Econet Services International Associate Liquid Telecom Zimbabwe The parent company of Econet Wireless Zimbabwe Limited is Econet Global Limited which is based in Mauritius. Fellow subsidiaries Liquid Telecommunications Operations Limited Worldstream (Pty) Ltd Solarway FZE Batoka Hospitality (Private) Limited Parties related to the company Parent INVESTMENTS AND LOANS IN SUBSIDIARIES

47.4 47.3 47.3 47.2 47.2 47.1 47.1 47 47 NotesPolicy toNotes the Financialto the Consolidated Statements Financial (continued) Statements For the year ended 29 February 2016

Policy note IFRS/IAS reference Content

A IAS 1(revised) Presentation of financial statements: General information and functional currency

B IAS 1(revised) Basis of preparation

C IAS 8 Change in accounting policy, adoption of new and revised Standards

D IAS 21 Effects of changes in foreign exchange rates

E IFRS 3, 10 Business combinations and goodwill

F IAS 28 Investment in associates and joint ventures

G IAS 38 Intangible assets

H IAS 23 Borrowing costs

I IAS 16 Property, plant and equipment

J IAS 40 Investment properties

K IAS 36 Impairment of property, plant and equipment and intangible assets

L IAS 17 Leases

M IAS 2 Inventories

N IAS 18 Revenue

O Other Income

P IAS 12 Income taxes

Q IAS 19 Employee benefits and retirement benefits

R IAS 1(revised) Current versus non-current classification

S IFRS 13 Fair value measurements

T IFRIC 17 Cash dividend and non-cash distribution to equity holders of the parent

U IAS 39, IFRS 7 Financial instruments – initial recognition, subsequent measurement and disclosure

V IAS 7 Cash and short term deposits

W IAS 32 Treasury shares

X IAS 37 Provisions

Y Fiduciary assets

Z IFRS 8 Operating segments

AA IFRS 2 Share based payments

AB IAS 1 (Revised) Significant assumptions and key sources of estimation uncertainty

90

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 FINANCIAL REPORTING rights; and any additional facts and circumstances that indicate that the Company has, or does not have, the current abilitydirect to therelevant activities thetimeat that made,includingdecisionsbe patterns voting to need at previous shareholders’ meetings. Powertheover investee (i.e. existing rights that give currenttheit ability direct to relevanttheactivities of the investee); Exposure, or rights, involvement to with the and investee; variable returns from The ability its to use its affect its returns. power over the investee to The contractual arrangement with holders of the investee; the other vote Rights arising from other contractual arrangements; The Company voting rights and potential voting

Basis of consolidation between members of the Group are eliminated in full on consolidation. A change in the without a ownership loss of control, interest is accounted of for as an transaction. a equity subsidiary, If the Company derecognises loses the control related over liabilities, assets non-controlling interest a and other (including components subsidiary, goodwill), it The Company re-assesses whether or not it controls an investee if facts and circumstances indicate that are there changes to one or more of control. the three elements of Consolidation of a subsidiary begins when the Company obtains control over the subsidiarythe Company and ceases loses control when of liabilities, income the and expenses of subsidiary.a subsidiary acquired Assets, or disposed of duringconsolidated the financial year statements are Company from included gains the in control date the ceases the until control to the subsidiary. the date the Company Profit or Comprehensive loss Income (OCI) equity and holders are of the attributed each parent non-controlling of to theinterests, even if Group this component theresults in and the non- to the controlling of interests having Other necessary, a deficit adjustments balance. statements are When of made subsidiaries to policies to into line bring the with the their Group’s financial accountingAll accounting policies. intra-group assets expenses and liabilities, and equity, cash income, flows relating to transactions The consolidated financial statements comprise of financial statements the of the Company and its subsidiaries as at 29 February 2016. Control is Company achieved is when exposed, the or has rights, to from variable returns its involvement with ability to affect the those returns through its power over investeethe and has investee and if, only the Company if, has: the votingmajority the a of thanCompanyless Whenhasthe Companyconsidersall the investee, an of rightssimilar or relevantfacts andcircumstances assessingin whether it has power over an investee, including: • • • • • • •

B.4 91 Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Annual Report Limited Integrated Wireless Zimbabwe Econet Use of estimates and judgments Compliance with legal and regulatory requirements BASIS OF PREPARATION Statement of compliance Currency of Account THE COMPANY revised and in any future periods affected. Informationabout the significant areas estimations of accounting and judgement; assumptions policies in that applying have accounting the amounts most significant recognised effect on in statements are described the in Note AB. these consolidated financial judgments, estimates andthe application of accounting assumptions policies and the that amounts reported of affect assets, liabilities, Actual results may differ from these estimates. income and expenses. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions are recognised to in the period accountingin which the estimates estimates are of the Companies Act (Chapter 24:03) and the relevant statutory instrument (SI33/99 and Banking SI Act (Chapter 24:20). 62 /96) and the The preparation of the consolidated financial statements in conformity with IFRS requires management to make from the previous year and through the current year. These Group’s financial statements have been prepared accordancebelow, accountingoutinthepolicies withset and comply with the modified disclosure requirements The Group’s prepared in financial accordance Reporting with Standards statements (IFRS); International Standards International (“IAS”); Financial the International Accounting Financial have Reporting Interpretations Committee (IFRIC). With the exceptions been noted below in policyStandards and Interpretations- the accounting Adopted”, Note C1 “Newpolicies set and out below Revised have been consistently applied and presentation currency environment in which the Group of operates. the primary economic Econet Wireless Global Limited) which is in incorporated Mauritius. Except where specific reference “theto theCompany”, is notes disclosed in these financial made statements pertain the to Group. These consolidated financial statements are presented in United States Dollars (US$) being the functional was incorporated in Zimbabwe on 4 Augustits main 1998 operating and subsidiary, Econet Wireless (Private)registered its of address1994.AugustThe 23 onLimited, office and principal place of business is Econet Park, Old 2 Mutare Road, Msasa, Harare. of the The Group is main mobile businesstelecommunications and related overlay services. The ultimate holding company for the Group is Econet Global Limited (previously reported as Econet Wireless Zimbabwe Limited (“the Company”)

B.3 B.2 B.1 B.1 B

A.2

A GENERAL INFORMATION A.1 Policy Notes to the Consolidated Financial Statements (continued) For the year ended 29 February 2016

of equity while any resultant gain or loss is recognised in paragraph 12 of IFRS 8, including a brief description of profit or loss. Any investment retained is recognised at operating segments that have been aggregated and the fair value. economic characteristics (e.g., sales and gross margins) used to assess whether the segments are ‘similar’ C ADOPTION OF NEW AND REVISED • The reconciliation of segment assets to total assets is only required to be disclosed if the reconciliation is STANDARDS AND INTERPRETATIONS reported to the chief operating decision maker, similar to the required disclosure for segment liabilities C.1 Application of new and revised standards and interpretations – Adopted The Group has not applied the aggregation criteria in In the current year, the Group adopted the following new IFRS 8.12. The Group has presented the reconciliation of and revised IFRSs and annual improvements to IFRSs. segment assets to total assets in previous periods and The nature and the impact of each new standard and continues to disclose the same in Note 1 in this period’s amendment is described below: financial statements as the reconciliation is reported to the chief operating decision maker for the purpose of his Amendments to IFRSs that are mandatory effective for decision making. the year ended 31 December 2015. IAS 16 Property, Plant and Equipment and IAS 38 Amendments to IAS 19 Defined Benefit Plans: Intangible Assets Employee Contributions The amendment is applied retrospectively and clarifies IAS 19 requires an entity to consider contributions from in IAS 16 and IAS 38 that the asset may be revalued employees or third parties when accounting for defined by reference to observable data by either adjusting the benefit plans. Where the contributions are linked to gross carrying amount of the asset to market value or service, they should be attributed to periods of service by determining the market value of the carrying value as a negative benefit. These amendments clarify that, and adjusting the gross carrying amount proportionately if the amount of the contributions is independent of the so that the resulting carrying amount equals the market number of years of service, an entity is permitted to value. In addition, the accumulated depreciation or recognise such contributions as a reduction in the service amortisation is the difference between the gross and cost in the period in which the service is rendered, carrying amounts of the asset. This amendment did not instead of allocating the contributions to the periods of have any impact to the revaluation adjustments recorded service. This amendment is effective for annual periods by the Group during the current period. beginning on or after 1 July 2014. This amendment is not relevant to the Group, since none of the entities within IAS 24 Related Party Disclosures the Group has defined benefit plans with contributions The amendment is applied retrospectively and clarifies from employees or third parties. that a management entity (an entity that provides key management personnel services) is a related party Annual improvements 2010 – 2012 cycle subject to the related party disclosures. In addition, an entity that uses a management entity is required IFRS 2 Share-based Payment to disclose the expenses incurred for management This improvement is applied prospectively and clarifies services. This amendment is not relevant for the Group various issues relating to the definitions of performance as it does not receive any management services from and service conditions which are vesting conditions. other entities. The clarifications are consistent with how the Group has identified any performance and service conditions IFRS 13 Fair Value Measurement – Portfolio which are vesting conditions in previous periods. Thus, exception these amendments did not impact the Group’s financial The amendment is applied prospectively and clarifies statements or accounting policies. that the portfolio exception in IFRS 13 can be applied not only to financial assets and financial liabilities, but also to IFRS 3 Business Combinations other contracts within the scope of IAS 39. The Group The amendment is applied prospectively and clarifies that does not have financial assets, financial liabilities and all contingent consideration arrangements classified as other contracts that meet this criteria. liabilities (or assets) arising from a business combination should be subsequently measured at fair value through Annual improvements to IFRSs 2011 – 2013 Cycle. profit or loss whether or not they fall within the scope IFRS 3 Business Combinations of IAS 39. This is consistent with the Group’s current The amendment is applied prospectively and clarifies that accounting policy and, thus, this amendment did not all contingent consideration arrangements classified as impact the Group’s accounting policy. liabilities (or assets) arising from a business combination IFRS 8 Operating Segments should be subsequently measured at fair value through The amendments are applied retrospectively and clarify profit or loss whether or not they fall within the scope that: of IAS 39. This is consistent with the Group’s current • An entity must disclose the judgements made by accounting policy and, thus, this amendment did not management in applying the aggregation criteria in impact the Group’s accounting policy.

