Annual Report 2008 NICO HOLDINGS LIMITED Notes totheFinancialStatements Cash Flow Statement ofChangesinEquity Statement Income Statement Balance Sheet Independent Auditors’ Report Certificate of Actuary Responsibilities ofDirectors’Statement Directors’ Report Corporate Governance Executive Management Board ofDirectorsandSecretary Managing Director’s Report The Chairman’s Statement Summarised ListofShareholders Five Year Highlights CONTENTS 35 34 31 30 29 28 27 26 23 21 19 18 10 7 4 2 Mission Statement To create value for all stakeholders
The Vision To be the leader in insurance and financial services
Our Values Integrity, care, ethical values, quality services,
health and safety, LIMITED transparency, accountability, corporate governance practices
1 Annual Report 2008 NICO HOLDINGS FIVE YEAR HIGHLIGHTS
2004 2005 2006 2007 2008
Gross Income (MK million) 4,256 5,331 7,229 9,001 11,923
Profit Before Tax (MK million) 555 437 1,093 1,729 2,667
Earnings per Share (tambala) 39 30 74 128 171
Net Dividend Paid To Shareholders (MK million) 113 200 229 250 400
Net Dividend paid per share (tambala) * 16 22 14 18 27
Total Assets (MK million) 12,679 17,062 23,240 35,342 44,210
Net Assets (MK million) 1,674 1,804 1,833 2,886 4,702
Share Price (tambala) 160 270 360 800 950
Net Asset Value Per Share (tambala) 160 173 176 272 446
Price To Book Value (times) 1.0 1.6 2.0 2.9 2.1
Price Earnings Ratio (times) 4.1 9.0 4.9 6.3 5.6
Market Capitalisation (MK million) 1,669 2,816 3,755 8,344 9,909
* Dividend paid out of the year’s profits
12,000 GROSS INCOME Profit before Tax (Million Kwacha) (Million Kwacha) 11,000 2,800 2,600 10,000 2,400 9,000 2,200 8,000 2,000 7,000 1,800 1,600 6,000 1,400 5,000 1,200 4,000 1,000 3,000 800 600 2,000 400 1,000 200 0 0 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 Gross Income Profit before Tax
Annual Report 2008 NICO HOLDINGS LIMITED (Million Kwacha) 4,256 5,331 7,229 9,001 11,923 2 (Million Kwacha) 555 437 1,093 1,729 2,667 FIVE YEAR HIGHLIGHTS
1000 Share Price (Tambala) 900
800 700 600 500 400 300 200 100 0 2004 2005 2006 2007 2008 Share Price (Tambala)
180 Earnings per Share Net Dividend per Share (Tambala) (Tambala) 160 30 140 25 120
100 20
80 15 60 10 40
20 5
0 0 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 Earnings per Share Net Dividend per Share (Tambala) (Tambala) LIMITED
5,000 45,000 Total Assets Net Assets (Million Kwacha) 4,500 (Million Kwacha) 40,000 4,000 35,000 3,500 30,000 3,000 25,000 2,500 20,000 2,000
15,000 1,500 10,000 1,000
5,000 500 0 0 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 Total Assets Net Assets (Million Kwacha) 12,679 17,062 23,240 35,342 44,210 3 (Million Kwacha) 1,875 1,950 2,659 2,886 4,702 Annual Report 2008 NICO HOLDINGS SUMMARISED LIST OF SHAREHOLDERS
GENERAL PUBLIC C/O NATIONAL BANK,FMS P/B 945, BLANTYRE 22.94% (Malawian & Foreign)
NICO EMPLOYEES TRUST, C/O NATIONAL BANK,FMS P/B 945, BLANTYRE 1.10% (Malawian & Foreign)
MILLENNIUM HOLDINGS LIMITED, C/O RACANE ASSOCIATES P O BOX 1524 BLANTYRE 9.95% (Malawian)
INTERNATIONAL FINANCE CORPORATION, 1818 H STREET N.W. WASHINGTON DC UNITED STATES 11.65% (American) 20433 OF AMERICA
MILLENNIUM INVESTMENTS LIMITED, C/O NICO HOLDINGS LIMITED PO BOX 501 BLANTYRE 1.35% (Malawian)
SANTAM LIMITED, P O BOX 3881 TIGER VALLEY SOUTH AFRICA 25.10% (South African) 7536
AFRICAP LLC, 5847 SAN FELIPE SUITE 850 HOUSTON USA 27.91% (American) TEXAS 77057
100.00%
One of NICO Holdings’ Shareholder- Africap’s President, Rob Scharar seen here with the Managing Director of NICO Holdings Limited, Felix Mlusu (right), in a consultative meeting with other industry leaders, SUNCORP in Australia, May- 2008
Annual Report 2008 NICO HOLDINGS LIMITED 4 LIMITED
The Board of NICO Holdings Limited seen at the entrance of the new Head Office building, NICO House, soon after the move
5 Annual Report 2008 NICO HOLDINGS services, which are delivered with a high level of professionalism.
We remained focussed on our strategic priorities of maintaining core business mandates, achieving top-line growth, careful selection of our client base and, achieving strong earnings growth. Our regional footprint backed by our identifiable branding, have laid a strong foundation for good future business growth. We will continue using this platform to leverage our corporate operations to gain a competitive advantage over our competitors.
The results of the regional footprint give us more enthusiasm and encouragement to continue with the CHAIRMAN’S STATEMENT implementation of our regional growth strategy. During the year we had hoped to close on a deal in one of the 2008 has been a challenging year target markets in which we sought a presence, but with extremely difficult market due to other logistical issues this did not happen. We conditions which included regulatory are however, confident that this deal will be concluded changes, high claims payouts and, in 2009. reduced earnings on listed equities. In my report of 2007, I had stated that we were finalising Market challenges are, however, the test of any the design and planning for an upmarket shopping mall company, and I am pleased to report that the Group in Lilongwe. I am pleased to report that the project has has achieved significant advances despite a particularly been started and is scheduled for completion during difficult environment. All our business portfolios in the the first half of 2010. Designs for an office complex in markets in which we operate registered exceptionally Lilongwe to house some of our operations are also at strong growth. an advanced stage. Considering the rapid growth and expansion which Lilongwe is experiencing, it is Gross revenues increased from MK11.2 billion to important that we have a significant presence in one MK13.7 billion representing a 22% growth, resulting of Africa’s fastest growing cities. in a profit before tax and transfer to reserves of policyholders’ future benefits of MK4.4 billion, from The stock market experienced a downturn during the MK3.02 billion. Profit before tax grew by 59% to year for a host of reasons, not least the world economic MK2.7 billion from MK1.7 billion. meltdown. The market witnessed significant price drops in some shares. It is however, pleasing to note This growth is a result of clear and practical that our share price registered a 19% increase from strategies with marketing plans which are very MK8.00 to MK9.50 per share by the close of the year. targeted and focussed; introduction of new products; This is a sign of the confidence in the Group’s brand and, customer friendly service. In addition to growth, and good growth prospects. we also take pride in the quality of our products and
Annual Report 2008 NICO HOLDINGS LIMITED 6 Following the good performance and result, the of the board. These committees are charged with the Board of Directors at the Annual General Meeting will responsibility of ensuring that matters, on which the propose a total dividend for the year of 37 tambala board takes decisions, are thoroughly analysed. I am per share for the year under review. This includes pleased to report that our three committees, Finance the interim dividends paid out during the year. As the and Audit, Remuneration and Appointments, and Group is still on a major growth drive, we believe that Investment worked very diligently throughout the the retained earnings will provide a stronger platform year. I thank them and, all my fellow directors for their for higher future growth. commitment, support, guidance and their valuable contribution to the business of our company. I also In line with our core values, we take corporate social thank all directors of Group companies for their varied responsibility with great seriousness. Our business but always valuable contributions. is not just about making profits but also about giving back to the community through various forms of social In conclusion, I thank the management and staff investment. This is in recognition of the simple fact for their hard work, commitment and loyalty in that the community is one of our major stakeholders, producing these excellent results. To all our valued indeed the sine qua non for our business. Our clients, connections and all associated with the involvement ranges from participation with our own Group, I thank you for giving us that opportunity of staff, local communities, the private, and public, association. We trust we can continue to be of real sectors too. value, to all of you.
Good corporate governance practices remain one of our attributes of our core values. While the Board of Directors not only ensures that there is a separation of powers between the board and management, it also ensures George Jaffu that there are relevant and, appropriate committees Chairman
NBS broke new banking ground in 2008 with the importation during the year of purpose-built mobile LIMITED agencies. This one, based in Lilongwe, serves Mponela, Dowa, Ntchisi and Mchinji
7 Annual Report 2008 NICO HOLDINGS The old and dilapidated Chibisa House in Blantyre was, after its acquisition by NICO Holdings Limited, extensively refurbished during the year and now houses the corporate offices as well as those of some of the smaller subsidiaries
Annual Report 2008 NICO HOLDINGS LIMITED 8 LIMITED
9 Annual Report 2008 NICO HOLDINGS again, showed its strong resilience and potential in the face of these challenges.
Despite the challenges, the Group achieved a gross revenue growth of 22% from MK11.2 billion to MK13.7 billion, resulting in a profit of MK4.4 billion, from MK3.02 billion, before tax and policyholders’ future benefits representing 47% growth. Profit before tax grew by 59% from MK1.7 billion to MK2.7 billion.
In achieving these results, we had to ensure that we focus closely on the careful implementation of our strategies which are in line with the Group’s strategic direction as carved out of our strategic growth priorities. Our strategic priorities are to retain our MANAGING existing business, to penetrate the market with existing products and services, to create new products, and to DIRECTOR’S REPORT diversify into new markets. We seem to be doing well in all these areas. The year under review has registered continued strong growth of our Arising from these strategic priorities are the areas businesses. The strong performance of special focus which include staying with our is in no small way due to the rigorous core business which ensures that we do what we implementation of our strategies are good at, ensuring through Human Resource designed to reap maximum rewards management that our people not only perform at from the opportunities we come across. their potential but also that they enjoy what they do, improving the cash-flows which are the lifeblood However, this excellent performance and result have of our businesses, improving operating efficiencies not happened without market challenges. Our banking through robust and dynamic systems, achieving business faced some challenges related to regulatory industry accreditation as a measure of our financial changes when the Central Bank issued a directive strength, professionalism and high standards and regarding handling of the tobacco foreign exchange staying true to our core values as demonstrated by proceeds of our farming clientele. This had a profound our high corporate governance practices. impact on the bank’s operations as it finances a large farming community across the Country. Above all these areas of specific focus, our over- riding aim is to produce sustainable returns to all our We also experienced significant retrenchment stakeholders. This is not just about paying dividends payments in one of our major schemes in our life to our shareholders; it is also about corporate social business. Our general insurance business experienced responsibility in all various forms. In line with our core an increased incidence of motor claims generally. values, this begins with our staff and is taken to all Overall the Group’s performance was good and, once stakeholders in the communities we operate.
