Annual Report & Financial Statements
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ANNUAL REPORT & FINANCIAL STATEMENTS AS AT 31ST DECEMBER 2014 Our Vision To become our customers’ most trusted savings and wealth management partner in East Africa. Values Integrity Our Mission Respect Accountability Through understanding and Pushing Beyond Boundaries meeting our customers’ needs, we will profitably expand our market for wealth accumulation and protection in East Africa. Our Vision To become our customers’ most trusted savings and wealth management partner in East Africa. Values Integrity Our Mission Respect Accountability Through understanding and Pushing Beyond Boundaries meeting our customers’ needs, we will profitably expand our market for TABLE OF CONTENTS wealth accumulation CORPORATE INFORMATION 2 and protection in NOTICE OF THE ANNUAL GENERAL MEETING 3 East Africa. BOARD OF DIRECTORS 4 REPORT OF THE DIRECTORS 5 CHAIRMAN’S STATEMENT 6 MANAGING DIRECTOR’S STATEMENT 9 CORPORATE GOVERNANCE STATEMENT 12 OLD MUTUAL STORY 16 STATEMENT OF DIRECTORS’ RESPONSIBILITIES 19 STATUTORY ACTUARY’S REPORT 20 REPORT OF THE INDEPENDENT AUDITORS 21 STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 22 STATEMENT OF FINANCIAL POSITION 23 STATEMENT OF CHANGES IN EQUITY 24 STATEMENT OF CASH FLOWS 25 NOTES TO THE FINANCIAL STATEMENTS 26 LIST OF THE TOP TEN SHAREHOLDERS 54 FORM OF PROXY 57 1 Old Mutual Life Assurance Company Limited CORPORATE INFORMATION BOARD OF DIRECTORS P. De Beyer* - Chairman C. Nyokangi - Managing Director: Appointed on 01 August 2014 P. Mwangi - Appointed on 05 December 2014 T. C. Madzinga** R. N. Ogega P. Truyens*** A. Mutahi S. Mmbijjewe P.W. Muthoka * South African ** Zimbabwean ***Dutch COMPANY SECRETARY Ms Pauline Ngonyo Certified Public Secretary (Kenya) Old Mutual Building Mara/Hospital Roads, Upper Hill P O Box 30059 - 00100 GPO Nairobi REGISTERED OFFICE Old Mutual Building Corner of Mara / Hospital Road Upper Hill P O Box 30059 - 00100 GPO Nairobi Company Registration Number 1/94 AUDITORS Deloitte & Touche Certified Public Accountants (Kenya) Deloitte Place Waiyaki Way, Muthangari P O Box 40092 - 00100 GPO Nairobi LEGAL ADVISERS Daly & Figgis Advocates ABC Towers, ABC Place, 6th Floor Waiyaki Way P O Box 40034 - 00100 GPO Nairobi PRINCIPAL BANKERS Standard Chartered Bank Kenya Limited Kenyatta Avenue P O Box 30001 - 00100 GPO Nairobi SHARE REGISTRARS Maonga Ndonye Associates Jadala Place, 3rd Floor Ngong Lane off Ngong Road P O Box 73248 - 00200 Nairobi 2 Annual Report and Financial Statements 2014 NOTICE OF THE ANNUAL GENERAL MEETING NOTICE IS HEREBY GIVEN that the 21st Annual General Meeting of the Company will be held at The Intercontinental Hotel Nairobi on Friday, 29 May 2015 at 11.00 a.m. to transact the following business: ORDINARY BUSINESS 1. To read the notice convening the meeting, table the proxies received and confirm the presence of a quorum. 2. To confirm the minutes of the Twentieth Annual General Meeting held on 18 July 2014. 3. To receive, consider and adopt the audited Financial Statements for the year ended 31 December 2014 together with the reports of the Directors and Auditors thereon. 4. To note that the Directors do not recommend the payment of a dividend in respect of the Financial Year ended 31 December 2014. 5. To re-elect Directors:- a) In accordance with Articles 17(a) and 17(b) of the Company’s Articles of Association, Mr Tavaziva Chadamoyo Madzinga retires at this meeting and, being eligible, offers himself for re-election. b) In accordance with Articles 17(a) and 17(b) of the Company’s Articles of Association, Ms Rose Nyaboke Ogega retires at this meeting and, being eligible, offers herself for re-election. c) In accordance with Articles 17(a) and 17(b) of the Company’s Articles of Association, Ms Sheila Mary Riziki Mmbijjewe retires at this meeting and, being eligible, offers herself for re-election. 6. To approve the Directors’ remuneration in respect of the Financial Year ended 31 December 2014 and to authorize the Board to fix the remuneration of Directors for the current year. 7. To note that Messrs Deloitte & Touche (Kenya), having expressed their willingness would continue in office as the Company’s Auditors in accordance with the provisions of Section 159(2) of the Companies Act (Cap 486), subject to approval by the Commissioner of Insurance in accordance with Section 56(4) of the Insurance Act (Cap 487), and to authorise the Directors to fix their remuneration for the ensuing financial year. 8. To consider any other business for which notice has been received. BY ORDER OF THE BOARD Pauline Ngonyo Company Secretary DATE: 27 February 2015 Note: A member entitled to attend and vote at this meeting is entitled to appoint a proxy to attend and vote on his or her behalf. A proxy need not be a member of the Company. To be valid, a form of proxy must be duly completed by the member and must be lodged at the registered office