92

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 FINANCIAL REPORTING revenue-based method cannot be property, used plant to and depreciate equipment and in may only very be used limited circumstancesassets. The to amortise amendments are for intangible annual periods beginning on effectiveor after 1 January 2016, prospectively with early adoption permitted. These amendments are not expected to have any that impact the Group has not used a revenue-based to method to the Group given depreciate its non-current assets. Amendments to Accounting for Acquisitions IFRS of Interests 11 The amendments require to IFRS that 11 a joint operator Joint Arrangements: accounting for the acquisition of operation, an interest in in which a the joint activity constitutes a of business, themust apply joint the relevant operationIFRS 3 principles for business combinations amendments also accounting. clarify that The a previously held interest in a joint operation is not re-measured on the acquisition anadditionalof interest thein same joint operation while hasscopeexclusion addition, a retained.In is control joint been added to IFRS to 11 specify that the amendments do not apply when including the reporting the entity, are under common control parties sharing of the same joint ultimate controlling party. control, The amendments apply to both the initial interest acquisition in a of joint operation the and the acquisition anyof additional interests in the same joint operation and are prospectively effective for annual periods beginning adoptionpermitted.earlywithJanuary 2016, 1 after or on Theseimpactamendmentsany expectedhave not areto on the Group. Amendments to IAS of 16 and IAS Acceptable 38: Amortisation Clarification Methods The amendments clarify of the principle in IAS 16 and IAS Depreciation38 that revenue reflects a pattern of economic benefits and that are generated from operating a business (of which the asset is part) rather than the economic benefits that are consumed through use of the asset. As a result, a gains and losses on assets the that are sale not an of outputactivities some of (e.g., sales non-financial the of entity’s property, ordinary plant or and intangibles). equipment Extensive disclosures will including be required, disaggregation of total about revenue; information performance obligations; liabilityandasset account balances between periods and changes in judgementskey and estimates. contract The new revenue standard will revenue recognition supersede requirements all under IFRS. current Either a full retrospective application or a modified retrospective application is required for annual periods or beginning after on 1 January 2018, when the IASBamendments to finalises defer their the effective date of IFRS one15 by year. Early adoption is permitted. The Group adopt to plansthe newstandard on the required effective date using the full retrospective method. Group Duringperformed a 2015, preliminary assessment the of IFRS 15, which is subject changesto arising from a more detailed ongoing analysis. Furthermore, the Group is considering theclarifications issued bythe IASB inan exposure draft in July and 2015 will monitor any further developments.

93 Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Annual Report Limited Integrated Wireless Zimbabwe Econet New and revised IFRSs that are not mandatory effective (but allow for early adoption) for the year ended December 31 2015. IFRS 15 establishes a five-step model that will apply to revenue earned from a contract with a customer limited (with exceptions), regardless of the typetransaction or the industry. of The standard’s requirements revenue will also apply to the recognition and measurement of IFRS Revenue 15 from Contracts with Customers IFRS 15 was issued in May 2014 and establishes a five- modelstepaccount arisingto revenue for contractsfrom with customers. Under IFRS 15, revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services a customer. to flow characteristics. Apart from classification the and measurement ‘own is of unchanged financial credit from liabilities existing applicable requirements. risk’ for annual IFRS periods 9 requirements,Januaryearly beginningadoptionpermitted.but2018, is Group The is on or after 1 is still assessing the impact of IFRS 9. The expected credit loss expressed model following addresses the concerns recorded losses financial too late under IAS 39. crisis that IFRS 9 entities stipulates that financial assets are measured amortised at cost, fair value through profit or loss,value or fair through other on both the comprehensive entity’s business model income, for financialfinancialassetstheand contractualasset’s managingcash based the Instruments bringing together measurement, the classification impairment phases and of the IASB’s project to replace IAS and 39 Financial Instruments: hedge Recognition accounting and previous Measurement versions and of measurement IFRSrequirements all address specific application 9. The issues classification arising and in IFRS preparers, 9 mainly (2009) from the that financial were services raised industry. by intends to adopt these standards, they become effective. if applicable, when IFRS 9 Financial Instrumentsmeasurement – classification On 24 July and 2014, the International Accounting Standards Board (IASB) issued the final version of IFRS 9-Financial The standards and interpretations that are issued, but not issued,butstandardsinterpretationsThe are and that yet effective, up to the date of issuance of the Group’s financial statements are disclosed below. The Group differentiates between investment property and owner occupied property. IFRS 3 is used transaction to determine is if the the purchase of an combination. asset The or Group a will business consider thewhen amendment it enters into business combination where transactions judgement needs to whethertransactionbusinessanthe purchasea or a of is be applied to determineasset. IAS 40 interrelationship Investment of classifying property investment IFRS property or owner occupied 3 - property - Amendment to IAS and 40 Clarifying IAS The the 40 description when of ancillary services in IAS 40

C.2

Policy Notes to the Consolidated Financial Statements (continued) For the year ended 29 February 2016

Amendments to IAS 27: Equity Method in Separate amendment clarifies that changing from one of these Financial Statements disposal methods to the other would not be considered The amendments will allow entities to use the equity a new plan of disposal, rather it is a continuation of method to account for investments in subsidiaries, the original plan. There is, therefore, no interruption joint ventures and associates in their separate financial of the application of the requirements in IFRS 5. This statements. Entities already applying IFRS and electing amendment must be applied prospectively. to change to the equity method in its separate financial statements will have to apply that change retrospectively. IFRS 7 Financial Instruments: Disclosures For first-time adopters of IFRS electing to use the equity (i) Servicing contracts method in its separate financial statements, they will be The amendment clarifies that a servicing contract that required to apply this method from the date of transition includes a fee can constitute continuing involvement to IFRS. The amendments are effective for annual periods in a financial asset. An entity must assess the nature beginning on or after 1 January 2016, with early adoption of the fee and the arrangement against the guidance permitted. These amendments will not have any impact for continuing involvement in IFRS 7 in order to assess on the Group’s consolidated financial statements. whether the disclosures are required. The assessment of which servicing contracts constitute continuing Amendments to IFRS 10 and IAS 28: Sale or involvement must be done retrospectively. However, the Contribution of Assets between an Investor and its required disclosures would not need to be provided for Associate or Joint Venture any period beginning before the annual period in which The amendments address the conflict between IFRS the entity first applies the amendments. 10 and IAS 28 in dealing with the loss of control of a subsidiary that is sold or contributed to an associate or (ii) Applicability of the amendments to IFRS 7 to condensed joint venture. The amendments clarify that the gain or interim financial statements loss resulting from the sale or contribution of assets that The amendment clarifies that the offsetting disclosure constitute a business, as defined in IFRS 3, between an requirements do not apply to condensed interim investor and its associate or joint venture, is recognised financial statements, unless such disclosures provide a in full. Any gain or loss resulting from the sale or significant update to the information reported in the most contribution of assets that do not constitute a business, recent annual report. This amendment must be applied however, is recognised only to the extent of unrelated retrospectively. investors’ interests in the associate or joint venture. These amendments must be applied prospectively and IAS 19 Employee Benefits are effective for annual periods beginning on or after 1 The amendment clarifies that market depth of high January 2016, with early adoption permitted. These quality corporate bonds is assessed based on the amendments are not expected to have any impact on the currency in which the obligation is denominated, rather Group. than the country where the obligation is located. When there is no deep market for high quality corporate bonds Amendments to IFRS 10, IFRS 12 and IAS 28 in that currency, government bond rates must be used. Investment Entities: Applying the Consolidation This amendment must be applied prospectively. Exception The amendments address issues that have arisen IAS 34 Interim Financial Reporting in applying the investment entities exception under The amendment clarifies that the required interim IFRS 10. The amendments to IFRS 10 clarify that the disclosures must either be in the interim financial exemption from presenting consolidated financial statements or incorporated by cross-reference between statements applies to a parent entity that is a subsidiary the interim financial statements and wherever they of an investment entity, when the investment entity are included within the interim financial report (e.g. measures all of its subsidiaries at fair value. in the management commentary or risk report). The other information within the interim financial report Furthermore, the amendments to IFRS 10 clarify that must be available to users on the same terms as the only a subsidiary of an investment entity that is not interim financial statements and at the same time. This an investment entity itself and that provides support amendment must be applied retrospectively. services to the investment entity is consolidated. All other subsidiaries of an investment entity are measured These amendments are not expected to have any impact at fair value. The amendments to IAS 28 allow the on the Group. investor, when applying the equity method, to retain the fair value measurement applied by the investment entity Amendments to IAS 1 Disclosure Initiative associate or joint venture to its interests in subsidiaries. The amendments to IAS 1 Presentation of Financial Statements clarify, rather than significantly change, Annual Improvements 2012-2014 Cycle existing IAS 1 requirements. The amendments clarify: These improvements are effective for annual periods • The materiality requirements in IAS 1 beginning on or after 1 January 2016. They include: • That specific line items in the statement(s) of profit or loss and OCI and the statement of financial position IFRS 5 Non-current Assets Held for Sale and may be disaggregated Discontinued Operations • That entities have flexibility as to the order in which Assets (or disposal groups) are generally disposed they present the notes to financial statements of either through sale or distribution to owners. The • That the share of OCI of associates and joint ventures

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Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 FINANCIAL REPORTING unitand part theof operation within that unit isdisposed of, the goodwill associated with the disposed operation is included in the when determining the gain or loss carrying on disposal. Goodwill amount of disposed in the these circumstances is measured operation based on the relative values of the portion disposed the of cash-generating operation unit retained. and the settlement is accounted for within equity. Goodwill is initially measured as and determined recognised on the at acquisition, cost being the the aggregate excess of of the consideration transferred and amount the recognised for non-controllingany previous interests, interest and held,assets acquired and liabilities over assumed. If the the fair value net of the net assets acquired identifiable is in excess of the aggregate consideration transferred, whether it the has correctlyacquired Group and identified all of the all liabilities re-assesses assumed of the and procedures reviews the used assets to measurerecognised at the the acquisition amountsdate. If the to reassessment be still results in an excess of the fair value acquired of net over assets the aggregate consideration transferred,then the gain is recognised in profit or loss. Afterinitialrecognition, lesscostgoodwill measured at is any accumulated impairment losses. Forof impairment the testing, purpose goodwill acquired in combination a business is, from to the each of acquisition the Group’s date, cash-generatingexpected to allocated units benefit from that the are combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. This goodwill is impairmenttestedfor leastannualatan on basis andany subsequently resulting impairment is recognised immediately statement comprehensive in income. the Where goodwill has been allocated to a cash generating When the Group acquires a business, financial it assets assesses and the liabilities assumed classification for appropriate and the designation contractual terms, in pertinent economic conditions accordance circumstances as and includes at withthe separation of embedded the derivatives in host acquisition date. contracts by the acquiree. This If the business combination is achieved in previously stages, any held equity interest acquisitionresultinglossis gainorany valueand fair date is re-measured at recognised in profit or loss. its Any contingent consideration to be transferredacquirer will be recognised atfair value atthe acquisition by the date. Contingent consideration classified as an asset or financialliabilitya scopeinstrumentwithintheis andthat of IAS 39 Financial Instruments: Recognition and Measurement, is measured at fair value with changes in changea as or loss or profitrecognised valuein either fair to OCI. If the contingent consideration is not within the scope of IAS 39, the it appropriate is IFRS. measured Contingent in consideration accordanceclassified that as equity is with is not re-measured and subsequent