Annual Report 2008 NICO HOLDINGS LIMITED 10 Through astute use of its bold corporate colours, NBS branches are now prominent landmarks in almost every city and major town throughout Malawi LIMITED
11 Annual Report 2008 NICO HOLDINGS BANKING significantly was our cost / income ratio. This improved from 81.5% in 2007 to 66.6% in 2008, signifying The year was full of challenges which ranged from improvement in our operating efficiencies. irregular supply of foreign exchange, regulatory changes in the handling of foreign exchange for The bank’s good performance is a clear sign of the tobacco proceeds of our farming clients and stiff great potential it has for future growth. Being part of market competition. However, despite these market the NICO Group, it has the DNA required of a good challenges, this past year was exceptionally good for parent to succeed. this business. GENERAL INSURANCE Performance was beyond market expectations. We were able to achieve a profit before tax of 172% from Overall this line of business performed well during MK413 million to MK1.124 billion. Both net interest the year in all the markets in which we operate. The income and non-interest income grew significantly challenges of increased incidences of motor claims, resulting in a total interest income growth of 51% over liquidity problems and the market competition which the corresponding period. we faced during the previous year continued affecting the operations in this past year. However, their effects In addition to the various growth areas and operational were somehow mitigated by the strategies which we improvements, one other ratio which improved formulated, drawing on the lessons of previous years.
Annual Report 2008 NICO HOLDINGS LIMITED 12
An NBS advertising campaign in print and outdoors media, much acclaimed for its professionalism by independent market observers, led to a further surge in its customer base
Annual Report 2008 NICO HOLDINGS LIMITED 14 We closed the year with a profit before tax of MK817 general insurance company operating in Malawi at the million from MK557 million, a growth of 47% over the present time has received. corresponding period. Apart from continuing to grow the business, our major During the year, we achieved another first for NICO and pre-occupation in the forthcoming year is to quickly roll in Malawi, a milestone in industry accreditation. NICO out our operating system in the remaining markets. General Insurance Company Limited was granted This will assist in improving our efficiencies. a AA- (double A minus) for its financial strength on claims paying ability. This is the highest rating that a LIFE INSURANCE
Gross premium increased to MK2.57 billion from MK1.9 billion representing a growth of 34% over the corresponding period. Investment income was negatively affected by the depressed equity market. Furthermore, group business was also negatively affected by some significant retrenchment payments on some of our large schemes.
During 2007, the method for transfer to reserves was revised by our actuaries whereby this is now to be done on a product by product basis. This revision resulted in significant reserve releases, to the tune of MK1.7 billion, which enhanced our profit for the year.
Training is regarded as vitally important throughout the The overall result therefore is a profit before tax of Group and helps ensure the maintenance and growth MK694 million compared to the MK770 million realised of professionalism in all areas of operation during the corresponding period.
Our business continues to grow and, the underwriting result will continue to achieve good results. However, due to long term investments, which is recommended
for this class of business, our short term investment LIMITED returns may show slow growth or suffer from short term market shocks. Our policy and track record are those of consistent smoothened returns.
CONTINUING GROWTH
This has been a year of continuing growth of all our business portfolios and consolidating our regional footprint. The NICO brand continues to enjoy more market acceptability and, it has indeed become a household name in all the markets in which we
15 Annual Report 2008 NICO HOLDINGS operate. Our scale and geographical spread make us In summary, I would say that the year has been the preferred business partner of many large multi- a successful one and while such success cannot nationals thereby enabling us to benefit from the be repeated, we hope to do even better during the opportunities these businesses bring. This is a good coming year. Our success this year has been due to the platform for continued growth. The prospects continue consistent, disciplined and focussed implementation to look better. of our strategies, in line with our mission.
Looking at the opportunities which present themselves Finally, I would like to pay special tribute to the Board to us and our platform, we remain bullish and confident of Directors, management and staff without whom about future and sustainable growth. Our potential these results would never have been achieved. gives us the strength to leverage on our corporate advantage - to gain competitive advantage.
The confidence about the future is not without regard to both business and operational risks. We are aware of these and have developed the necessary tools to Felix Mlusu deal with these accordingly. Our staff, who are the Managing Director most important asset in our business and who make everything happen, stand guard against and remain vigilant to these risks, perceived, potential or real.
Annual Report 2008 NICO HOLDINGS LIMITED 16 NICO General launched a wide variety of new products during 2008 including a new joint offer, with Auction Holdings Limited, of comprehensive cover for the country’s hundreds of thousands of tobacco farmers LIMITED
Mtetezi is a tobacco insurance policy that comprehensively covers loss or damage to tobacco leaf:
(i) whilst growing in the field as (ii) whilst in the process of picking, a result of hail, wind-storm, stringing, curing, bulking, grading, floods and physical action of re-ordering and in transit until excessive rainfall. finally delivered to the auction floors.
. ENQUIRIES: NICO General Insurance Co. Auction Holdings Ltd. Tel: 01 822 699 / 01 751366 / 01 312 876 Tel: 01 710 377 / 01 840 377 E-mail: [email protected] E-mail: [email protected]
17 Annual Report 2008 NICO HOLDINGS BOARD OF DIRECTORS AND SECRETARY
George A. Jaffu Felix L. Mlusu Chairman Managing Director & Chief Executive
Robert W. Scharar Harold Bijoux Mpumelelo Tyikwe Director Director Director
Alaudin Osman Vizenge M. Kumwenda Betty Kacelenga Director Finance Director Company Secretary
Annual Report 2008 NICO HOLDINGS LIMITED 18 EXECUTIVE MANAGEMENT
Felix Mlusu Betty Kacelenga Managing Director Company Secretary
Vizenge Kumwenda Chris Kapanga John Biziwick Finance Director Chief Operating Officer Chief Executive NBS Bank
Eric Chapola Bernadette Nkhwazi Nauman Ahmed Chief Executive NICO General General Manager (Finance) Chief Executive NICO Insurance Company Limited Technologies LIMITED
Titus Kalenga Ronald Zake Manfred Sibande Chief Executive NICO Zambia General Manager Chief Executive NIKO Tanzania NICO Uganda
19 Annual Report 2008 NICO HOLDINGS The building on Blantyre’s Haile Selassie Street, which NICO Holdings had used as its Head Office for more than 35 years is now the centre of operations for both major subsidiaries, NICO Life and NICO General
Annual Report 2008 NICO HOLDINGS LIMITED 20 CORPORATE GOVERNANCE AND CODE OF ETHICS
NICO Holdings is fully committed to the principles HUMAN RESOURCES of accountability, integrity and transparency as advocated by the King Committee report on Corporate In order to ensure our competitive advantage, Governance. The Board of Directors endorse the Code our human resources strategies focussed on the of Corporate Practices and Conduct as generally participation of our staff in the success of the accepted corporate practices. company and ensured that the quality of the people, Within these parameters, NICO Holdings Limited and their ability to adapt to daily demands, was not in embraced values committed to the highest any way compromised. standards of behaviour and ethics in dealings with NICO Holdings Limited has a lean workforce, as all stakeholders, including directors, managers and most of the competencies are based in the operating employees, customers, suppliers, competitors and companies. In the rapidly changing environment in which society at large. Business was therefore, conducted the company has operated, all staff were encouraged with uncompromising integrity and all our relationships to come forward with ideas, show innovation, to pro- with regulatory authorities, stakeholders and staff actively tackle problems and to find solutions. were maintained to uphold the code. The principles of life-long learning has been endorsed In order to ensure effective management, proper and employees have been encouraged to participate direction and sufficient internal controls, the Board in a diverse cross section of skills and knowledge and its committee have met regularly during the period development courses. under review. The Directors’ diversity, in terms of skills and expertise, provided a wealth of experience The company strove to optimise its human resource - from their various sectors and businesses - thus policies and programmes to ensure that we were guaranteeing constructive and effective decisions on able to nurture and retain highly motivated employees strategies, policies and performance. with the skills and opportunities necessary to ensure sustainable growth and further success. The new boardroom in NICO House is fully equipped The company adhered to its principles of employment with the latest audiovisual equipment equity and broader labour laws.
CORPORATE SOCIAL INVESTMENT
In keeping with its social investment development
and commitment, the company remained sensitive LIMITED to the needs of the community in which we operate. In addition to the normal corporate social investment programmes directed toward education, housing, job creation and training, we have, in conjunction with other partners from the community, spearheaded the safety of school children by handing over traffic control equipment. We have also supported the provision of medical care to the Northern Region while support for safety and youth development is high on the corporate social responsibility list.