of the Company, P O Box 30059, 00100 GPO, Nairobi, not less than 48 hours before the time of the meeting. A form of proxy is provided with this report 3 Old Mutual Life Assurance Company Limited BOARD OF DIRECTORS Peter De Beyer Chris Nyokangi Paul Truyens Chairman Managing Director Non Executive Director Sheila Mmbijjewe Peter Mwangi Tavaziva Madzinga Non Executive Director Executive Director Non Executive Director Peter Muthoka Anne Mutahi Rose Ogega Non Executive Director Non Executive Director Non Executive Director Pauline Ngonyo Company Secretary 4 Annual Report and Financial Statements 2014 REPORT OF THE DIRECTORS The Directors present their report together with the audited financial statements of Old Mutual Life Assurance Company Limited (the “company”) for the year ended 31st December 2014. ACTIVITIES The principal activity of the Company is the transaction of all classes of life assurance, savings and retirement benefits business. RESULTS Shs ’000 Loss before taxation (416,430) Taxation expense (30,267) Loss for the year transferred to accumulated losses (446,697) HOLDING COMPANY The Company is a subsidiary of Old Mutual Holdings Limited which is incorporated in Kenya. The ultimate holding company is Old Mutual Plc, which is incorporated in the United Kingdom and listed on the London, Johannesburg, Malawi, Namibia, and Zimbabwe stock exchanges. At least one third of the shareholders are citizens of Kenya. DIVIDENDS The directors do not recommend the payment of a dividend during the year (2013 – Nil). SHARE CAPITAL The nominal share capital was increased from 1 billion Kenya shillings to 3 billion Kenya shillings. The issued and paid up ordinary shares were increased from 72,495,684 to 217,487,052 through a rights issue where by two (2) new shares were issued for every (1) one held. DIRECTORS The current Board of Directors is set out on page 2. Mr. Morris Kihunyu passed away on 24th July 2014. Mr Rueben Java resigned as Managing Director on 1st August 2014 and was replaced by Mr. Chris Nyokangi on the same day. Mr Rueben Java resigned as Director on 30th September 2014. Mr. Peter Mwangi was appointed to the Board on 5th December 2014. AUDITORS The auditors, Deloitte & Touche, have indicated their willingness to continue in office in accordance with Section 159(2) of the Kenyan Companies Act. BY ORDER OF THE BOARD Pauline Ngonyo Company Secretary 27 February 2015 5 Old Mutual Life Assurance Company Limited CHAIRMAN’S STATEMENT PETER GERARD DE BEYER 6 Annual Report and Financial Statements 2014 CHAIRMAN’S STATEMENT Operating Environment The economy in 2014 generally performed positively with key indices showing satisfactory outcomes. In June, Kenya successfully issued its first Eurobond with a five and ten year bond raising $2B and towards the end of the year successfully re-opened the two bonds to raise an additional $750M. Both issues were significantly oversubscribed demonstrating the significant confidence global investors have in the country and her prospects. The major challenge to the country has been the security incidents during the year that have had a persistent and negative impact mainly on tourism, resulting in a reduction in the number of visitors. Following a re-evaluation of the economic measures of the country and improvements in capturing economic performance, the economy has been estimated to be approximately 25% larger than originally estimated in 2013 at $55B. It is expected the economic growth will be 5% - 5.5% for 2014 and in excess of 6% for 2015. Listed equities performance The Nairobi Securities Exchange (NSE) 20 Share index posted marginally positive results in 2014 of 3.8% and the market capitalization weighted Nairobi All Share Index rose by 19.2%. The continued positive trend in the stock market has been led by solid corporate earnings growth and the relative attractiveness of Kenya listed equities versus other countries and other asset classes. The returns witnessed in 2014 reinforces our long held view that holders of long term policies will see their financial objectives achieved through an appropriate strategy based in part on sound equity investing principles that have a core emphasis of providing real returns. Inflation Inflation eased through the year from 7.15% in December 2013 to close out 2014 at 6.02% mainly due to prudent monetary policy applied by the Monetary Policy Committee of the Central Bank of Kenya and in the latter part of the year falling food and fuel prices. The Central Bank Rate was maintained at 8.5% throughout the year. Foreign exchange rate The Kenya Shilling appreciated modestly against a basket of currencies including the Euro, British Pound and South African Rand. It depreciated against its East African peers to the tune of 2.5% and 4.8% versus the Tanzanian and Ugandan Shilling respectively and against the US Dollar the Shilling closed the year at Kes 90.6 from KES 86.30 at the start of the year depreciating by 5%.