95 Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Annual Report Limited Integrated Wireless Zimbabwe Econet accounted for using the presented equity in aggregate method as must a be not will be classifiedor willthat betweenitems those single line item, and subsequently reclassified profit to or loss BUSINESS COMBINATIONS AND GOODWILL SUMMARY OF SIGNIFICANT POLICIES ACCOUNTING FOREIGN CURRENCY TRANSACTIONS BALANCES AND acquiree. For each business elects whether to combination,measure the non-controlling interests the Group in the acquiree at fair value or at the proportionate share of the acquiree’s identifiable related costs net are expensed assets. as incurred Acquisition-and included administrativein expenses. Business combinations the acquisition are method. is accounted The measured cost as for of transferred the an aggregate measured using acquisition of at and the the acquisition amount consideration of any non-controlling date interests fair in the value The gain or loss arising on re-translationarisingonloss or non-monetary gain The of items is treated in line with the recognition of orthe loss on gainchange in fair value of the item i.e. translation differences on items whose fair recognised value in gain other comprehensive or income loss or profit is or loss is also recognised in other comprehensive income or profit or loss. Non-monetary items that historical are measured cost in in terms using the of a exchange rates foreign as at the transactions. currencyNon-monetary dates valuefair measured atitems of the are initial translated in a foreign currency are translated using the exchange rates at the date when the fair value is determined. recorded by the Group’s functionalcurrency spot rates theat date the transaction entities at their first respective qualifies for translated are currenciesforeign denominatedliabilitiesin recognition. Monetary at the assetsfunctional currency spot rates of and exchange at the reporting date. Differences translation arisingof monetary items are recognised on in profit or settlement loss. or presented in United States dollars, parent Company’s which functional is currency. also For the each the Group entitydetermines the functional currency and items included in the financial statements of measured each using that functional currency. entity are Transactions in currencies otherfunctional than currency Group entity’s (foreign currencies) are initially The Group’s consolidated financial statements are Furthermore, the amendments clarify the requirements thatapply when additional subtotals presentedare thein statement of financial position and the statement(s) profit or of loss and OCI. These amendments are effective for annual periods beginning on or after 1 January 2016, with early adoption permitted. These amendments are not expected have to any impact on the Group.

E

D

Policy Notes to the Consolidated Financial Statements (continued) For the year ended 29 February 2016

F INVESTMENTS IN ASSOCIATES intangible assets are carried at cost less accumulated An associate is an entity over which the Group has amortisation and accumulated impairment losses. significant influence. Significant influence is the power to participate in the financial and operating policy decisions Internally generated intangible assets, excluding of the investee, but is not control or joint control over capitalised development costs, are not capitalised and those policies. the related expenditure is reflected in profit or loss in the period in which the expenditure is incurred. The considerations made in determining significant influence are similar to those necessary to determine The useful lives of intangible assets are assessed as control over subsidiaries. either finite or indefinite.

The Group’s investment in its associate are accounted for Intangible assets with finite lives are amortised over using the equity method. the useful economic life and assessed for impairment whenever there is an indication that the intangible Under the equity method, the investment in an associate asset may be impaired. The amortisation period and is initially recognised at cost. The carrying amount of the amortisation method for an intangible asset with a the investment is adjusted to recognise changes in the finite useful life are reviewed at least at the end of each Group’s share of net assets of the associate since the reporting period. Changes in the expected useful life or acquisition date. Goodwill relating to the associate is the expected pattern of consumption of future economic included in the carrying amount of the investment and is benefits embodied in the asset are considered to modify not tested for impairment individually. the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The The statement of comprehensive income reflects amortisation expense on intangible assets with finite the Group’s share of the results of operations of the lives is recognised in the statement of comprehensive associate. Any change in OCI of those investees is income in the expense category that is consistent with presented as part of the Group’s OCI. In addition, when the function of the intangible assets. there has been a change recognised directly in the equity of the associate, the Group recognises its share of any Intangible assets with indefinite useful lives are not changes, when applicable, in the statement of changes amortised, but are tested for impairment annually, in equity. Unrealised gains and losses resulting from either individually or at the cash-generating unit level. transactions between the Group and the associate are The assessment of indefinite life is reviewed annually eliminated to the extent of the interest in the associate. to determine whether the indefinite life continues to be supportable. If not, the change in useful life from The aggregate of the Group’s share of profit or loss of indefinite to finite is made on a prospective basis. an associate is shown on the face of the statement of comprehensive income and represents profit or loss after Derecognition tax and non-controlling interests in the subsidiaries of the An intangible asset is derecognised: associate. (a) on disposal; or (b) when no future economic benefits are expected from The financial statements of the associate are prepared its use or disposal. for the same reporting period as the Group. Gains or losses arising from derecognition of an intangible After application of the equity method, the Group asset are measured as the difference between the net determines whether it is necessary to recognise an disposal proceeds and the carrying amount of the asset impairment loss on its investment in its associate. At each and are recognised in the statement of comprehensive reporting date, the Group determines whether there is income when the asset is derecognised. objective evidence that the investment in the associate is impaired. If there is such evidence, the Group calculates G.1 Research and development costs the amount of impairment as the difference between Research costs are expensed as incurred. Development the recoverable amount of the associate and its carrying expenditures on an individual project are recognised as value, and then recognises the loss in the statement of an intangible asset when the Group can demonstrate: comprehensive income. • The technical feasibility of completing the intangible asset so that the asset will be available for use or sale; Upon loss of significant influence over the associate, the • The intention to complete and its ability and intention to Group measures and recognises any retained investment use or sell the asset; at its fair value. Any difference between the carrying • How the asset will generate probable future economic amount of the associate upon loss of significant influence benefits; and the fair value of the retained investment and proceeds • The availability of resources to complete the asset; from disposal is recognised in profit or loss. • The ability to measure reliably the expenditure attributable to the intangible asset during development; and G INTANGIBLE ASSETS • Adequate technical, financial and other resources to complete the development and to use or sell the Intangible assets acquired separately are measured on intangible asset. initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value Subsequent to initial recognition of the development at the date of acquisition. Following initial recognition, 96

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 FINANCIAL REPORTING Buildings - 40 years Network equipment 25 - 3 to years Beverage plant and equipment - 25 years Office equipment years 10 to - 4 Motor vehicles 5 years - 4 to

• • • • • residual values over their useful lives as follows:- The residual values, depreciation useful of lives property, reviewed and plant at methods each and prospectively, if appropriate. of financial equipment year are end and adjusted Write downs of containers to expensed net realizable over value are four years.losses are expensed Containerin the period in breakages which they occur. Any and gains in net realisable value are recognisedperiod in which they occur. in the The present value decommissioning of an asset after its use of is included in the thecost theof respective asset if the recognition criteria expected cost for a provision are met. for the subsequentlymeasuredequipmentis Property,and plant at cost less subsequent depreciation and accumulatedimpairment charges. (See Note K on Impairment of non- financial assets.) Depreciation is recognised so as to write off the cost or valuation of assets (other than freehold land) less residual values their over their useful lives, using the straight- line method. The estimated useful lives, residual values and depreciation method are reviewedeach reporting at period, the with end the of effect in of any estimate changes accounted Depreciation is charged profit to or loss. for on a prospective basis. Depreciation is not provided on freehold land and capital projects under development. Other assets are depreciated deemed appropriate to reduce on book values to estimated such bases as are accordingly. Likewise, when performed, its cost is recognised in the carrying a amount major of the inspection plant and is recognition equipment criteria are satisfied. as Software integral a to an replacement item if of hardware the equipment is classifiedplant and equipment. as property, All other repair and maintenance costs are recognised in profit or loss as incurred. Assets in the course of construction for for production other or purposes not yet cost less any recognised determined impairment loss. Costs include are carried at professional fees and, for qualifying assets, costs. borrowingDepreciation of these assets, on the same basis as other property assets, commences when the assets are ready for intended use. Containers form part returnable of bottles fixed and assets crates purchased which and at are current comprise sold deposit and prices net and re-realisable value. are Net realisable stated value represents at the current deposit price that is payable to customers when containers are repurchased from them.

97 Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Annual Report Limited Integrated Wireless Zimbabwe Econet PROPERTY, PLANT AND EQUIPMENT BORROWING COSTS Licence and Software thecostreplacing of part theplantof andequipment and borrowing costs for long-term construction the recognition projects criteria if are met. When significant partsof plant and equipment are required to intervals, be the Group replaced recognises at such parts as individual assets with specific useful lives and depreciates them All other borrowing costs are expensed in the period in which they are incurred. Property, plant and equipment and are land stated and at buildings includes cost, cost Such less any. if losses, accumulatedimpairment accumulated depreciation and assets are substantially ready for their intended use sale. or Investmentincome earned theontemporary investment of specific borrowings qualifying pending assets is deducted their from the borrowing expenditure costs eligible on for capitalisation. Borrowing costs consist of interest and other costs thatfunds. of borrowing the withconnection in incursentity an Borrowing costs directly attributable to the acquisition, qualifyingconstructionproductionare whichassets,of or assetsthat necessarily takessubstantial a period timeof to get ready for its intended use or sale are capitalisedas part of the cost of the assets, until such time as the - software held by Transaction Payment Solutions (Private) Limited is amortised 4 years; over 2 to - software held by Econet Wireless (Private) Limitedis amortised over 5 years; and - software held by Steward Bank Limited is amortised over 4 years. Steward Bank Limited. Software integral to an item of hardware equipment classified as property, is plant and equipment The software and licences are amortised as follows: - licence held by Econet Wireless (Private) Limited with the option of renewal at the end of this period. As a result, the licence is assessed as having a finite useful life. Software comprises Payment software Solutions (Private) Limited, held software Econet Wireless held (Private) by by Limited, and software held by Transaction future benefit. Amortisation is recorded in cost of sales. Duringperiodthe development,of testedassetforthe is impairment annually. TheGroup made upfront payments for the renewal itsof cellular operating licence. The licence was granted for a period of 20 years by the relevant government agency expenditure as an asset, the less asset is carried accumulated at impairment cost losses. amortisation Amortisation available of is assetdevelopmentwhencompletethe and is the and asset begins for accumulated use. It is amortised over the period of expected

I

H

amortised over 20 years;

G.2 Policy Notes to the Consolidated Financial Statements (continued) For the year ended 29 February 2016

Any item of property, plant and equipment and any In assessing value in use, the estimated future cash significant part initially recognised is derecognised flows are discounted to their present value using upon disposal or when no future economic benefits a pre-tax discount rate that reflects current market are expected from its use or disposal. Any gain or loss assessments of the time value of money and the risks arising on derecognition of the asset, calculated as the specific to the asset. In determining fair value less costs difference between the sales proceeds and the carrying of disposal, recent market transactions are taken into amount of the asset is included in profit or loss when the account. If no such transactions can be identified, an asset is derecognised. appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share J INVESTMENT PROPERTIES prices for publicly traded companies or other available Investment properties are properties held to earn rentals fair value indicators. and/or for capital appreciation (including property under construction for such purposes). Investment properties The Group bases its impairment calculation on detailed are measured initially at cost, including transaction costs. budgets and forecast calculations, which are prepared Subsequent to initial recognition, investment properties separately for each of the Group’s CGUs to which the are stated at fair value, which reflects market conditions individual assets are allocated. These budgets and at the reporting date. Gains or losses arising from forecast calculations generally cover a period of five changes in the fair values of investment properties are years. For longer periods, a long-term growth rate is included in profit or loss in the period in which they arise, calculated and applied to project future cash flows after including the corresponding tax effect. the fifth year.