21 Annual Report 2008 NICO HOLDINGS CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
For the year ended 31 December 2008
22 component of its Mission Statement; “To maintain professionalism by developing staff to their full potential”. full their The to staff staff Group hasmaintained development programmesthroughtrainingbothlocallyaswell asinternationally. developing by professionalism “Tomaintain Statement; Mission its of major a remains component to committed remains resource therefore Group Human NICO Group. The669). the of (2007: success the 2008, to factor key December and 31 major a at as 762 at stands Group the for complement Staff STAFFING million MK73 of dividend final a share)for theyear(MK0.07 perordinary ended31December 2008. recommend Directors The 2009. April in paid and share)directors the by ordinary per approved was MK0.20 (representing million MK208.6 further A year. the during paid was share) ordinary perMK0.19 (2007: share ordinary per MK0.27 representing million) MK194 (2007: million, MK285 of dividend A DIVIDENDS earnings. retained to added been has MK1.34 billion) (2007: MK1.82 of billion, Group the of shareholders equity to attributable year the for profit The PROFIT policies andnotes. accounting associated and statements flow cash equity, in changes of statements statements, income sheets, balanceaccompanyingconsolidated the in out set Companyare and affairsGroup of the of state and Theresults FINANCIAL PERFORMANCE MALAWI Blantyre P OBox 501 Chibisa House 19 GlynJones The physical addressoftheCompany’s registeredoffice is:- REGISTERED OFFICE technology and60%shareholdinginNBSBank Limitedoffering services; bankingservices. informationofferingNICO Technologies Limited and administration, pension and assurance lifeoffering Limited Insurance Life NICO in shareholding 100% has It business. insurance term offeringshort all (Tanzania)Limited, Insurance NIKO in shareholding 66.67% and Limited, Insurance General NICO and Limited, (Uganda) Insurance information technology. NICO Holdings Limited has 100% shareholding in and NICO Insurance banking (Zambia) Limited, administration, NICO pension and assurance life insurance, general are Group the of activities major The NATURE OFBUSINESS Holdings Limitedanditssubsidiariesfor theyear ended31December2008. The Directors have pleasure in presenting their report and consolidated and separate financial statements of NICO DIRECTORS’ REPORT CONSOLIDATED AND SEPARATE FINANCIALSTATEMENTS For theyearended31December2008 23
Annual Report 2008 NICO HOLDINGS LIMITED Annual Report 2008 NICO HOLDINGS LIMITED All Board committees have termsofreference andreporttothe mainBoard. principles ofgoodcorporategovernance. Boarddischargesthe effectively that duties Boardensure its committeesto withwereestablished accordance in BOARD COMMITTEES SHAREHOLDING STRUCTURE number isnotthreeoramultipleofthenthenearestone-third,shallretirefromoffice. and Directors Executive excluding but Directors appointed by Santam, Directors, Africap LLC, Millennium the Holdings and International of Finance Corporation or,third if their one Company the of Meeting General Annual the At Africap LLC In termsofthememorandumandarticlesassociationBoard isconstituted asfollows: Mrs. Betty Kacelenga Mr. M Tyikwe Mr. Robert W. Scharar Mr. Harold A.R. Bijoux Mr. Alaudin Osman Mr. Vizenge Kumwenda Mr. Felix L.Mlusu Mr. George A. Jaffu oftheCompanyThe duringtheyear: following asDirectorsandSecretary served NICO Employee (Malawian and Foreign) Millennium Investments Limited(Malawian andForeign) International FinanceCorporation(American) Millennium HoldingsLimited(Malawian) General Public (Malawian andForeign) Limited(South Santam African) Africap (American) BOARD OFDIRECTORSANDSECRETARY Santam International FinanceCorporation Millennium Holdings Public Shareholders Executive Management CONSOLIDATED AND SEPARATE FINANCIALSTATEMENTS - (Throughout theyear)Company Secretary Director (From 28November 2008) Director (Throughout theyear) Director (Throughout theyear) Director (Throughout theyear) Finance Director(Throughout the year) Managing DirectorandChiefExecutive Officer (Throughout the year) Chairman (Throughout theyear) - - - - - For theyearended31December2008 2 2 1 1 1 2 Directors Directors Director Director Director Directors 24 100.00 22.85 25.10 27.91 11.65 2008 1.19 9.95 1.35 % 100.00 15.63 25.10 27.91 11.65 2007 11.12 1.10 7.49 % 3 April 2009 2009 April 3 CHAIRMAN George A. Jaffu as office in attheforthcomingappointment willbetabled Annual GeneralMeeting. continue to willingness their expressed have auditors in respect of the Company’s and a resolution proposing their (Malawi) re- financial statements 31 December 2009 Accountants Public Certified KPMG Messrs AUDITORS non- two of consists It decisions. investmentexecutive Directors,theManagingDirectorandFinanceDirector. term The External Auditors attend long by invitation. other and investments market money properties, in investments for The like is Committee investments, of equity approval Investment proposals, responsible investment INVESTMENT COMMITTEE the Managing DirectorandtheFinanceDirector.Directors, non-executive The External two Auditors attend by invitation. of consists It staff. and management to, remuneration and of, appointments to relating issues for responsible forum independent an as Committeeact Remuneration and Appointments The APPOINTMENTS ANDREMUNERATION COMMITTEE by attend auditors external and internal Director, invitation. Finance The committee ayear. meetsatleasttwice Director, Managing The Directors. non-executive two This statements. of Committee.consists committee Audit Theand financial Finance the through Directors and of Board internalthe to and report reports externalauditors Both systems. annual control internal reviewing and accounting for of adequacy the responsible monitors also committee is Committee Audit and Finance The COMMITTEE AUDIT AND FINANCE CONSOLIDATED AND SEPARATE FINANCIALSTATEMENTS For theyearended31December2008
25 MANAGING DIRECTOR Felix L.Mlusu
Annual Report 2008 NICO HOLDINGS LIMITED CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS For the year ended 31 December 2008
STATEMENT OF DIRECTORS’ RESPONSIBILITIES FOR THE FINANCIAL STATEMENTS
The Malawi Companies Act, 1984, requires the Directors to prepare consolidated financial statements for each financial year which give a true and fair view of the state of affairs of the Group and Company as at the end of the financial year and of the operating results for that year.
The Act also requires the Directors to ensure that the Group and Company keep proper accounting records which disclose with reasonable accuracy at any time the financial position of the Group and Company and enable them to ensure that the financial statements comply with the Malawi Companies Act, 1984.
In preparing the financial statements, the Directors accept responsibility for the following:
• Maintenance of proper accounting records; • Selection of suitable accounting policies and applying them consistently; • Making judgments and estimates that are reasonable and prudent; • Compliance with applicable accounting standards, when preparing financial statements, subject to any material departures being disclosed and explained in the financial statements; and • Preparation of financial statements on a going concern basis unless it is inappropriate to presume that the Group and Company will continue in business.
The Directors also accept responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and Company and to maintain adequate systems of internal controls to prevent and detect fraud and other irregularities.
Nothing has come to the attention of the Directors to indicate that the Group and Company will not remain a going concern for at least the next twelve months from the date of this statement.
The Directors are of the opinion that the financial statements give a true and fair view of the state of the financial affairs of the Group and Company and of their operating results and cash flows.
Approval of the financial statements
The financial statements of the Group and the Company were approved by the board of Directors on 3 April 2009 and are signed on its behalf by;
CHAIRMAN
MANAGING DIRECTOR 3 April 2009
Annual Report 2008 NICO HOLDINGS LIMITED 26 CONSOLIDATED AND SEPARATE FINANCIALSTATEMENTS QED Directors: Registration Number1991/005277/07VAT Number 4320101498 Consulting Actuaries: + C.A. RouxB.Com(Hons)CA(Chairman),R.D.Williams Life Insurance Company Limited do not exceed the amount of the life insurance fund NICO the by issued policies fund sinking and individual and funeral, life,unmatured under liabilities the belief and knowledge our of best the to that certify hereby We Executive *Ethiopian N.J. Strohmenger M.SC.FIA,J.L.PotgieterB.Com(Hon)A.P. RouxB.Com(Hons)FIA,A.A.Faure B.Com.FFA, D.T.Mureriwa B.Sc.(Hons)FFA B.Bus.Sc.FIA,P.C.R.D. Williams FalconerB.SC.FFA, M.G.HayesB.Bus.SC.FIA,R.I.ChauhanM.SC.(Econ)G.Tognon B.SC. FFA, CONSULTING For QEDActuariesandConsultants(Pty)Limited CERTIFICATE OFTHEACTUARY For theyearended31December2008 as at31December2008. + * B.Bus.Sc.FIA(MD),Y. Aseffa**, G.M. FaganNDCA.,AM.Mbeki(MASoc),P.C. Falconer 3 April 2009 27 Actuarial, Healthcare &Retirement FundingConsultants The Place,1SandtonDrive,Sandhurst,Sandton,2196 P OBox1874,Parklands,2121Gauteng An AonGroup Company QED Actuaries&Consultants(Pty)Ltd Johannesburg, SouthAfrica Telephone: +27119447000
+ Fax: +27119448115 B.Sc.FFA.
Annual Report 2008 NICO HOLDINGS LIMITED Annual Report 2008 NICO HOLDINGS LIMITED 3 April 2009 Certified Public Accountants andBusiness Advisors KPMG of Malawi Companies Act, 1984, sofar asconcernsthemembersofCompany. separate cash flows for the year then ended in accordance with International Financial Reporting and the Standards provisions and consolidated its and performance financial separate and consolidated its of and 2008, December 31 at Limited Holdings give truea statements financial these opinion, our In fairand view NICOof position financial separate and consolidated the of Opinion We believe thattheauditevidence we have issufficient obtained andappropriatetoprovide abasisfor ourauditopinion. the of presentation overall the evaluating as well financial statements. as management, by made estimates accounting of reasonableness the and used policies accounting of appropriateness the evaluating includes also audit An system. control entity’sinternal the of effectivenessthe on opinion an expressing of purpose the for not but circumstances, the in appropriate are that audit procedures design to order in statements financial the of presentation fair and preparation entity’s the to relevant system control internal considers auditor the assessments, risk those making error.In or fraud to due whether statements, financial the of misstatement material of risks the of assessment the including auditor’sjudgment, the on depend selected procedures The An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. in audit arefree from materialmisstatement. and performreasonableassurancewhetherthefinancialstatements theaudittoobtain our conducted We audit. our on based statements financial accordance these with International on Standards on opinion Auditing. an Those express standards require to that is we comply responsibility with ethical Our requirements and plan responsibility Auditor’s accounting policies;andmakingestimatesthatarereasonableinthecircumstances. financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate responsibility 1984.This ofAct systemfair control relevantandpresentation internal preparation the to maintaining and implementing Companies designing, includes: Malawi the of provisions the and Standards Reporting Financial International with The Company’s Directors are responsible for the preparation and in fairaccordance of these financial statements presentation Directors’ responsibilityforthefinancialstatements notes,assetoutonpages29to95. significant accountingpoliciesandotherexplanatory of cash flowsand statements for the year then ended, and whichthe notes to the financial statements, of include a summary equity changesin of statements the statements, income the and 2008, December 31 at sheets balance the whichcomprise (“TheGroup”),Limited Holdings NICO of statements financial separate and Weaccompanyingconsolidated havethe audited Report ontheFinancialStatements SHAREHOLDERS OFNICOHOLDINGSLIMITED THE TO REPORT AUDITOR’S INDEPENDENT KPMG CONSOLIDATED AND SEPARATE FINANCIALSTATEMENTS For theyearended31December2008 cooperative. A list of the names of the partners is available for inspection inspection for available is partners the of Swiss a names at theofficethe address. of list International, A KPMG of firm cooperative. member a is Malawi KPMG Blantyre, Malawi P.O. Box508 MASM House,LowerSclaterRoad Public AccountantsandBusinessAdvisors KPMG 28