Fair values are determined based on an annual evaluation Impairment losses of continuing operations, including performed by an accredited external independent valuer. impairment on inventories, are recognised in the statement of comprehensive income in expense Investment properties are derecognised either when categories consistent with the function of the impaired they have been disposed or when they are permanently asset. withdrawn from use and no future economic benefit is expected from their disposal. The difference between For assets excluding goodwill, an assessment is made the net disposal proceeds and the carrying amount of at each reporting date to determine whether there is an the asset is recognised in profit or loss in the period of indication that previously recognised impairment losses derecognition. no longer exist or have decreased. If such indication exists, the Group estimates the asset’s or CGU’s Transfers are made to (or from) investment property recoverable amount. A previously recognised impairment only when there is a change in use. For a transfer from loss is reversed only if there has been a change in the investment property to owner-occupied property, the assumptions used to determine the asset’s recoverable deemed cost for subsequent accounting is the fair value amount since the last impairment loss was recognised. at the date of change in use. If owner-occupied property The reversal is limited so that the carrying amount of becomes an investment property, the Group accounts for the asset does not exceed its recoverable amount, such property in accordance with the policy stated under nor exceed the carrying amount that would have been property, plant and equipment up to the date of change determined, net of depreciation, had no impairment in use. loss been recognised for the asset in prior years. Such reversal is recognised in the statement of comprehensive income. K IMPAIRMENT OF NON-FINANCIAL ASSETS Further disclosures relating to impairment of non- Goodwill is tested for impairment annually at the financial assets are also provided in the following notes: reporting date and when circumstances indicate that the • Disclosures for significant assumptions Note AB carrying value may be impaired. • Property, plant and equipment Note 11 • Goodwill Note 43 Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGUs) The Group assesses, at each reporting date, whether to which the goodwill relates. When the recoverable there is an indication that an asset may be impaired. If amount of the CGU is less than its carrying amount, any indication exists, or when annual impairment testing an impairment loss is recognised in the statement of for an asset is required, the Group estimates the asset’s comprehensive income. Impairment losses relating to recoverable amount. An asset’s recoverable amount is goodwill cannot be reversed in future periods. the higher of an asset’s or cash-generating unit’s (CGU) fair value less costs of disposal and its value in use. The Intangible assets with indefinite useful lives are tested recoverable amount is determined for an individual asset, for impairment annually at the reporting date at the CGU unless the asset does not generate cash inflows that are level, as appropriate, and when circumstances indicate largely independent of those from other assets or groups that the carrying value may be impaired. of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

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Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 FINANCIAL REPORTING REVENUE RECOGNITION INVENTORIES excluding taxes or duty. The Group has concluded that it is the principal in all of its revenue arrangements since it is the primary obligor in all the revenue has pricing arrangements, latitude and is also exposed to inventory and credit risks. The specific recognition criteria described below also be met before revenue is recognised. must selling or distribution, where applicable. Merchandise, raw materials are valued and at consumable cost on a stores Manufacturedfinished weightedproducts and products inprocess average cost basis. are valued at raw material cost, plus labour and a portion manufacturing of overhead expenses,where appropriate. Inventories are de-recognised when they are sold, the and carrying amount is recognised as an expense in the period in which the related revenue is recognised. Impairment Write downs to net realisable value and inventory losses Obsoleteperiodexpensedtheoccur.which are they inin and slow moving inventories are identified and writtendown their to estimated economic or realisable value. The amount of inventories, any arising reversal from an of increase value, is anyaccounted in for as net a write-downreduction realisable in the amount inventories of of recognised as an expense in which the reversal the occurs. period in Revenue is recognised to the extent that it is theGroupand economicthe thethat benefitsto probableflowwill the when of regardlessmeasured,reliably be can revenue payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and Inventories are assets (a) held for course sale in of the ordinary business; (b) for in such sale; the or (c) process to be of categoriesservices.main consumed The of rendering the orprocess in production the production of inventory recognised in the financial statements (a) are Merchandise comprising accessories and simcards calling and (b) Spares, stationery and cards, handsets,other inventory. Measurement Inventories are measured at the realisable lower value. of cost or net Cost comprises inventories their to all present location and condition. costs necessary to Net bring realisable the value represents price less the all estimated costs estimated incurred in the sellingmarketing, the leased asset and recognised over the lease term on the same basis as rental income. Contingent recognised rents are as revenue in the period in earned. which they are

N M 99 Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Annual Report Limited Integrated Wireless Zimbabwe Econet LEASES expense in the statement of comprehensivestatementtheof expense in income a on straight-line basis over the lease term. Group as a lessor Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated over the estimated useful life of the asset and the lease shorter term. of the operatingan recognisedas are payments Operatinglease of the lease liability so as to achieve a constant interest on ratethe remaining balanceof of the liability. Finance chargesrecognisedare financein costs theinstatement of comprehensive income attributable to a qualifying unless asset in which case they they are capitalised are in accordance directly with borrowing costs. the Group’s policy on benefits from the leased asset are consumed. Group as a lessee Assets held under finance leases are capitalised at commencementthe of the lease at the inception value date of the fair leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction period in which they are incurred. In the event that lease incentives are received to enter into operating leases, such incentivesas are a recognised liability. The straight-a expenseonrentalreduction recognised of a as aggregate benefit more is basissystematic of another where except basis, line incentives is representative of the time pattern in which economic Operatinglease payments recognisedare expenseanas where exceptstraight-line term,lease thea overonbasis another systematic basis is more representative of the timepattern whichin economic benefits leasedthefrom asset are consumed. Contingent rentals operating arising leases under are recognised as an expense in the A lease is classified at the inception lease date or an operating lease. as a finance Leases are classified as finance terms of leasesthe lease transfer substantially whenever all the risks the and rewards of ownership to the lessee. All other leases are classified as operating leases. The Group does not have any finance leases. The determination (or of contains) whether a lease the an is arrangement arrangement based at on the arrangement is theis, inceptionor contains, substance a of lease if of the fulfilment arrangementof is dependentthe lease.on the use of a specific asset The assetsarrangementtheorand the use right to conveysa explicitlyspecifiednot is right that if even assets,or asset in an arrangement. A lease is an agreement in to the which lessee, in the return for payment, lessor the right conveys to use an asset for an agreed period of time.

L Policy Notes to the Consolidated Financial Statements (continued) For the year ended 29 February 2016

Telecommunications the total transaction price less the sum of the observable N.1 Contract products stand-alone selling prices of other goods or services Connection fees promised in the contract (the residual value). Revenue is recognised on the date of activation. N.7 Other revenue Access charges N.7.1 Sale of goods Revenue from access charges is recognised as the Revenue from the sale of goods is recognised when the customers are provided access to the network based on significant risks and rewards of ownership of the goods the agreed fixed charges. have passed to the buyer, usually on delivery of the goods. Revenue from the sale of goods is measured at Airtime the fair value of the consideration received or receivable, Revenue is recognised on a usage basis. net of returns and allowances, trade discounts and volume rebates. N.2 Pre-paid products Starter packs The Group does not provide any extended warranties or Revenue is recognised on the date of purchase when all maintenance contracts to its customers. risks and rewards associated with the starter-packs are transferred to the purchaser. N.7.2 Interest income and expense For all financial instruments measured at amortised cost, Airtime interest-bearing financial assets classified as available- Revenue is recognised when a customer utilises the for-sale, and financial instruments designated at fair airtime, at which point the risks and rewards have been value through profit or loss, interest income or expense transferred. Upon purchase of an airtime voucher the is recorded using the effective interest (EIR) method. customer receives the right to make outgoing voice calls, EIR is the rate that exactly discounts estimated future use the short message service, download internet data cash payments or receipts through the expected life and other overlay services to the value of the voucher. of the financial instrument or a shorter period, where Revenue is deferred until such a time as the customer appropriate, to the net carrying amount of the financial uses the airtime. asset or financial liability. The calculation takes into account all contractual terms of the financial instrument N.3 Internet services (for example, prepayment options) and includes any fees Subscriptions or incremental costs that are directly attributable to the Subscriptions revenue is recognised on a straight-line instrument and are an integral part of the EIR, but not basis over the period of the subscription. future credit losses. Data Services The carrying amount of the financial asset or financial Revenue is recognised on the basis of usage by the liability is adjusted if the Bank revises its estimates of subscriber in accordance with the substance of the payments or receipts. The adjusted carrying amount agreement. is calculated based on the original EIR and the change in carrying amount is recorded as ’Interest income’ for N.4 Automated transaction services financial assets and ’Interest expense’ for financial Software and hardware sales liabilities. However, for a reclassified financial asset for Revenue is recognised when goods are delivered and which the Bank subsequently increases its estimates of ownership has passed. future cash receipts as a result of increased recoverability Service revenues of those cash receipts, the effect of that increase is Revenue is recognised on the accrual basis in accordance recognised as an adjustment to the EIR from the date of with the substance of the agreement. the change in estimate.

N.5 Interconnect services Once the recorded value of a financial asset or a group Interconnect services revenue is recognised when the of similar financial assets has been written down due service is rendered. to an impairment loss, interest income continues to be recognised using the rate of interest used to discount N.6 Bundled products the future cash flows for the purpose of measuring the Post-paid and prepaid products with multiple deliverables impairment loss. are defined as multiple element arrangements. N7.3 Banking fee and commission income Post-paid products typically include the sale of a handset, The bank earns fee and commission income from a activation fee and a service contract; and prepaid products diverse range of services it provides to its customers. Fee include a subscriber identification module (SIM) card and income can be divided into the following two categories: airtime. • Fee income earned from services that are provided over a certain period of time; and These arrangements are divided into separate units • Fees earned for the provision of services over a period of accounting, and revenue is recognised through of time are accrued over that period. application of the residual value method. In applying the These fees include commission income and asset residual value method, an estimate of the stand-alone management, custody and other management and selling price of a good or service is made by reference to advisory fees.