E-mail: Telefax: Telephone:
[email protected] (265) 01820575 (265) 01820744/391
Total equityattributable ofthecompany toequityholders Balance sheets Minority interest
Total Equity Intangible assets Intangible Property andequipment Non-current assets ASSETS Long-term policyholdersliabilities Non-current liabilities Investment properties Interest-bearing loansandborrowings Other investments andloanreceivables Severance pay provision Investment companies insubsidiary Deferred liabilities tax Loans andadvances tocustomers Total non-current liabilities Deferred assets tax Bank overdrafts Current liabilities Total non-current assets Interest-bearing loansandborrowings Inventories Current assets Unearned premiumprovision Amounts due from subsidiary companies Amounts duefromsubsidiary Trade payables Deferred acquisitioncosts Other payables Trade receivables Deposits andcustomeraccounts Other receivables Total current liabilities Loans andadvances tocustomers Total liabilities Income tax receivableIncome tax Total equityandliabilities Short-term investments The independent auditor’s report isonpage28 The aretobereadinconjunction withnotesfrompages 35 -95 financialstatements Chairman signed onitsbehalfby: The ofthe GroupandCompany financialstatements were approved by the Board ofDirectors on3 and April2009 were Cash andcashequivalents Total current assets Total assets Issued sharecapital Equity EQUITY AND LIABILITIES Share premium Revaluation reserve Other reserves Retained earnings CONSOLIDATED AND SEPARATE FINANCIALSTATEMENTS For theyearended31December2008 In thousandsofMalawiKwacha Managing Director
Notes 4.9 40 20 33 21 42 22 34 27 34 29 33 23 36 37 24 39 25 38 26 27 28 29 18 30 30 30 31 19
29 23,496,893 21,839,596 15,354,556 20,713,443 44,210,336 44,210,336 16,905,160 38,744,756 11,701,143 6,379,060 15,087,186 7,228,858 4,702,447 2,462,854 5,465,580 2,026,092 1,834,753 2,944,207 3,180,098 3,292,175 1,076,704 1,192,165 5,515,177 4,427,345 210,906 763,133 925,208 681,860 428,859 956,983 203,213 213,651 56,629 84,355 41,838 78,195 52,152 21,317 2008 - - -
GROUP 31,969,373 35,342,367 35,342,367 13,773,750 14,364,733 18,195,623 11,836,607 20,977,634 4,332,807 10,667,609 4,898,126 2,886,008 2,383,254 3,372,994 1,338,825 1,839,906 4,695,891 5,869,058 3,586,235 5,771,191 6,118,554 1,727,976 Restated 486,986 265,997 174,524 237,870 985,266 685,880 923,998 592,790 428,859 439,151 187,776 72,458 52,152 59,676 16,769 8,543 2007 - - - 1,228,122 1,228,122 1,742,671 1,742,671 1,547,209 851,651 479,272 428,859 315,988 198,561 514,549 195,462 176,000 247,197 95,257 747,111 14,187 117,964 40,286 54,604 80,597 22,499 58,041 52,152 13,765 5,900 2008 COMPANY ------
1,291,313 1,412,190 1,412,190 Restated 816,172 905,903 905,903 440,843 222,951 283,336 506,287 428,859 424,892 218,086 161,041 120,877 63,575 16,382 54,604 65,250 29,158 15,451 12,693 52,152 17,916 7,306 2007 ------
Annual Report 2008 NICO HOLDINGS LIMITED Annual Report 2008 NICO HOLDINGS LIMITED Income statements
Gross earnedinsurancepremiums Revenue Unearned premiumadjustment Insurance premiumcededtoreinsurers Net earnedinsurancepremiums Fees andcommissionincome Income frombankingoperations Investment income Total revenue Fair value adjustmentofinvestment properties Fair value adjustmentofavailable for saledebtsecurities Net GrossIncome Other income/(expenses) Net policyholdersclaimsandbenefits Expenses Insurance contractsacquisitioncosts Bank interestexpense Administrative expenses long term policyholders’ benefits long termpolicyholders’ Profit beforefinancecostsand Finance costs Long-term policyholdersbenefits’ Profit beforeincometaxexpense Income tax expenseIncome tax Profit fortheyear Minority interest Minority Attributable to: Equity holdersoftheparentCompanyEquity
Basic anddilutedearningspershare(MK) The independentauditor’s report isonpage28 The financialstatementsare to bereadinconjunctionwithnotesfrompages35-95 CONSOLIDATED AND SEPARATE FINANCIALSTATEMENTS For theyearended31December2008 In thousandsofMalawiKwacha Notes 4.9 20 19 12 13 14 15 16 10 17 11 6 6 6 7 8 9
30 11,236,265 11,922,673 3,402,439 (1,663,527) (2,619,533) (3,825,476) 1,136,146 (2,187,888) 8,098,224 1,029,686 2,054,923 1,821,942 2,054,923 4,423,173 5,667,994 2,667,124 (242,342) (612,201) (552,545) (501,946) 465,973 232,981 93,003 127,432 (92,522) 2008 1.75
GROUP 1,204,853 (1,890,198) (3,020,516) (1,236,274) 9,000,956 (2,217,620) 6,663,906 2,842,420 1,459,593 1,342,445 1,459,593 8,651,219 3,021,131 1,729,215 4,211,368 (269,622) (234,918) Restated (465,446) (603,665) 392,578 143,245 (21,010) 227,502 (55,642) 117,148 2007 1.29 1,063,289 1,065,065 (338,200) 723,353 339,936 726,865 661,896 607,219 607,219 607,219 (64,969) (54,677) 1,776 2008 ------COMPANY
Restated (270,067) 382,673 690,782 425,948 338,295 308,109 345,401 349,401 345,401 696,015 (87,653) 5,233 7,106 2007 ------Statements of changes in equity CONSOLIDATED AND SEPARATE FINANCIALSTATEMENTS
Reconciliation of movement in capital and reserves Share Share Revaluation Translation Fair value General Retained Minority capital Premium reserves reserves reserve reserves earnings Total interest Total
GROUP Balance at 1 January 2007 52,152 428,859 292,597 26,821 19,515 118,238 895,265 1,833,447 261,429 2,094,876 Prior year adjustment * ------(22,743) (22,743) - (22,743)
Prior year adjustment **** ------38,823 38,823 - 38,823 For theyearended31December2008 Restated balance at 1 January 2007 52,152 428,859 292,597 26,821 19,515 118,238 911,345 1,849,527 261,429 2,110,956
Transfer to general reserve - - (9,518) - - 157,832 (148,314) - - - In thousandsofMalawiKwacha Loan loss reserve ** - - - - - (83,400) - (83,400) (55,600) (139,000) Dilution of shareholding *** - - (40,879) - - - (151,894) (192,773) 121,296 (71,477) Revaluation surplus on property and equipment - - 260,566 - - - - 260,566 47,808 308,374 31 Deferred tax on revalued assets - - (64,739) - - - - (64,739) (10,664) (75,403) Realised revaluation surplus - - - - 8,354 - - 8,354 5,569 13,923 Translation gain - - 1,124 (11,970) - 2,480 (31,302) (39,668) - (39,668) Total income and expense recognised directly in equity - - 146,554 (11,970) 8,354 76,912 (331,510) (111,660) 108,409 (3,251) Profit for the year ------1,342,445 1,342,445 117,148 1,459,593 Total recognised income and expenses 146,554 (11,970) 8,354 76,912 1,010,935 1,230,785 225,557 1,456,342 Dividends to equity holders ------(194,304) (194,304) - (194,304) Balance at 31 December 2007 52,152 428,859 439,151 14,851 27,869 195,150 1,727,976 2,886,008 486,986 3,372,994
* Related to prior year reinsurance adjustment for NICO Insurance (Zambia) Limited ** Related to reversal of loan loss provision in accordance with Reserve Bank of Malawi guidelines. *** The Group diluted its shareholding from 74% to 60% in NBS Bank in 2007. This resulted in a reduction of reserves by MK192 million. **** Prior adjustment relate to reversal of overstated severance pay provision in 2007.
The financial statements are to be read in conjunction with notes from pages 35 - 95 The independent auditor’s report is on page 28
Annual Report 2008 NICO HOLDINGS LIMITED Annual Report 2008 NICO HOLDINGS LIMITED
Statements of changes in equity CONSOLIDATED AND SEPARATE FINANCIALSTATEMENTS In thousands of Malawi Kwacha
Reconciliation of movement in capital and reserves Share Share Revaluation Translation Fair value General Retained Minority capital Premium reserves reserves reserve reserves earnings Total interest Total
GROUP Balance at 1 January 2008 52,152 428,859 439,151 14,851 27,869 195,150 1,727,976 2,886,008 486,986 3,372,994
Transfer from general reserve - - (1,345) - - (89,705) 91,050 - - - For theyearended31December2008 Revaluation surplus on property and equipment - - 602,571 - - - (175,870) 426,701 43,166 469,867 Deferred tax on revalued assets - - (83,394) - - - - (83,394) - (83,394)
Realised revaluation surplus - - - - (27,869) - - (27,869) - (27,869) In thousandsofMalawiKwacha Translation gain - - - (35,941) - - - (35,941) - (35,941) Total income and expense recognised directly in equity - - 517,832 (35,941) (27,869) (89,705) (84,820) 279,497 43,166 322,663 Profit for the year ------1,821,942 1,821,942 232,981 2,054,923 Total recognised income and expenses - - 517,832 (35,941) (27,869) (89,705) 1,737,122 2,101,439 276,147 2,377,586 32 Dividends to equity holders ------(285,000) (285,000) - (285,000) Balance at 31 December 2008 52,152 428,859 956,983 (21,090) - 105,445 3,180,098 4,702,447 763,133 5,465,580
The financial statements are to be read in conjunction with notes from pages 35 - 95 The independent auditor’s report is on page 28 COMPANY In thousandsofMalawiKwacha Statements ofchangesinequity 2007 Balance 2007 at1January Prior year adjustment* Restated balanceat1January 2007 Profit for the year Dividend paid Balance at31December2007 Balance at1January 2008 2008 Profit for the year Dividend paid Balance at31December2008 The independentauditor’s reportisonpage28 The aretobereadinconjunctionwithnotesfrompages35-95 financialstatements * Prior year adjustmentrelatedtoreversal ofoverstated severance pay provision in2007. CONSOLIDATED AND SEPARATE FINANCIALSTATEMENTS For theyearended31December2008 In thousandsofMalawiKwacha 33 capital 52,152 52,152 52,152 52,152 52,152 Share - - - - - premium 428,859 428,859 428,859 428,859 428,859 Share - - - - - Earnings Retained (285,000) (194,304) 234,972 273,795 424,892 424,892 345,401 607,219 38,823 747,111 1,228,122 (285,000) (194,304) 754,806 905,903 905,903 715,983 345,401 607,219 38,823 Total
Annual Report 2008 NICO HOLDINGS LIMITED Annual Report 2008 NICO HOLDINGS LIMITED
In thousandsofMalawiKwacha Cash FlowStatements Cash receiptsfromcustomers CASH FLOWS FROMOPERATING ACTIVITIES Cash payments toclients,employees andsuppliers Cash generatedfromoperations Income taxespaid Net cashflowsfromoperatingactivities Proceeds andequipment fromdisposalofproperty CASH FLOWS (TO)/FROM INVESTING ACTIVITIES Investment andotherincomereceived and loansreceivables andinvestment insubsidiaries Net movements tootherinvestments Additions toinvestment properties Additions andequipment toproperty Net cash(utilisedin)/flowsfrominvesting activities Net proceedsfrom/(repayment of)long-termborrowings CASH FLOWS FROMFINANCING ACTIVITIES Dividend paid Net cashflows(utilised)/frominfinancingactivities Net increaseincashandequivalents Cash andcashequivalents at1January Cash and cash equivalents at31December Cash andcashequivalents Increase innetworking capital ADDITIONAL STATUTORY INFORMATION The independentauditor’s reportisonpage28 The aretobereadinconjunctionwithnotes frompages35-95 financialstatements CONSOLIDATED AND SEPARATE FINANCIALSTATEMENTS For theyearended31December2008 In thousandsofMalawiKwacha Notes 28 18 19
34 11,625,504 (1,481,068) (8,437,593) (1,807,968) 2,998,940 4,838,450 1,655,858 1,303,376 6,175,847 1,337,397 (188,971) (212,092) 3,187,911 (285,000) (180,475) (769,104) 104,525 4,720 2008 GROUP (1,309,204) (5,712,884) 2,646,209 4,838,450 1,616,560 2,001,942 2,192,241 7,790,091 2,077,207 (699,648) (464,042) (194,304) (75,265) 848,645 654,341 895,475 (87,437) 15,687 2007 (285,000) (300,777) (336,334) (131,949) (176,000) 371,947 659,368 321,469 (24,623) (30,727) (51,334) 46,547 31,682 63,575 95,257 71,170 75,179 2008 777 COMPANY (339,328) (121,435) (194,304) (194,304) 339,702 382,673 249,432 86,871 (12,349) 63,798 63,575 8,296 8,670 2007 (223) 543 374 - - the revision andfuture years iftherevision affects bothcurrent andfuture years. estimates ofyear the in or year affectsthat revision accounting only the if revisedto is estimate whichthe in year Revisions the in Recognised are basis. ongoing an on reviewed are assumptions underlying and estimates The other sources. Actual resultsmay differ fromtheseestimates. from apparent readily not are that liabilities and assets of values carrying about judgements the making of basis and various other factors that are believed to be experiencereasonable under historical the on circumstances, the based results of are whichassumptions form associated the and estimates expenses. The and income liabilities, judgements, make to andassets of affectamounts that reported assumptions and and policies estimates accounting of application the management requires IFRSs with conformity in statements financial of preparation The 2.3 available for salefinancialassetsaremeasured atfair value. investment measuredatfair property value; • financialinstruments atfair value throughprofitorlossaremeasuredatfair value; • • the for except basis following: cost historical the on prepared been have statements financial separate and consolidated The 2.2 The were consolidatedandseparatefinancialstatements authorized for issueby theBoard ofDirectorson3 April 2009. issued by theInternational Accounting Board Standards (IASB) andprovisions oftheMalawi Companies Act, 1984. (IFRS) Standards Reporting Financial International with accordance in prepared been have statements financial The issued by theInternational Accounting Board Standards (IASB) andprovisions oftheMalawi Companies Act, 1984. (IFRS) Standards Reporting Financial International with accordance in prepared been have statements financial The 2.1 2. Limited Insurance Life NICO and60%shareholdinginNBSBank Limitedoffering in services; bankingservices. technology shareholding information, 100% offering Limited NICO and has Technologies It administration, pension and business. insurance life offering insurance term short offering all Limited, Limited, (Zambia) Insurance NICO NICO Insurance (Uganda) Limited and NICO General Insurance Limited; and 66.67% in NIKO in Insurance (Tanzania) shareholding 100% has Limited Holdings NICO technology. information and banking administration, pension and insurance life insurance, general are Group the of activities major The subsidiaries its and Company (together referredthe toasthe “Group”). the comprises The company islistedonMalawi Stock2008 Exchange. of December 31 ended address year the for The Malawi. statements in financial separate domiciled company liability limited a Company’s is registered office Company) is: 19 Glyn (The Jones, Chibisa House, Limited P.O. Holdings Box 501, NICO Blantyre, Malawi. The Consolidated and 1.
Basis of preparation preparation of Basis Reporting entity Use ofestimatesandjudgements Basis ofmeasurement Statement ofcompliance NOTES TO THE FINANCIALSTATEMENTS For theyearended31December2008 In thousandsofMalawiKwacha 35
Annual Report 2008 NICO HOLDINGS LIMITED Annual Report 2008 NICO HOLDINGS LIMITED and the minority’s share of changes in equity since the date of the combination. Losses applicable to the minority minority the to applicable Losses combination. the of date the since equity in changes of share minority’s the and combination business original of the date at the interests of those amount of the consist interests Minority therein. Group’sthe from separately identified are equity subsidiaries consolidated of assets net the in interests Minority iii) intra-Group from arising expenses and income eliminated inthesameway asunrealized gains,butonlytotheextent thatthereisnoevidence unrealized ofimpairment. any and less cost transactions, transactions, are eliminated in preparing the and Consolidated at and separate Financial Statements. Unrealized balances losses are carried Intra-Group are subsidiaries ii) in investments statements, financial separate impairment losses. Company’s the In that date control ceases. the until commences control that date the from statements financial the in included are of subsidiaries statements financial activities. The its from benefits obtain to as so entity another of policies operating and can Company financial the governthe to power has entity or an when exists control statements, financial separate and indirectly; Consolidated or directly capital share nominal the appoint, of or prevent the appointment half of not less than one half of the Directors of than the subsidiary Company. more Under IAS 27, holds Company the where exist to presumed is control 1984Act Companies Malawi the Company.Under the by controlled are that Limited(Tanzania) Insurance NIKO and Limited Bank General NBS Limited, NICO (Uganda) Insurance NICO Limited, subsidiaries; (Zambia) its and Company the include CompanyInsurance LifeNICO Limited, Statements CompanyInsurance NICO Limited, Technologies InsuranceNICO Limited, Financial separate and Consolidated The i) 3.1 comparative amountshave beenreclassifiedtoconfirmwiththecurrent year’s presentation. and separate financial and statements have been applied consistently by the Company and group entities. Certain The accounting policies set out below have been applied consistently to all periods presented in these consolidated 3. the also is nearest thousand. which the Kwacha,to rounded Malawi been Kwachahas Malawi in in presented presented information financial are All currency. functional Company’s statements financial separate and consolidated These 2.4 Note Note20 • Note4.9 • • accounting applying in in found be can judgements statements financial the the following critical notes: in Recognised and amounts the on effect uncertainty significant most have estimation, that of policies areas significant about Information 2.3 2. Significant accountingpolicies Basis ofpreparation(continued) Basis ofconsolidation Functional andpresentationcurrency Use ofestimatesandjudgements(continued) Minority interest Transactions eliminatedonconsolidation Subsidiaries NOTES TO THE FINANCIALSTATEMENTS (continued)
21 For theyearended31December2008 Other - Investment properties - Long-term insurancerisk - In thousandsofMalawiKwacha
investments 36
and
loans
receivable
3.2 Group the of interests the to investment coveradditional thelosses. against an make to able allocated is and are obligation binding a equity has minority the that subsidiaries’ extent the to the except in interest minority’s the of excess in emergence ofsuch margins. future margins in the revenue from the related contracts. The rate of amortization is consistent with the pattern of Deferred acquisition costs are amortised over the period in which the costs are expected to be recoverable out of they arerecoverable outof future margins. lifeand incurredannuity Costs insurance, general acquiring in deferred are contracts assurance extentthe to that Deferred acquisitioncosts provisions and disclosedseparatelyifmaterial. claims Themade methodsused,andtheestimatesmade,arereviewedare regularly. to adjustments the which in period the of Adjustments statements discounted. financial the in not reflected are years are prior in established outstanding claims for Provisions trends. past and and changes legislative experience trends, judicial inflation, procedures, handling claims in changes as such events, claims individual reviewing by assessed are and outstanding making allowance for Claims claims incurred but not margin. yet reported, the effectsprudential of both internal and appropriate external foreseeablean and expenses handling claims external and internal related and not, or reported whether date sheet balance the at unpaid but incurred claims all settling of cost ultimate the of estimate Group’s the for provisions comprise outstanding Claims events from arising claims outstanding and paid of occurring during thefinancialyear together withadjustmentstoprioryear claimsprovisions. costs handling and settlement the comprise incurred Claims Claims contract insurance eachestimated for toreflectanyis variationadjusted ifnecessary intheincidenceofriskduringperiodcovered by separately thecontract. which computed years, written financial subsequent premiums or following gross the of in earned proportion be to the comprises premiums unearned for provision The Unearned premium provision of risk,over period,basedonthepattern theindemnity oftherisksunderwritten. The earned proportion of premiums is Recognised as revenue. Premiums are earned from the date of attachment written premiums inprevious years.of estimates to on based adjustments and duties premiums ‘pipeline’ or for taxes estimates include any written excludePremium premiums. and year, the during written business reflect written premiums Gross Revenue i) Recognition andmeasurement 3.3 surpluses between “with profits”policyholdersandtheshareholders. The Life and Pensions Fund is actuarially valued each year. Based on the advice of actuaries, the Company allocates
Accounting forresultsoftheLifeandPensionsFund Insurance contracts contracts Insurance General insurancecontracts NOTES TO THE FINANCIALSTATEMENTS (continued) For theyearended31December2008 In thousandsofMalawiKwacha 37
Annual Report 2008 NICO HOLDINGS LIMITED Annual Report 2008 NICO HOLDINGS LIMITED Amounts due to and from policyholders, agents and reinsurers are financial instruments and are included in in included are and instruments financial are reinsurers and agents insurance receivables andpayables, andnotininsurancecontractprovisions. policyholders, from and to due Amounts Insurance receivables andpayables in used are forin theincomestatement year. provisions contract is Recognised insurance The deficiency is established. the provision an additional backing is identified If a claims shortfall tests. these assets as performing such from expenses, income related investment and and flows cash expenses, contractual handling future all of estimates best Current adequate. are provisions contract insurance if the to determine performed are tests adequacy liability date, sheet At each balance Liability adequacytest a of element discretionary the participationfeaturecontract withadiscretionary asaliability. recognizes Group The contract. the issues that entity other or fund Company, the of loss or profit the or insurer the by held assets of pool specified a on investmentreturnsunrealized or and are and of insurer the of discretion the at realizedcontract, of type specified a or contracts contractuallyof performancepool the specified on the based of contractually is timing or amount whose and the of benefits portion contractual significant a be total to likely are that benefits additional payments, minimum guaranteed to a supplement as receive to policyholder a by held right contractual a is feature participation discretionary a with contract A Participation FeaturesInsurance contractswithaDiscretionary (DPF) intheperiodwhichstatement they areincurred. Acquisition costs in respect of insurance contracts with a DPF are not deferred and are Recognised in the income when notified. Recognised are claims Death paid. when as Recognised are claims Recognised Surrender are payment. for claims due when expenseannuity an and Maturity claims. death and surrenders annuities, maturities, include Claims Claims Premiums policyholders. to allocated are units corresponding life the unit-linked exclude of any when taxesordutiesbasedonpremiums. respect Recognised in are Premiums due. contracts when revenue (Discretionary assurance as DPF with Recognised are insurance and contracts contracts, Features) assurance life Participation non-linked and annuity of respect in Premiums Revenue ii) agents, policyholders, from due amounts brokers andre-insurancecontracts. include These due. when Recognised are payables and Receivable Receivable andpayables related to insurance contracts Recognition andmeasurement(Continued) 3.3 3. Significant accountingpolicies(Continued) Insurance contracts(Continued) Long-term assurancecontracts NOTES TO THE FINANCIALSTATEMENTS (continued) For theyearended31December2008 In thousandsofMalawiKwacha 38 measured reliably. if it is probable that the future economic benefits embodied within the part will flow to the Group and cost can be The amount of the and itemequipment is Recognised cost of replacing part of an item of property in the carrying iii) income in Recognised is remeasurement on arising loss statement. or gain Any property. investment value as fair to classified remeasured is and it time which at complete, is development or constructionproperty as until cost classified at is stated property and investment an as use future for developed or constructed being is that Property ii) property of amount carrying the with disposal from and equipment. proceeds the comparing property by of item an determined of are disposal are on equipment they losses and and lives, Gains useful equipment. and different property having of items components separate as major for accounted comprises equipment and property of item an Where assets were locatedisalsoincludedinthecostofassets. thewhich on site the restoring and items the removing and dismantling of cost the relevant,overheads. Where self- of cost The asset. the of constructed acquisition assets includes the to cost of materials, attributabledirect labour and an directly appropriate proportion of are normal production that expenditures includes Cost losses. Items of property and equipment are measured at cost less accumulated depreciation and accumulated impairment i) 3.5 differences exchange Foreign transactions. of dates rates the at at Kwacha ruling Malawi arising onretranslationareRecognisedcalledtranslationreserve. directlyasaseparatecomponentofequity to rates exchange translated are foreign the operations to foreign of approximating expenses and income The date. sheet the at rulingbalance rates exchange foreign at Kwacha Malawi to translated value are fair consolidation, including on arising currencies, adjustments functional different have which operations foreign of liabilities and assets The ii) determined. was value fair the dates the at ruling rates exchange foreign Kwacha at Malawi to translated are value fair at stated foreignin denominated liabilities and assets currencies arethat Non-monetary transaction. the of date the at rate assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange Non-monetary statement. income the in Recognised are translation on arising differences currency Foreign date. that at ruling rate exchange the at currency) Kwacha (functional Malawi to re-translated are date foreign sheet in balance denominated the at liabilities currencies and assets Monetary transactions. the of dates the at ruling rates exchange the at entities group of currencies functional respective the to translated are currencies foreign Transactionsin i) 3.4