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Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 FINANCIAL REPORTING associated with associates and interests in investments joint ventures, tax assets are deferredrecognised only to the extent that it is in probable that the temporary subsidiaries,differences will reverse in the foreseeable future and taxable temporaryavailabletheagainstwhichdifferences can profit will be be utilised. When the deferred tax liability arises from the initial recognition of goodwill or an transaction asset that or is liability not a in business a combination at and, the time of the accounting transaction, profit nor taxable profit or loss and affects neither the In respect associated of with associates and taxable interests in joint ventures, when investments the temporarytiming of the reversal in of differences the temporarytheprobable temporary thatis it controlledand be can differences subsidiaries, differences will not reverse in the foreseeable future When the deductibletemporaryinitial deferreddifferencethe fromarises tax recognition of an asset or liability asset in a transaction that relating is not a business combination and, to at the time of the the transaction, affects neither the accounting profit nor taxable profit or loss and In respect of deductible temporary differences

TAXATION Current income tax Deferred tax The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it Deferred tax liabilities are temporary differences, except: recognised for all taxable Deferred tax assets are recognisedtemporary for differences, all deductible the tax carry credits forward and any of assets unused unused are recognised tax to losses. the extent Deferred that that it tax is taxable probable profit will be deductible temporary available differences, and the againstcarry forward which the of unused tax credits and utilised, except: unused tax losses can be Current income tax assets and liabilities are at measured the amount expected to be recovered to the from taxation or paid authorities. The tax used rates to compute the amount and are those that are tax enacted laws or substantively enacted, at the generatestaxableoperatesandGroup country the where reporting date in the income. Current income tax relating to items recognised directly equityin recognisedis equityin statementthein andnot of comprehensive income. evaluates positions taken in Managementthe tax returns with respect periodically to situations in which subject applicable to tax interpretation regulations where appropriate. are and establishes provisions Deferred tax is provided using the temporary liabilitydifferences between the method tax bases of on assets and liabilities and their carryingreporting purposes at the reporting date. amounts for financial • • • •

P P.1 P.2 101 Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Annual Report Limited Integrated Wireless Zimbabwe Econet Rental income Dividend Income OTHER INCOME Net trading income from financial instruments Insurance income Medical aid income line basis over the lease terms and is included in incomeother in the statement Initial direct of costs incurred in comprehensive negotiating and income.arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term. is probable that the economic benefits will flow Group), to which the is generally when shareholders the dividend. approve Rental income investment arising properties is accounted from for on operating a straight- leases on and lossesand changesfrom valuefairrelatedandinterestin dividendsexpenseincomeandfinancialor for assetsand financial liabilities ‘held for trading’. Dividend income is recognised when the Group’s right to receive the payment is established (provided that it Premium income arising from funeral cover is recognisedis funeralcoverincomePremiumarising from when paid. Results arising from trading activities include all gains basis of the actualservicetheproportion of basisa providedthe as of total services be to provided. Premium income Gross premiums comprise the premiums on entered contracts into during the year. Premiums written include adjustments to premiums written in prior periods. Contribution income is recognisedperiod in the in accounting membership is granted. which contributions are Fees received Fees are recognised and as revenue in the accounting period whichin theservices rendered,were thereference to by completion of the specific transaction assessed on the recognised on completion of the underlying transaction. Fees or components certain of performance are fees recognised that corresponding after criteria. fulfilling are the linked to a Contribution income fees are recognised over the commitment period straight line on basis. a Fee income from providing transactions services Fees arising from negotiating negotiation of or a participating transaction for in the a arrangement third the of party, the such acquisition as securities of shares or or the other purchase or sale of businesses, are Loan commitment fees for loans drawn that down are and likely other credit to related be fees are (together deferred with any incremental costs) and recognised as an adjustment to the EIR on the loan. When it is unlikely that a loan will be drawn down, the loan commitment

O.3

O.2 O.1 O.1 O N.7.5

N.7.4 N.7.4

Policy Notes to the Consolidated Financial Statements (continued) For the year ended 29 February 2016

is no longer probable that sufficient taxable profit will a) Short-term employee benefits be available to allow all or part of the deferred tax asset Short-term employee benefits are employee benefits to be utilised. Unrecognised deferred tax assets are re- (other than termination benefits) that are expected to be assessed at each reporting date and are recognised to settled wholly before twelve months after the end of the the extent that it has become probable that future taxable annual reporting period in which the employees render profits will allow the deferred tax asset to be recovered. the related service. The Group’s short term employee benefits comprise remuneration in the form of salaries, Deferred tax assets and liabilities are measured at the tax wages, bonuses, employee entitlement to leave pay and rates that are expected to apply in the year when the asset medical aid. is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted The undiscounted amount of all short-term employee at the reporting date. benefits expected to be paid in exchange for service rendered are recognised as an expense or as part of the Deferred tax relating to items recognised outside profit cost of an asset during the period in which the employee or loss is recognised outside profit or loss. Deferred tax renders the related service. The Group recognises the items are recognised in correlation to the underlying expected cost of bonuses only when the Group has a transaction either in OCI or directly in equity. present legal or constructive obligation to make such payment and a reliable estimate can be made. Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax b) Post-employment benefits assets against current tax liabilities and the deferred Post-employment benefits are employee benefits (other taxes relate to the same taxable entity and the same than termination benefits and short-term employee taxation authority. benefits) that are payable after the completion of employment. Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at Post-employment benefits comprise retirement benefits that date, are recognised subsequently if new information that are provided for Group employees through an about facts and circumstances change. The adjustment independently administered defined contribution fund is either treated as a reduction in goodwill (as long as it and by the National Social Security Authority (NSSA), does not exceed goodwill) if it was incurred during the which is also a defined contribution fund from the Group’s measurement period or recognised in profit or loss. perspective. Payments to the defined contribution fund and to the NSSA scheme are recognised as an expense Current and deferred tax for the period when they fall due, which is when the employee Current and deferred tax are recognised as income or as renders the service. The Group has no liability for Post- an expense in profit or loss, except when they relate to employment Retirement Benefit Funds once the current items that are recognised outside profit or loss (whether contributions have been paid at the time the employees in other comprehensive income or directly in equity), render service. in which case the tax is also recognised outside profit or loss, or where they arise from the initial accounting During the year the Group contributed to the Group for a business combination. In the case of a business defined contribution fund and to the NSSA scheme. combination, the tax effect is included in the accounting for the business combination. c) Termination benefits Termination benefits are employee benefits provided P.3 Value Added Tax (VAT) in exchange for the termination of an employee’s employment as a result of either an entity’s decision to Expenses and assets are recognised net of the amount terminate an employee’s employment before the normal of VAT, except: retirement date (or contractual date) or an employee’s • When the VAT incurred on a purchase of assets or decision to accept voluntary redundancy in exchange services is not recoverable from the taxation authority, for those benefits. The Group recognises termination in which case, the tax is recognised as part of the cost benefits as a liability and an expense at the earlier of of acquisition of the asset or as part of the expense when the offer of termination cannot be withdrawn or item, as applicable when the related restructuring costs are recognised • When receivables and payables are stated with the under IAS 37 Provisions, Contingent Liabilities and amount of Value Added Tax included Contingents Assets. The net amount of VAT recoverable from, or payable to, Termination benefits are measured according to the terms the taxation authority is included as part of receivables or of the termination contract. Where termination benefits payables in the statement of financial position. are due more than 12 months after the reporting period, the present value of the benefits shall be determined. Q EMPLOYEE BENEFITS The discount rate used to calculate the present value Employee benefits are all forms of consideration given in shall be determined by reference to market yields on exchange for services rendered by employees or for the high quality corporate bonds at the end of the reporting termination of employment. period.

The classification, recognition and measurement of Details regarding the termination benefits incurred by the these employee benefits is as follows; Group during the year are set out in notes 4 and 24.5. 102

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 FINANCIAL REPORTING documents. For the purpose of has fair determined value classes of disclosures, assets and the liabilities basis of the nature, on Group characteristics the and risks of the asset or liability and the level explained of above. the fair value hierarchy as input that is significant to the fair value measurement is unobservable. For assets and liabilitiesfinancial that statements on are a recognised determines recurring whether in transfers basis, the have the occurred Grouplevels between in the hierarchy (based on the lowest by level input that is significant to reassessingthe categorisation fair value measurement as a whole) at the end of each reporting period. DirectorsTheBoardof throughmanagement determines the policies and procedures for both recurring fair value measurement, such as investment properties, non-recurring and for measurement, such as sale, where applicable. assets held for External valuers are involved for valuation of significant assets, such as investment properties. Involvement externalvaluersdecided of is uponannuallyBoard theof by Directors. Selection criteria includes market knowledge, reputation, independence standards and are maintained. whether professional At each reporting movements in the values date, of assets and liabilities managementwhich are analyses required to be the re-measured the or reassessed Group’s as per accounting management verifies policies. the major For latest inputs this applied valuation in analysis, by the valuation agreeing computation to the contracts and information other relevant in the A fair value measurement of a non-financial asset takes into account a market participant’s economic abilitybenefits by using to the asset generatein its highest and participantanothermarket to sellingit by orbest usethat would use the asset in its highest and best use. appropriatevaluationusestechniquesare GroupThethat in the circumstances and for which sufficientavailable data to are measure fair value, maximising relevant the use observable of inputs and minimising unobservable inputs. the use of All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value based hierarchy, on the lowest level describedinput that is significant to as the follows, fair value measurement as a whole: Level 1 — Quoted (unadjusted) market prices in markets active for identical assets or liabilities. level lowest the which fortechniques Valuation — 2 Level input that is significant to the fair value measurement is directly or indirectly observable. level lowest the which fortechniques Valuation — 3 Level

103 Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Annual Report Limited Integrated Wireless Zimbabwe Econet In the principal market for the asset or liability or; In the absence of a principal advantageous market for the market, asset or liability in the most Disclosures for estimatesand assumptions Notesand 20AB, 19 13, valuation methods,Quantitative disclosures of fair value significant measurement hierarchy Note 19 Investment properties Note 13. It is held primarily for the purpose of trading or; settledbe to dueiswithin It twelve monthsafter the reporting period or; settlement the defer to unconditionalright no is There of the liability for at least twelve reporting months period after the twelve months after the reporting period It is expected to be settled in the normal operating cycle or; Expected to be realised or intended consumed in to thenormal operating cycle; or be sold or Held primarily for the purpose of trading; or Expected to be realised within twelve months after the reporting period; or Cashcashor equivalent unless restricted beingfrom exchanged or used to settle a liability for at least

• • • • • • • • • • • • • FAIR VALUE MEASUREMENTFAIRVALUE CURRENT AND NON CURRENT CLASSIFICATION CURRENT NON AND CURRENT The principal or the most advantageous market must be accessible by the Group. The fair value of an asset or a liability is measured using the assumptions that market when pricing the asset participants or liability, assuming that market would use participants act in their economic best interest. asset or paid to transfer a liability in an orderlytransactionliabilityan a intransfer to paid or asset between market participants at the measurement date. presumptionthemeasurementbasedvalue onThefair is that the transaction to liability sell takes place either: the asset or transfer the Fair value is the price that would be received to sell an available for sale financial assets and financial assets at fair value through profit or loss and non-financial assets such as investment properties, balance at sheet fair date. value Fair at value financial related each instruments disclosures and non-financial for assets measuredvaluefairwhereorvaluesatfair disclosed, are that are are summarised in the following notes: The Group classifies all other liabilities that do not meet the definition above as non-current. Deferred tax assets and liabilities are classified as non- current assets and liabilities respectively. The Group measures financial instruments such as The Group classifies all other assets that do not meet the meet notTheclassifiesGroup doassetsthat other all definition above are classified as non-current. A liability is current when: An asset is current whenit is: The Group presents assets and liabilities of in statement financial position based classification. on current or non-current