Property and equipment equipment and Property currency Foreign Subsequent costs Reclassification toinvestmentproperty Recognition andmeasurement Financial statementsofforeignoperations Foreign currencytransactions NOTES TO THE FINANCIALSTATEMENTS (continued) For theyearended31December2008 In thousandsofMalawiKwacha 39
Annual Report 2008 NICO HOLDINGS LIMITED Annual Report 2008 NICO HOLDINGS LIMITED the lessorby way isRecognised ofpenalty asanexpense intheperiod inwhich termination takesplace. tomade be to expired,anypaymentrequired has period lease beforethe terminated is lease operating an When line basisover theperiodof thelease. benefits of ownership. Payments made under operating leases are charged to the income on statement a straight and risks the all substantially effectively retains lessor the if leases operating as classified are assets of Leases ii) method (beforewhich tax), periodicrateofreturn. reflectsaconstant effectivethe using lease interest the of term overRecognisedthe is income Lease income. finance unearned as Recognised is receivable the of value present the aand receivable as gross Recognised the is between differencepayments receivable. The lease the of value present the lease, finance a to subject held are assets When the lessor. the reduces of which liability repayment capital the and period lease the the over identify income to against method charged is which interest cost, effective finance the using separated are payments Lease payments. lease minimum the of value present the and asset leased the of value fair the of lower the at capitalized are leases Finance leases. finance as classified are ownership, of risks and benefits the all substantially assumes Group the where Leases i) 3.7 The residualvalue, usefullife andmethodofdepreciationisreviewed ateach balancesheetdate. Computerhardware Fixtures andfittings • Otherequipment • Motorvehicles • Leasehold landandbuildings • Freehold buildings • • The estimatedusefullives for current andcomparative periodsareasfollows: progress arenotdepreciated. work-in- capital and Land separately. for accounted are that items components of major lives and useful equipment and estimated property the of over basis line straight- a on statement income the to charged is Depreciation v) the revaluationearnings. toretained reserve equivalent to the additional depreciation arising from revaluations is transferred annually, net of deferred fromtax, amount An reserve. revaluation the to transferredpreviously surpluses revaluation to relate they that extent the is reserve transferred to earnings. retained Revaluation decreases are charged to the income exceptstatement to as the of portion appropriate date the asset, the of sheet realization On reserve. revaluation to balance transferred are revaluations on the at values fair using determined be economic would conditions dictate, bywhich independent valuers. that The from basis of valuation used materially is current differ market value. not Surpluses does amount carrying the that such regularity sufficient with out carried are equipment and property of Revaluations iv) 3.6 3. Significant accountingpolicies(Continued) Leases Property andequipment(Continued) Operating lease Finance lease Depreciation Recognised Revaluation NOTES TO THE FINANCIALSTATEMENTS (continued) For theyearended31December2008 In thousandsofMalawiKwacha 3 years 10 years 3-10 years 5 years 40 years orover theleaseperiodiflessthan40years 40 years 40 Computersoftware • The estimatedusefullives for current andcomparative periodsareasfollows: not yet available for usearetestedfor impairmentonanannualbasis. are that assets Intangible amount. recoverable its exceeds amount carrying the if recognised is is loss impairment there whether determine to An date estimated. is asset’samount recoverablethe sheet then exists indication suchany balance If impairment. each of indication anyat reviewed is assets intangible of amount carrying The years five to three for thecurrent andcomparative periods. between is software of life useful estimated use. The for available is it date the from software, the of life useful estimated the over basis line straight a on statement income the in recognised is Amortisation the specificassettowhich itrelates. All otherexpenditure isexpensed asitisincurred. in embodied benefits economic future the increases it if only capitalised softwareis expenditureon Subsequent the developing to attributable amortisation andimpairmentlosses. directly costs all includes software accumulated less cost at stated developedsoftware life.is Internally useful overits amortised are software, developed and internally of cost capitalised The therearesufficient resourcestocompletedevelopment andtousetheasset. itistechnically and commerciallyfeasible; and, • theGroupcanreliablymeasurecoststocompletedevelopment; • • Software acquiredbyatcostlessaccumulatedamortisationandimpairmentlosses. theGroupisstated 3.8 • Expenditure oninternallydeveloped software isrecognisedasanassetwhen: the Group’s obligationsspecifiedinthecontract expire oraredischarged orcancelled. ifall deRecognised are liabilities Financial asset. the sell purchaseor to itself substantially commits Group the or that date the i.e., control retaining date, trade at without for accounted are assets party financial of sales and another purchasesRegular asset. to the of rewards and asset risks financial the transfers Group the if or expire assets financial the from flows cash the to rights contractualGroup’s the if deRecognised are assets Financial A financial instrument is Recognised if the Group becomes a party to the contractual provisions of the instrument. value fair initial to at Subsequent not below. described recognition non-derivativeas financialinstruments aremeasuredasdescribedbelow. instruments except for costs, plus, transaction value attributable fair directly any at loss, or profit initially through Recognised are instruments financial Non-derivative cash andequivalents, loansandborrowings, andtradeotherpayables. Non-derivative financial instruments comprise investments in equity and debt securities, trade and Non-derivative financial instrumentsother receivables, 3.9 in amannerthatwillgeneratefuture economicbenefits; the Intangible assets Financial instruments Group NOTES TO THE FINANCIALSTATEMENTS (continued) is able to demonstrate For theyearended31December2008 its In thousandsofMalawiKwacha intention and 4-8 years 41 ability to complete the
development
and use the software
Annual Report 2008 NICO HOLDINGS LIMITED Annual Report 2008 NICO HOLDINGS LIMITED guarantees areincludedwithin otherliabilities. the the present value of any expectedover payment (when payment under the guarantee has become probable). Financial amortised is value initial the and value fair their life of the guarantee. at The guarantee is liability subsequently measured at the higher of this amortised amount andRecognised initially are liabilities guarantee Financial instrument. a for holder the failsdebtor specified debta makea because to of incurs terms it the loss paymentwith accordance in due when reimburse to payments specific make to Group the require that contracts are guarantees Financial Financial guarantees rate interest effective the using cost amortised at is directly method. plus measurement settlement on Subsequent be to costs. amount the transaction being value attributable fair at measured initially are payables other and Trade Trade andotherpayables themovementstatement, inthefair value isaccountedforasinterestincome. intheincomestatement Where the Group has elected to classify and account for any loan as a financial asset at fair value through income origination fees received arecapitalizedtothevalue oftheloanandamortisedthroughinterestincome. and costs transaction Origination losses. impairment less method effectiveinterest the forusing cost accounted amortised at are receivables and Loans loans. purchased include and market active an in quoted not are that paymentsdeterminable or fixed with assets financial are receivables and loans as classified advances and Loans through incomestatement. value fair at assets financial or receivables and loans as recognition initial on classified are advances and Loans Loans andadvances or lossaremeasuredatfair value, andchanges thereinareRecognised inprofitorloss. attributable incurred.instrumentsRecognisedwhen Financial are loss costs or transaction profit fairin at value profitthrough recognition, initial Upon value. fair their on based decisions sale and purchase makes and investments such or if loss manages profit the Group at fair through value are designated instruments Financial recognition. initial such upon as designated is or trading for held is it if loss or profit through value fair at as classified is instrument An Financial assetsatfair value through incomestatement Recognised income statement. to transferred are is equity items in loss or gain monetary available-for-sale cumulative the deRecognised, available-for-sale is as investment on an equity. When in losses directly classified and gains are exchange foreign securities and than losses other debt therein, changes impairment and value fair at certain measured are they and recognition, initial to securities Subsequent assets. financial equity in investments Group’s The Available-for-sale financialassets any impairmentlosses. less method, interest effective the using cost amortised at measured are investments Held-to-maturity to-maturity. tohold debtsecuritiestomaturity,positivethe If theGrouphas ability intentand then they as held- are classified Held-to-maturity investments 3.9 3. Significant accountingpolicies(Continued) Financial instruments(continued) NOTES TO THE FINANCIALSTATEMENTS (continued) For theyearended31December2008 In thousandsofMalawiKwacha 42 investment isaccountedfor property asdescribedinaccountingpolicynote(o). from income Rental statement. income the in Recognised is value fair in change a from arising loss or gain Any the partieshadeach actedknowledgeably, prudently andwithout compulsion. is value of Fair date valuation between a the willing buyervaluer. and on a exchangedwilling seller in an be arms length transaction aftercould registered proper marketing whereinproperty a which for independent amount an estimated the by being values, market determined on based as value fair at measured is property Investment 3.10 less any impairmentlosses. method, effectiveinterest the using cost amortised at measured are instruments financial non-derivative Other Other by dividend period the shareholdersontheregisterof onthedateofpayment. the numberofordinary during Recognised dividends ordinary the on based is share per dividend of calculation The iii) shareholders. shares Dividends are on Recognisedordinary in in equity the period in which they are approved by the Company’s ii) Recognised asadeductionfromequity, netofanyeffects. tax shares are classified as equity.Ordinary costs directly attributable Incremental shares are to the issue of ordinary i) Share capitalanddividends (g). 4 policy accounting in described as loss or profit in immediately Recognised changes value fair with value, fair at accounts deposit customer carries Group The at fair value throughprofitorloss. liabilities the carry to chooses Group the where except method, interest effective the using cost amortised their measured at subsequently and costs, transaction plus value fair at measured initially are liabilities deposits Customer the with accordance in instrument. the of instruments terms equity contractual the of or substance liabilities financial as instruments capital classifies Group The a as for accounted is arrangement the date, future a on deposit, andtheunderlyingassetcontinuestobeRecognised intheGroup’sprice financialstatements. fixed a at asset) similar a (or asset the repurchase a “repo”into toenters or agreement “stock lending” simultaneously and asset financial a sells Group the When Customer depositsaccountsaretheGroup’s sourcesofdebtfunding. accounts. deposits term and denominated, currency foreign accounts, savings and current comprise accounts deposits Customer Customers’ depositsaccounts Investment property Dividend pershare Dividends onordinaryshares Ordinary shares NOTES TO THE FINANCIALSTATEMENTS (continued) For theyearended31December2008 In thousandsofMalawiKwacha 43