S

R Policy Notes to the Consolidated Financial Statements (continued) For the year ended 29 February 2016

T CASH DIVIDEND AND NON-CASH profit or loss. Financial assets are classified as held for DISTRIBUTION TO EQUITY HOLDERS trading if they are acquired for the purpose of selling or repurchasing in the near term. Financial assets at fair OF THE PARENT value through profit or loss are carried in the statement The Company recognises a liability to make cash or of financial position at fair value with net changes in fair non-cash distributions to equity holders of the parent value presented in the statement of comprehensive when the distribution is authorised and the distribution income. is no longer at the discretion of the Company. As per the corporate laws in Zimbabwe, a distribution is authorised when it is approved by the shareholders. A corresponding U.1.2 Loans and receivables amount is recognised directly in equity. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted Non-cash distributions are measured at the fair value in an active market. After initial measurement, such of the assets to be distributed with fair value re- financial assets are subsequently measured at amortised measurement recognised directly in equity. Upon cost using the Effective Interest Rate (EIR) method, distribution of non-cash assets, any difference between less any impairment. Interest income is recognised by the carrying amount of the liability and the carrying applying the effective interest rate, except for short- amount of the assets distributed is recognised in the term receivables when the effect of discounting is statement of comprehensive income. immaterial. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The U FINANCIAL INSTRUMENTS – INITIAL EIR amortisation is included in finance income in the RECOGNITION AND SUBSEQUENT statement of comprehensive income. The losses arising from impairment are recognised in profit or loss. MEASUREMENT A financial instrument is any contract that gives rise to For more information on receivables, refer to Note 22 and a financial asset of one entity and a financial liability or 23. equity instrument of another entity. Financial assets and financial liabilities are recognised when a Group entity becomes party to the contractual provisions of the U.1.3 Held-to-maturity investments instrument. Non-derivative financial assets with fixed or determinable payments and fixed maturities are classified as held to maturity when the Group has the positive intention and U.1 Financial assets ability to hold them to maturity. After initial measurement, Initial recognition and measurement held to maturity investments are measured at amortised Financial assets are classified, at initial recognition, as cost using the EIR, less impairment. Amortised cost is financial assets at fair value through profit or loss, loans calculated by taking into account any discount or premium and receivables, held-to-maturity investments, available on acquisition and fees or costs that are an integral part for sale financial assets, or as derivatives designated as of the EIR. The EIR amortisation is included as finance hedging instruments in an effective hedge, as appropriate. income in the statement of comprehensive income. The The classification depends on the nature and purpose of losses arising from impairment are recognised in the the financial assets and is determined at the time of initial statement of comprehensive income. recognition. All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that U.1.4 Available For Sale financial assets are attributable to the acquisition of the financial asset. Available For Sale (“AFS”) financial assets include equity investments and debt securities. Equity investments Purchases or sales of financial assets that require delivery classified as AFS are those that are neither classified as of assets within a time frame established by regulation or held for trading nor designated at fair value through profit convention in the market place (regular way trades) are or loss. recognised on the trade date, i.e., the date that the Group commits to purchase or sell the asset. Debt securities in this category are those that are intended to be held for an indefinite period of time and Subsequent measurement that may be sold in response to needs for liquidity or in For purposes of subsequent measurement financial response to changes in market conditions. assets are classified in four categories: • Financial assets at fair value through profit or loss; After initial measurement, AFS financial assets are • Loans and receivables; subsequently measured at fair value with unrealised • Held-to-maturity investments; and gains or losses recognised in OCI and credited in the AFS • Available for sale financial assets. reserve until the investment is derecognised, at which time the cumulative gain or loss is recognised in other operating income. If the investment is determined to be U.1.1 Financial assets at fair value through profit or impaired, the cumulative loss is reclassified from the AFS loss reserve to profit or loss. Financial assets at fair value through profit or loss include financial assets held for trading and financial assets Interest earned whilst holding AFS financial assets is designated upon initial recognition at fair value through reported as interest income using the EIR method.

104

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 FINANCIAL REPORTING If a write-off is later recovered, the recovery is credited to finance costs in income. the statement of comprehensive For AFS financial assets, the Group reporting assessesdate whether at there is eachobjective evidence that an investment or a group of investments is impaired. asset in a group of financial risk assets with similar characteristics credit for and impairment. collectively Assets that for assesses are impairment individually them and assessed for whichor continues an to be, impairment recognised loss are not collective is, included assessment of impairment. in the measured is identifiedloss impairment any of amount The as the difference between the asset’s carrying amount and the present value of estimated yet not expectedhave creditfuturelosses(excludingthat future cash flows estimatedfuturethe of incurred).beenvaluepresentThe cash flows is discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account and the loss is recognised in the statement of income comprehensive (recorded as income. finance Interest income in of comprehensive the income) statement continues to be accrued on the reduced carrying amount and is accrued rate using of interest the used to discount the future purposethemeasuring for of cashimpairmentthe loss.Loans flows together with the associated allowance are writtenrecoveryrealisticfutureprospect no and of is therewhen off all collateral has been realised or has to been the transferred Group. If, in a subsequent the year, estimated the impairment amount loss of increases or because decreases of an event occurring after the impairment was recognised,previouslythe recognised impairment lossis allowanceaccount.adjustingthe reducedby increasedor For financial assets carried at amortised cost, the Group first assesses whether impairment for financial exists assets individually that are collectively individually for financial significant, assets that or are not significant. individually If the individuallyassessed Group an for existsimpairment determines of evidence that no objective financial asset, whether significant or not, it includes the there is objective evidence that group a financial of asset financial or a assets exists if is one or more events that has impaired. occurred since the An impairment initial recognition of the asset (an incurred ‘loss event’), has an impact on the estimatedthe financial future asset cash or the flows group of of financial can assets that be reliably may include estimated. indications that the Evidence debtors or debtors a of group is of impairment experiencing significant default or delinquency financialin interest or principal payments, difficulty, the probability that they will enter bankruptcy financial or reorganisation other and observable datathat there indicating is a economic or arrears measurablein changes as such flows, cash decreasefuture in the estimated conditions that correlate with defaults. U.1.5.2 AFS financial assets U.1.5.2

U.1.5.1 Financial assets carried at amortised cost U.1.5.1 105 Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Annual Report Limited Integrated Wireless Zimbabwe Econet Disclosures for significant assumptions Note AB receivablesTrade Note 22 Loans and advances Note 23 but has transferred control of the asset. The Group has transferred its rights to receive cash flows from the asset or has assumed an to obligation pay the material delay receivedto a third party under a ‘pass-through’ cash flows arrangement and either (a) the Group has transferred in full substantially without all the risks and rewards of the or (b) asset, the Group has neither transferred nor retained substantially all the risks and rewards of the asset, The rights to receive cash flows from the asset have expired or;

Impairment of financial assets • • • The Group assesses, at each reporting date, whether original carrying amount of the asset and the maximum requiredbe could Groupconsideration the of thatamount repay. to Further disclosures relating to impairment assets are also provided in the following notes: of financial of the asset, the transferred asset to the extent of the Group Group’s continuing continues to involvement. recognise In the that case, the an Group associated also liability. recognises The associated liability transferred are measured on a basis asset that reflects and the the rights and obligations that the Group has retained. guarantee a of form the takes that involvementContinuing the of lower the atmeasured is transferredasset the over When the Group has transferred its rights to receive cashreceive to rightstransferreditshasGroup Whenthe flows from an asset or has entered into a pass-through arrangement, it evaluates if and to ownership.hasof Whenrewards it andrisks retained the what extent it has neither transferred nor retained substantially all risks of and rewards the of the asset, nor transferred control • Derecognition financiala applicable,partof where a (or, financialasset A asset or part of a group primarily of derecognised similar (i.e., removed financial from assets) the Group’s is consolidated statement of financial position)when: • the remaining life of the investment using the EIR. Any difference between the new maturity amortisedamortisedalsoamountremaining is thelife over cost and the of the asset using the EIR. If the asset is subsequently determined to be impaired, then the amount recorded in equity is reclassified to the statement of comprehensive income. assets if management has the abilityhold the assets for foreseeable future or until maturity. and intention to For a category, financial the fair value carrying asset amount at reclassification the date of reclassified becomes its new from any amortised previous gain cost the or and loss on recognised AFS the in equity asset is that amortised has to profit been or loss over The Group evaluates whether the ability to and sell its intention AFS financial assets in appropriate. the When, near in term rare circumstances, is still the Group is unable to trade these financialreclassifyfinancial these to elect may Group the markets, assets due to inactive

U.1.5 U.1.5

Policy Notes to the Consolidated Financial Statements (continued) For the year ended 29 February 2016