Annual Report 2008 NICO HOLDINGS LIMITED Annual Report 2008 NICO HOLDINGS LIMITED financial assetRecognised previouslyistransferred inequity toprofitorloss. All impairment losses are Recognised in income statement. Any cumulative loss in respect of an available-for-sale assets areassessedcollectively inGroupsthatsharesimilarcreditriskcharacteristics. financial remaining basis. The individual an on impairment for tested are assets financial significant Individually to itscurrent fair value. difference the as original the by at reference is asset calculated calculated financial discounted of is an in loss available-for-sale flows respect An rate. cash impairment interest effective cost future estimated amortised the of value at present the measured and amount, asset carrying its financial between a of respect in loss impairment An events have hadanegative effect ontheestimatedfuture cash flows ofthatasset. more or one that indicates evidenceobjective the if impaired be to considered is asset financial A impaired. is it A financial asset is assessed at the balance sheet date to determine whether there is any objective evidence that Financial assets 3.13 flows, cashandequivalents arepresentednetofbankoverdrafts. cash of statement the of purpose the For deposits. call and balances cash comprise equivalents cash and Cash 3.12 the less business, of course ordinary the estimated costofcompletionandsellingexpenses. in price selling estimated the is value realizable Net condition. and location existing their to them bring and inventories the acquiring in incurred expenditure includes and principle Consumable stock is measured at the lower of cost and net realizable value. Cost is based on the first-in-first out 3.11 value fair model for uses theassetrecognition. lessee the and property investment of definition the meet otherwise would property the if property interest A that property is held by a lessee under an operating lease is classified and accounted for as investment is loss Any earnings. retained to transferred is gain the Recognised immediately. intheincomestatement item, the of disposal Upon any gain. a use, is it if its equity in in change directly a following property investment an becomes differences arising at the date of equipment transfer between the amount carrying of and the item and its fair value is Recognised property of item an When 3.10 3. Significant accountingpolicies(Continued) Impairment Cash andcashequivalents Inventories Investment property(continued) NOTES TO THE FINANCIALSTATEMENTS (continued) For theyearended31December2008 In thousandsofMalawiKwacha 44 interest basis. and effectivean on cost borrowings the of between period differencethe over statement any initial income the to in with Recognised being value cost redemption Subsequent amortised costs. at stated transaction are borrowingsattributable bearing less interest value, recognition, fair at initially measured are and borrowings of the provisions contractual the to party a becomes Group the when Recognised are borrowings bearing Interest 3.14 loss impairment no if had beenRecognised. amortization, or depreciation accumulated of net determined, been have would that amount carrying exceedthe not does asset’samount the that carrying extent the to reversedonly is loss impairment An loss a that indications any for date has decreasedornolongerexists. reporting each at assessed are periods prior in Recognised losses Impairment loss isRecognised iftheestimatedrecoverable amount. amountislessthanthecarrying is there whether determine to date recoverableasset the estimated. then is impairmentarise, amount An indications sheet If impairment. anyof indication balance each at reviewed are assets non-financial of amounts Carrying Non financialassets reversal isRecognised inequity. the securities, equity Foravailable-for-saleare that loss. assets and financial profit in Recognised reversalis the securities, debt are that assets financial sale for available and cost amortised at measured assets financial For loss was Recognised. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment Reversal ofimpairment The amountsrequiredtofund theassessedlevel ofprovision for creditlossesarecharged totheincomestatement. Advances arewritten off ofrecovering oncetheprobability becomesremote. take and advances of evaluations specific on based are account ofpastlossexperience, debts, economicconditionsandchanges inthenature andlevel ofriskexposure. doubtful identified covering provisions, Specific Advances inthebalancesheetafter andotherassetsarestated thedeductionofprovisions for creditlosses. Loans andadvances Interest bearingborrowings NOTES TO THE FINANCIALSTATEMENTS (continued) For theyearended31December2008 In thousandsofMalawiKwacha 45
Annual Report 2008 NICO HOLDINGS LIMITED Annual Report 2008 NICO HOLDINGS LIMITED on preference shareinvestments form partoftheGroup’s lendingactivitiesandareincludedininterestincome. interest- on adjustments value fair includes bearing financial instruments held income at fair value, interest excluding financial instruments Net held for trading. Dividends rate. received interest effective original the on based value impaired the on Recognised be to continues income interest impaired, been have assets financial Where amortised and loss) or profit as interestincomeover thelife oftheasset. through value fair carrying at the instruments to financial capitalized (excluding are instruments sheet, financial balance of amount on assets margin-yielding bringing of result a as received fees origination and incurred costs transaction incremental Direct statements. financial the on amount carrying the to basis accrual exactly discounts an estimated future cash paymentson or receipts through the expected life instruments of the financial instrument interest-bearing all for using the statement effective interest method. In income terms of the effective the interest method, interest in is Recognised at a rate that Recognised is income Interest i) 3.16 date andarereducedtotheextentbenefitswillberealized. thatitisnolongerprobabletherelatedtax sheet balance each at reviewed are assets tax Deferredavailable utilized. be be differencecan will temporary the profits which against taxable future that probable is it that extent the to only Recognised is asset tax deferred A it relatestoitemspreviously charged orcrediteddirectlytoequity. effect on deferred tax of any changes in tax rates is Recognised in the income statement, except to the extent that it relates to a transaction that is Recognised directly in equity, or a business combination that is an acquisition. The enacted at the balance sheet date. Deferred is Recognised tax exceptto the income statement to the extent that substantively or of enacted rates manner tax using liabilities expected and assets of the amount carrying on the settlementof or based realization is provided tax deferred of amount The future. foreseeable the in reversenot will they that probable is it that extent the to subsidiaries in investments to relating differences and taxation profit, for used amounts the taxable or assets accounting affectsthe that of neither and combination business a and not is that recognition transaction a in liabilities or initial the purposes differences; temporary reporting following the for financial Recognised not for is tax Deferred liabilities purposes. and assets of amounts carrying Deferred is tax Recognised using the balance sheet method, liability providing fordifferences temporary between Deferred tax enacted atthebalancesheetdate,andanypayable adjustmenttotax inrespectofprevious years. substantively or enacted rates tax year, using the for income taxable the on payable tax expected the is tax Current Current tax to theextent thatitrelatesto itemsRecognised directlytoequity, inwhich caseitisRecognised inequity. Income tax expense comprises current and deferred tax. Income tax is Recognised in the income statement except 3.15 3. Significant accountingpolicies(Continued) Revenue recognition Incometax Interest income NOTES TO THE FINANCIALSTATEMENTS (continued) For theyearended31December2008 In thousandsofMalawiKwacha 46 The Group contributes to a number of defined contributions pension schemes on behalf of its employees. The The employees. its the payroll andarecharged againstprofits asincurred. of behalf on schemes of percentage a on pension based Fundsare the to Contributions incurred. is it period the contributions in Recognised is cost pension defined of number a to contributes Group The a into contribution fixed pays andwillhaveseparate entity Group nolegalorconstructive obligationtopay furtheramounts. the which under plan benefit post-employment is plan contribution defined A Defined contribution plans 3.18 risks specifictotheliability. flows cash future expected the discounting by at a rate pre-tax that reflects current determined market assessments of the time valueare of money and, where appropriate, the provisions material, is effect the If obligation. the settleto required be will benefits economic of outflow an that probable is it reliably,and estimated be can that constructiveobligation or legal present a has Group the event, past a of result a if,as Recognised is provision A 3.17 The accountingpoliciesfor therecognitionofrevenue frominsurancecontractsaredisclosedinnote4(c). v) the over income rental total the of term ofthelease. part integral an as Recognised are granted incentives Lease lease. the of term overbasis thestraight-line a on statement income the Recognisedin is investment from property income Rental iv) The shares. is takentoincomeonanamortisedcost;ittreatedasaccrued interestincludedinotherreceivables. listed in investments and property investment of financial instruments value include local registered stocks, bills fair treasury and fixed deposits. in The discount on increase Treasury and bill companies unlisted and Investment income comprises of interest income on money market financial instruments and dividends from listed iii) act. Fees charged aloanareRecognised forasrevenueisprovided. servicing as theservice generally Recognised are provided on an incurred or on executionbasis when the related services of a significant as Recognised are dividends dividends received to the Scrip extent that they compare to cash dividends in a similar entity. Fees established. and commission are is receipt to right which in period the in Recognised are Dividends of investment bankingassets. related transactions, net and revenueinsurance from banking, exchangefrom commission and and securities feestrading investments, and from net dividends gains on includes revenuethe realization Non-interest or revaluation ii) Employee benefits Provisions Insurance Premiums Rental income Investment income Non-interest revenue NOTES TO THE FINANCIALSTATEMENTS (continued) For theyearended31December2008 In thousandsofMalawiKwacha 47