In the case of equity investments classified as AFS, or loss when the liabilities are derecognised as well as objective evidence would include a significant or through the EIR amortisation process. prolonged decline in the fair value of the investment Amortised cost is calculated by taking into account any below its cost. The determination of what is ‘significant’ discount or premium on acquisition and fees or costs or ‘prolonged’ requires judgement. ‘Significant’ is that are an integral part of the EIR. The EIR amortisation evaluated against the original cost of the investment and is included as finance costs in the statement of ‘prolonged’ against the period in which the fair value has comprehensive income. been below its original cost. When there is evidence of impairment, the cumulative loss – measured as the This category generally applies to interest-bearing loans difference between the acquisition cost and the current and borrowings. For more information refer Note 30. fair value, less any impairment loss on that investment previously recognised in the statement of comprehensive U.2.2 Financial guarantee contracts income – is removed from OCI and recognised in the Financial guarantee contracts issued by the Group are statement of comprehensive income. Impairment losses those contracts that require a payment to be made to on equity investments are not reversed through profit reimburse the holder for a loss it incurs because the or loss; increases in their fair value after impairment are specified debtor fails to make a payment when due recognised in OCI. in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as In the case of debt instruments classified as AFS, the a liability at fair value, adjusted for transaction costs that impairment is assessed based on the same criteria as are directly attributable to the issuance of the guarantee. financial assets carried at amortised cost. However, the Subsequently, the liability is measured at the higher of amount recorded for impairment is the cumulative loss the best estimate of the expenditure required to settle measured as the difference between the amortised cost the present obligation at the reporting date and the and the current fair value, less any impairment loss on amount recognised less cumulative amortisation. that investment previously recognised in the statement of comprehensive income. Derecognition A financial liability is derecognised when the obligation Future interest income continues to be accrued based on under the liability is discharged, cancelled or expires. the reduced carrying amount of the asset, using the rate of interest used to discount the future cash flows for the When an existing financial liability is replaced by another purpose of measuring the impairment loss. The interest from the same lender on substantially different terms, or income is recorded as part of finance income. the terms of an existing liability are substantially modified, such an exchange or modification is treated as the If, in a subsequent year, the fair value of a debt instrument derecognition of the original liability and the recognition increases and the increase can be objectively related of a new liability. The difference in the respective to an event occurring after the impairment loss was carrying amounts is recognised in the statement of recognised in the statement of comprehensive income, comprehensive income. the impairment loss is reversed through the statement of comprehensive income. U.3 OFFSETTING OF FINANCIAL INSTRUMENTS Financial assets and financial liabilities are offset and the U.2 FINANCIAL LIABILITIES net amount is reported in the consolidated statement of Initial recognition and measurement financial position if there is a currently enforceable legal Financial liabilities are classified, at initial recognition, as right to offset the recognised amounts and there is an financial liabilities at fair value through profit or loss, loans intention to settle on a net basis or to realise the assets and borrowings, payables, or as derivatives designated and settle the liabilities simultaneously. as hedging instruments in an effective hedge, as appropriate. V CASH AND SHORT-TERM DEPOSITS Cash and short-term deposits in the statement of financial All financial liabilities are recognised initially at fair value position comprise cash at banks and on hand and short- and, in the case of loans and borrowings and payables, term deposits with a maturity of three months or less, net of directly attributable transaction costs. The Group’s which are subject to an insignificant risk of changes in financial liabilities include trade and other payables, value. loans and borrowings including bank overdrafts, financial guarantee contracts and derivative financial instruments. For the purpose of the consolidated statement of cash flows, cash and cash equivalents consist of cash and Subsequent measurement short-term deposits, as defined above. The measurement of financial liabilities depends on their classification, as described below: W TREASURY SHARES Own equity instruments that are reacquired (treasury U.2.1 Loans and borrowings shares) are recognised at cost and deducted from equity. This is the category most relevant to the Group. After initial recognition, interest-bearing loans and borrowings No gain or loss is recognised in profit or loss on the are subsequently measured at amortised cost using the purchase, sale, issue or cancellation of the Group’s own EIR method. Gains and losses are recognised in profit equity instruments. Any difference between the carrying

106

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 FINANCIAL REPORTING The preparation of the statements Group’s requires management consolidated to make judgements, financial estimates and assumptions that affect the reported earnings per share (further details are given in Note 10. the grant date fair value. Any other conditionsotherattachedAny value. to fair date grant the associatedservicerequirement,anwithout but award, an non-vestingbe conditions.considered to Non-vestingare conditions are reflected in the fair value of an award and unlessimmediatethereaward ananexpensing leadof to are also service and/or performance conditions. ultimately not do that awards for recognised is expense No vest because non-market performance conditions and/or have service not been met. Where a market awards or includenon-vesting condition, the transactions are treated as vested irrespective of whether the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied. equity-settledan of Whentermsthe modified,are award the minimum expense recognised is the grant date fair value of the unmodified terms award, of provided the the award original are measured as met. at the date An of modification, additional is recognisedfor expense,any modification that increases the total fair value of the share-based payment transaction, orbeneficial the to employee. is otherwise Where an award is cancelled counterparty, by the any entity remaining or element by of of the the the award is fairexpensed immediately value through profit or loss. The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted Equity-settled transactions The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model, further details of which recognisedemployeeisThatcost in 24. Note in given are correspondinga withtogether 4), (Notebenefitsexpense increase in equity period (other in which capital the service and, reserves), where performance applicable, over conditions the are fulfilled (the vesting the period). The cumulative expense recognised for transactions equity-settled at each reporting date reflects the extent date to which the vesting untilperiod has the expired and vesting the Group’s best estimate of the number of equityinstruments thatwillultimately vest.The expense comprehensivestatementthecreditof orin incomea for period represents the movement in cumulative expense recognised as at the beginning and end of that period. Service and non-market performance conditions are not taken into account when determining the grant date fair conditionsbeingthe of likelihoodthe butawards, of value met is assessed as part of the Group’s best estimate of the number of equity instruments performanceMarketvest. conditionsreflectedwithin are that will ultimately SIGNIFICANT ACCOUNTING JUDGEMENTS;ESTIMATES AND ASSUMPTIONS

AB

107 Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Annual Report Limited Integrated Wireless Zimbabwe Econet SHARE-BASED PAYMENTS OPERATING SEGMENT INFORMATION FIDUCIARY ASSETS PROVISIONS employees rendered the services as equity consideration instruments (equity-settled for transactions). annual financial statements to segmenttransactions transactionsand balancesand that take account of inter- are not allocated reporting to segments. Employees of the benefits in the form of Groupshare-based payments, whereby were offered termination The chief operating decision-maker has been identified as the Group Chief Executive Officer. Measurement of segment information The accounting policies of the reportable segments are the same as the Group’s accounting policies. Segment information has been reconciled to the consolidated revenues are earned and expenses incurred revenues (including and expenses relating other components of to the same entity), whose operating transactions with results are regularly operating reviewed decision by the maker resources to be allocated entity’s to the to segment and assess its chief make financialperformance,discretewhichinformation decisions for and about is available. of assets on behalf of a its fiduciary clients, capacity the assets are statements, as they are not the assets held of the Group. not in reported in the financial The Group identifies segments as componentsGroup of that the engage in business activities from which that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase provision due in to the the passage of time is recognised as a finance cost. To the extent that the Group provides fiduciary trust services and that result other in the holding or investing as a separate asset, but only when the reimbursement is virtually certain. The expense relating is presented to in the statement a of comprehensive provisionincome net of any reimbursement. If the effect of the provisions time are value discounted of using money a is current material, pre-tax rate Provisions are recognised present obligation (legal or constructive) when as a result of a the past event, Group it is probable has that an embodying outflow a economic of benefits resources will be required to settle theobligation andreliable a estimate can be made theof obligation.the amountof GroupexpectsWhenthe some orall provisiona of be to reimbursed, for example, under an insurance contract, the reimbursement is recognised amount and the consideration, if reissued, is recognised in share premium. General

AA

Z

Y

X Policy Notes to the Consolidated Financial Statements (continued) For the year ended 29 February 2016

amounts of revenues, expenses, assets and liabilities, are made where appropriate. The valuation methods and the accompanying disclosures, and the disclosure adopted in this process involves significant judgement of contingent liabilities. Uncertainty about these and estimation. assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of Useful lives of property, plant and equipment assets or liabilities affected in future periods. A review of the estimated remaining lives of all network equipment was performed using the engineering Other disclosures relating to the Group’s exposure to expertise within the business with reference to published risks and uncertainties includes: industry benchmarks. • Capital management Note 35 • Financial risk management and policies Note 35 This review considered the following factors, at a • Sensitivity analysis disclosures Notes, 35.3 and 36.2 minimum; the age of the equipment, technological advancements, current use of the equipment, Judgements and planned network upgrade programmes. The In the process of applying the Group’s accounting policies, determination of the remaining estimated useful lives management has made the following judgements, of the network equipment is deemed to be a significant which have the most significant effect on the amounts area of judgment due to its highly specialised nature. recognised in the consolidated financial statements: Refer to Note I for the useful lives of property, plant and equipment. Capitalisation of borrowing costs When capitalising borrowing costs that are directly Network modernisation attributable to the acquisition, construction or production The network cellar segment embarked on a network of a qualifying asset, the matter of determining whether modernisation project during the year. The transaction an asset takes a substantial period of time to get ready involved the swap out of old equipment for new for its intended use, normally one year, is deemed to be equipment. a significant area of judgement. Significant judgements are made by directors in In particular, as there are multiple financing sources for determining the extent to which the exchange both general and specific use, allocation of borrowing transactions impact the future cash flows of the business, costs demands significant judgement. and thus if the transaction has commercial substance and the consequential accounting treatment. Estimates and assumptions The key assumptions concerning the future and other In determining if the transaction has commercial key sources of estimation uncertainty at the reporting substance directors assesses if: date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and a) The configuration (risk, timing and amount) of cash liabilities within the next financial year, are described flows of the assets received differs from the below. The Group based its assumptions and estimates configuration of the cash flows of the assets on parameters available when the consolidated financial transferred; statements were prepared. Existing circumstances and b) The entity-specific value of the portion of the entity’s assumptions about future developments, however, may operations affected by the transaction changes as a change due to market changes or circumstances arising result of the exchange; and that are beyond the control of the Group. Such changes c) The difference in (a) or (b) is significant relative to the are reflected in the assumptions when they occur. fair value of the assets exchanged.

AB. 1 Property, plant and equipment - IAS 16 The Directors therefore concluded that the swap had Property, plant and equipment represent a significant commercial substance, and thus the equipment acquired proportion of the asset base of the Group, being 58% was recognised at fair value. (59% in prior year) of the Group’s total assets in the year under review. The fair value of the new equipment was ascertained as the cash consideration that would have been exchanged Therefore, the estimates and assumptions made to in an arm’s length and orderly transaction between determine their carrying value and related depreciation are willing market participants, had the new equipment been critical to the Group’s financial position and performance. acquired for a cash consideration only.

Residual values of property, plant and equipment AB.2 Intangible assets - IAS 38 During the year management assessed the residual Intangible assets include licences and development values of property, plant and equipment. Residual costs. These assets arise from both separate purchases values of each asset category have been assessed by and from acquisition as part of business combinations. considering the fair value of the assets after taking into On the acquisition of mobile network operators, the account age, usage and obsolescence. These residual identifiable intangible assets may include licences, values are reassessed each year and adjustments customer bases and brands.

108

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 FINANCIAL REPORTING Staff retention period – 15 the years expected (This period represents employees employed are by the likely Group. to It takes stay into considerationpast behaviour and behaviour external patterns of market certain research age groupsemployment trends); and on and their Discount rate – weighted average cost of capital. 10% based on the computed

Syndicated loans Deferred revenue Provisions from revenue until the airtime customers. has The deferred been revenue portion usedis determined by the by both information arithmetical technologyformulae to identify the related portion of revenue checks beto deferred. and IAS 19 - Employee Benefits,treatment of outlines long service the awards payable accounting to employees. qualifying The standard determination provides of guidance provisions such on awards. as the the The long provision service to is net determined present by value discountingservice the awards. In computing future the obligation, cash the Group flows management have made the following assumptions: for long • • Certain cash flows used in the calculation of amortised syndicatedthecost of loansbased areforecast on future interest rates (LIBOR) which are subject to estimation. The interest is based on various interest arrangements on facilities with various lenders. The Syndicated loans are detailed on Note 30. Revenue for cellular network whenairtimethe The utilisedunusedcustomer. isthe by services is recognisedair time as at 29 February 2016 has been deferred Provision for impairment of accounts receivable The provision for impairment is based on an estimate of the recoverability of accounts receivable and subject to estimation.Note Refer22to thefor basis determiningof impairment loss provisions. Provision for long service awards In accordance with Liabilities IAS 37 - and Provisions,obligation exists Contingent Contingent within the Group Assets,long for service the awards. This paymentobligation is of derived a from the past practice of paying constructiveout awards and has thus created a constructive obligation. or the Cash Generating Unit (CGU)recoverable being amount tested. is The sensitive used for to the DCF model the as well as the discount expected future rate cash-inflows and the growth rate used for extrapolation purposes. These estimates are goodwill recognised most by the Group. The key assumptions relevant to the used to determine different the CGUs recoverable are disclosed amount and Note 43. further for explained in the

AB.5 AB.6 AB.4 AB.4 109 Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Annual Report Limited Integrated Wireless Zimbabwe Econet Impairment reviews - IAS 36 the Group is not yet committed to or significantinvestments futurethat will enhance the asset’s performance and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales assets similar for length, arm’s transactions,atconducted or observable market prices less incremental costs disposing for of the asset. The value based in use on calculation a Discounted is Cashflow (“DCF”) cash flows model.are derived from the budget The for the next five years and do not include restructuring activities that may impact their life, such as Historically, changeschanges in useful in lives have technology. not resulted in material changes the to amortisation Group’s charge. Impairment exists when the carrying value of an or cash assetgenerating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal management’s view of Group will the receive benefits from period the software, exceeding over but the licence term. not which the the Group, the by controlledproductssoftware unique For useful life is based on historical experience with similar products as well as anticipation of future events, which any changes to economic lives have not been following these material reviews. The useful life is determined time by the management software at is the and acquired is and brought regularly computer into software reviewed use licences, the useful for life represents appropriateness. For over which the Group will For receive technology economic specific benefit. licencesof with renewal a at presumption economic negligible life cost, reflects the the Group’s period expectation estimated over of which useful the the Group economic will benefit from continue the licence. to The economic receive lives are periodically reviewed,such factors taking as into changes consideration in technology. Historically, The basis for determining the useful significant categories life of intangible assets for is as follows: the most The estimated useful life is, generally, the termlicence, of the unless there is periodreflectsthelicence a negligible term the Usingcost. presumption of renewal at of the intangible assets. Estimation of useful life The useful life used amortiseto intangible assets relates to the future performance of the management’s assets acquired judgement and of economic the benefit will be derived from the asset. period over which The fair value of these assets is determined by discounting by determined is assets these of value fair The estimated future net cash flows generated by the asset, where no active market for the assets exists. The use of differentexpectationsassumptionsthecash futurefor of flows and the discount rate would change the valuation

AB.3

AB.2.2 Capitalised software AB.2.2 AB.2.1 Licences AB.2.1

Policy Notes to the Consolidated Financial Statements (continued) For the year ended 29 February 2016

AB.7 Investment property - determination of fair c. Past due but not impaired loans value Loans and advances where contractual interest or Where the fair values of investment property cannot principal payments are past due but the Group believes be derived from an active market, they are determined that impairment is not appropriate on the basis of the using a variety of valuation techniques. Determining level of security/collateral available and/or the stage of the valuation technique to use and the inputs requires collection of amounts owed to the Group. significant judgement. Refer Note 13 for more detail on valuation of investment property. AB.9 Taxation Deferred tax assets are recognised for unused tax losses AB.8 Impairment losses on loans and advances to to the extent that it is probable that taxable profit will be available against which the losses can be utilised. bank customers Significant management judgement is required to The Group reviews its individually significant loans and determine the amount of deferred tax assets that can be advances to bank customers at each statement of financial recognised, based upon the likely timing and the level of position date to assess whether an impairment loss future taxable profits together with future tax planning should be recorded in the statement of comprehensive strategies. income. In particular, management’s judgement is required in the estimation of the amount and timing of These losses relate to subsidiaries that have a history of future cash flows when determining the impairment losses, and may not be used to offset taxable income loss. These estimates are based on assumptions about a elsewhere in the Group. Further details on taxes are number of factors and actual results may differ, resulting disclosed in Note 15. in future changes to the allowance. AB.10 Share-based payments AB 8.1 Impairment provision Estimating fair value for share-based payment a. Specific and portfolio provisions transactions requires determination of the most Loans and advances that have been assessed appropriate valuation model, which depends on the individually and found not to be impaired and all terms and conditions of the grant. This estimate also individually insignificant loans and advances are then requires determination of the most appropriate inputs assessed collectively, in groups of assets with similar risk to the valuation model including the expected life of the characteristics, to determine whether provision should share option or appreciation right, volatility and dividend be made due to incurred loss events for which there is yield and making assumptions about them. The Group objective evidence, but the effects of which are not yet initially measures the cost of cash-settled transactions evident. The collective assessment takes account of data with employees using a binomial model to determine from the loan portfolio (such as levels of arrears, credit the fair value of the liability incurred. For cash-settled utilisation, loan-to-collateral ratios, etc.), and judgements share-based payment transactions, the liability needs on the effect of concentrations of risks and economic to be remeasured at the end of each reporting period data. Refer to Note 23 for the carrying amount of loans up to the date of settlement, with any changes in fair and advances to customers and more information on the value recognised in the profit or loss. This requires a impairment of loans and advances to customers. reassessment of the estimates used at the end of each reporting period. For the measurement of the fair value b. Regulatory provision of equity-settled transactions with employees at the The Reserve Bank of Zimbabwe requires the Bank to grant date, the Group uses the market price of the share provide provisions for impairments on loans. Where the at the grant date or the fair value of the services rendered regulatory provision is higher than the IAS 39, ‘Financial as determined by the employment benefits contract. Instruments: Recognition and Measurement’ the excess is recognized as an appropriation of reserves.

110

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Continuing efforts are made to improve our customers’ experience through consistent provision of highly innovative services and products. We are present in all major locations countrywide and continue to expand our branch network to be closer to our customers. ADMINISTRATION

Strategic Business Partnerships 112

Shareholder Analysis 113

Corporate and Advisory Information 114

111

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Strategic Business Partnerships

The opportunities in the market have made it imperative to broaden our relationship with key partners. This has enabled the business to deliver value to stakeholders and promote accelerated growth.

112

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 ADMINISTRATION

Shareholder Analysis For the year ended 29 February 2016

Consolidated Top 20

Rank Account Name Shares % of Total

1 ECONET GLOBAL LIMITED 492,325,748 30.02 2 STANBIC NOMINEES (PRIVATE) LIMITED - NNR 340,898,071 20.79 3 ECONET WIRELESS ZIMBABWE LIMITED 169,578,284 10.34 4 AUSTIN ECO HOLDINGS LIMITED - NNR 89,872,460 5.48 5 STANBIC NOMINEES (PRIVATE) LIMITED 86,346,396 5.26 6 OLD MUTUAL LIFE ASSURANCE COMPANY OF ZIMBABWE LIMITED 81,259,945 4.95 7 ECONET WIRELESS ZIMBABWE SPV LIMITED 48,475,095 2.96 8 EBENEZER TRUST 28,959,972 1.77 9 STANDARD CHARTERED NOMINEES (PRIVATE) LIMITED - NNR 23,893,789 1.46 10 STANDARD CHARTERED NOMINEES (PRIVATE) LIMITED 22,033,751 1.34 11 NORTHUNDERLAND INVESTMENTS (PRIVATE) LIMITED 22,020,090 1.34 12 AMRO INTERNATIONAL HOLDINGS LIMITED - NNR 15,033,962 0.92 13 MINING INDUSTRY PENSION FUND 11,318,349 0.69 14 HELLIKOP INVESTMENTS (PRIVATE) LIMITED - NNR 10,699,010 0.65 15 NATIONAL SOCIAL SECURITY AUTHORITY 10,454,285 0.64 16 PRESSFORTH INVESTMENTS (PRIVATE) LIMITED 10,317,570 0.63 17 ECONET EMPLOYEES BENEFICIARY TRUST 9,936,300 0.61 18 LOCAL AUTHORITIES PENSION FUND 8,430,062 0.51 19 COVERSITE (PRIVATE) LIMITED 7,014,684 0.43 20 CAPERNAUM TRUST ENDOWMENT FUND 6,218,472 0.38

OTHER SHAREHOLDERS 144,935,135 8.84

TOTAL ISSUED SHARES 1,640,021,430 100.00

Range Holders % of Holders Shares % of Shares 0 - 100 2,455 27.12 105,460 0.01 101 - 200 731 8.08 120,597 0.01 201 - 500 988 10.92 339,143 0.02 501 - 1,000 1,008 11.14 695,544 0.04 1,001 - 5,000 2,330 25.74 4,765,759 0.29 5,001 - 10,000 513 5.67 3,563,901 0.22 10,001 - 50,000 561 6.20 11,954,358 0.73 50,001 - 100,000 128 1.41 9,153,016 0.56 100,001 - 500,000 179 1.98 42,607,511 2.60 500,001 - 1,000,000 65 0.72 45,362,948 2.77 1,000,001 - 10,000,000 75 0.83 229,711,734 14.01 10,000,001 and above 18 0.20 1,291,641,459 78.76 Total 9,051 100.00 1,640,021,430 100.00

113

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Corporate and Advisory Information

Registered Office

Incorporated in the Republic of Zimbabwe Company registration number 7548/98 Econet Park, 2 Old Mutare Road, Msasa, Harare, Zimbabwe

Telephone: +263-486124-5, +263-772 793 700, Fax:+263- 4-486183 E-mail: [email protected], website: www.econet.co.zw

Group Company Secretary

Charles Alfred Banda Econet Park, 2 Old Mutare Road, Msasa, Harare, Zimbabwe

Independent Auditors

Deloitte & Touche (Zimbabwe) Registered Public Auditors West Block, Borrowdale Office Park, Borrowdale Road, Borrowdale, P.O. Box 267, Harare, Zimbabwe

Principal Bankers

African Export-Import Bank Limited 72 (B) EL Maahad EL-Eshleraky Street, Opposite Merryland Park, Roxy, Heliopolis, Cairo 11341, Egypt

Barclays Bank Kurima House, Nelson Mandela Avenue, P.O Box CY 881 Causeway, Harare

Stanbic Bank Stanbic Centre, 59 Samora Machel Avenue, Harare, Zimbabwe

Steward Bank Limited 2nd Floor, 101 Union Avenue Building,101 Kwame Nkrumah Avenue, Harare, Zimbabwe

CBZ Bank Limited Union House, 60 Kwame Nkrumah Avenue, Harare, Zimbabwe

Principal legal advisors

Mtetwa and Nyambirai Legal Practitioners 2 Meredith Drive, Eastlea, Harare, Zimbabwe

Registrars and transfer secretaries

First Transfer Secretaries (Private) Limited 1 Armagh Avenue, Eastlea, Harare, Zimbabwe

114

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Notes

115

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016 Notes

116

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016