Annual Report 2008 NICO HOLDINGS LIMITED Annual Report 2008 NICO HOLDINGS LIMITED • financial separate and consolidated these preparing in applied been not statements: have and year 2008, the for effective December yet 31 not are ended interpretations and standards to amendments standards, new of number A 3.21 to theacquisition,issueordisposalafinancialliability. effectivethe of part integral an rate. interest Transactionattributabledirectly are that costs incremental are costs The calculation of the effective interest rate includes all fees, transaction costs, and discounts or premiums that are is notrevised subsequently. and liability financial the of liability.recognition financial initial the on of established effectiveTheis rate interest amount carrying the to period) shorter a (or,appropriate, where liability financial the lifeof expected the through interest method. effectiveThe effectivethe interest using rate is the rate that exactly discounts the statement estimated future cash paymentsincome the in Recognised is and expense interest of comprise expense Finance 3.20 the weighted average sharesfor theeffects numberofordinary shares. ofalldilutive potentialordinary and shareholders ordinary to attributable loss or profit the adjusting by determined is share per earnings Diluted orsubdivisionandthecorresponding figuresforcapitalization allearlierperiodsareadjustedaccordingly. have been issued by way of capitalization or subdivision, the profit is apportioned over the shares in issue after the the year. during shares new Where equity outstanding the shares of of by number ordinary average Company the shareholders weighted ordinary to attributable loss or profit the dividing by calculated is share per earnings Basic 3.19 3. • • IFRS and separate financial statements, isnotexpectedand separatefinancialstatements, tohave any impactonthefinancialstatements. free or discounted goods or services. IFRIC 13, which becomes mandatory for the such Group’sfor awards as credits redeem can 2009 consolidated which customer the under programmes loyalty customer in, participate asset as part of the cost of that asset. The Group is currently in the process of evaluating the potential potential the evaluating of process the in currently is Group The asset. that effecting therevised IAS 23which for theGroup’s willbecomemandatory of financialstatements. 2009 cost the of part as asset qualifying a of production or construction acquisition, the to attributable directly costs borrowing capitalize IFRIC Revised assess to order in each segment’smanagement performanceGroup’s andtoallocateresourcesthem. the by segment reviewed of regularly disclosure reports internal the the on require based will information statements, financial 2009 Group’s the for mandatory becomes Significant accountingpolicies(Continued) New standards andinterpretations notyetadopted Finance costs Earnings pershare NOTES TO THE FINANCIALSTATEMENTS (continued) 8 13 Operating
IAS Consumer
23
Borrowing Segments Loyalty
For theyearended31December2008 Costs Programmes introduces
removes In thousandsofMalawiKwacha the
the addresses “management
option 48
to the
expense accounting approach”
borrowing by to entities segment
costs
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The willnothave interpretation any effect ontheGroup’s consolidatedandseparatefinancialstatements. • • • • • • currently inthe processofevaluating thepotentialeffect ofthisamendment. is required. Group Theapplication retrospective with statements, financial 2010separate and consolidated for Group’s the flows mandatory cash become will of The amendments relationship. in portions a hedging or for designation risks eligible are specific whether determine that principles existing of application the clarifies determined tobeeffective isreclassified toprofitorloss. - being hedged. - less thanthenetassetsofforeign operation. currencyforeigna of entity’sparent the and operation orto equal currencyamount functional an in only and - IFRIC 16 HedgesofaNetInvestment inaForeign Operationclarifiesthat: potential effecting these amendments, which become mandatory for the Group’s 2009 consolidated and and consolidated 2009 Group’s the for mandatory withretrospectiveseparate financialstatements applicationrequirement. become which amendments, these effecting potential evaluatingof theprocess met. the are in conditions currently is certain TheGroup if equity as classified be entity the on impose to liquidation on only that entity the of assets net the instruments of share rata pro and party another to deliver to obligation on instruments puttable require Liquidation on Arising Obligations Amendments in ownership interests in a subsidiary that occur without loss of control, to be recognised as an equity equity for theGroup’sbecome mandatory 2010 an financialstatements. as recognised be loss. 27,IAS or to profit to amendments Thein recognised loss or gain the with valuefair at measured control, be will of loss without occur that subsidiary former the in retained subsidiary,interest anya of control transaction. loses Company the When subsidiary a in interests ownership in Amendment Amended of comprehensive income. Revised for IAS theGroup’s 1,becomesmandatory financialstatements. 2009 in presented be all non-owner changes in or ainand in singleana equity statement), income separate statement may income comprehensive Total and statement income owners. the (effectivelyboth income combining comprehensive of as statement single a either from capacity resulting their changes in those owners than with other period transactions a during equity in changes represents which income;’ evaluating the potential effect of this amendment. amendment. this of effect potential the evaluating conditions of process the in currently is Group non-vesting consolidatedapplication. The retrospective with 2009 statements, for Group’sfinancial separate and the for treatment mandatory become accounting will the 2 conditions IFRS provides to amendments non-vesting and The cancellation. and value requires fair conditions, grant-date in non-vesting of reflected be concept to the introduces conditions, vesting of Amendments Revised
On disposal of a hedged operation, the cumulative gain or loss on the hedging instrument that was was that instrument hedging the on loss or gain cumulative the operation, hedged a of disposal is that On operation foreign the except Group the within entity any by held be may instrument hedging The functional the between arising differences exchange foreign to only applied be can hedging investment Net NOTES TO THE FINANCIALSTATEMENTS (continued) IAS
IAS to
1
to to 27 IFRS Presentation
IAS
IAS Consolidated 32
2 39 Share-based and
Financial For theyearended31December2008 IAS of
and 1 Financial Presentation
Instruments:
In thousandsofMalawiKwacha Separate Payment Statements
Financial – of Vesting
49 Financial Recognition
Statements Conditions (2007) Statements
and introduces
and Measurement (2008) – Cancellations Puttable
requires the term
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Annual Report 2008 NICO HOLDINGS LIMITED Annual Report 2008 NICO HOLDINGS LIMITED between lossestimatesandactual lossexperience. used assumptions and methodology differencesThe any reduce flows. to reviewed regularly are flows cash futurecash of timing and amount the future both estimating for its scheduling when portfolio the in those to similar based on historical estimatesloss experience uses for assets with Management credit risk Group. characteristics and the objective evidencein of impairment assets on national defaultsor with Group, correlate a that in conditions borrowers economic of local or status payment the in change adverse an been has there that loans indicating of data portfolio a from flows cash future estimated the in before the decrease decrease can be identified with measurable an individual a loan in is that portfolio. there that This evidence may include indicating observable data loss should be recorded in the income statement, the Group makes judgement as to The Group whether reviews its there loan portfolio is to assess impairment anyon annual basis. observable In determining whether an impairment iv) and interestcashflow based,discountedatthemarket ofinterestatthebalancesheetdate. principal future of value present the on based calculated is purposes, disclosure for determined is which value, Fair iii) after propermarketing whereinthepartieshadeach actedknowledgeably, prudently andwithoutcompulsion. be could property a whicharm’san in seller buyerwilling willing a transactionexchangeda and length valuation between for the of date the on amount estimated the being values, market on every based are properties values investment fair Group’s The the year. values valued, being property of category and location the in experience An external, independent valuation Company, having appropriate Recognised professional qualifications and recent ii) item ofplant,equipment,fixtures andfittings isbasedonthequotedmarket pricesfor similaritems. compulsion. knowledgeably,eachwithout ofacted market had Theand prudently parties the wherein marketing proper after transaction arm’slength an in seller willing a and buyer willing a between valuation of date the on exchangedbe could property a whichfor amount estimated the is on property based of value is marketvalues. Themarket combination business a of result a as Recognised equipment and plant property, of value fair The i) notes specifictothatassetorliability.the in disclosed is values fair determining in made assumption the about information further applicable, When and/or measurement for determined been have values disclosure purposesbasedonthefollowing Fair methods. liabilities. and assets both non-financial for value, and fair of financial determination the require disclosures and policies accounting Group’s the of number A 3.22 3.
Significant accountingpolicies(Continued) Determination offairvalues Impairment lossesonloansandadvances liabilities financial Non-derivative Investment property Property, plantandequipment NOTES TO THE FINANCIALSTATEMENTS (continued) For theyearended31December2008 In thousandsofMalawiKwacha 50 In presenting information on the basis of geographical segments, segment revenue is based on the geographical geographical the on based is revenue location ofcustomers.Segmentassetsarebasedonthe geographicallocationoftheassets. segment segments, geographical of basis the on information presenting In Geographical segments and Pension,Insurance InformationLife TechnologyHolding, andBanking segmentsareonlyoperatedinMalawi. Investment Uganda. and Tanzania Zambia, Malawi, in operate segment Insurance General - - - - - The Groupcomprisesthefollowing mainbusinesssegments: Business segments to beusedfor morethanoneyear. Segment capital expenditure is the total cost incurred during the year to acquire segment assets that are expected bearing loans,borrowings andexpenses, andcorporateassetsexpenses. be can that allocated on a reasonable basis. Unallocated items those comprise mainly income-earning assets and revenue,as interest- well as segment a to attributable directly items include liabilities and assets results, Segment Inter-segment pricingis determinedonanarmslengthbasis. products related providing in either environment (geographical segment)which engaged economic issubjecttorisksandrewards thataredifferentparticular fromthoseofothersegments. is a within that services, or products Group providing in the or segment) of (business services or component distinguishable a is segment A 3.23 which they areexpected. e) d) c) b) a) Key assumptionsused:
Information Technology Investment Holding Banking business General Insurancebusiness Life InsuranceandPension business in year calendar the of end the at arise to assumed been have realization security from arising flows Cash andare erratic orunpredictable; repayments and security no and agreement repayment no is there where arise to assumed are flows cash No Unsupported guaranteesareassumedtoresultinnilcashflows; futuretotal estimatedcashflows areassumedtobenil; doubtful,yearsare subsequent the flowsin cash and place in security no but agreement an is there Where to ariseattheendofperiod; Cash flows arising from repayment agreement are aggregated over yearly intervals of 12 months and assumed Segmental reporting NOTES TO THE FINANCIALSTATEMENTS (continued) For theyearended31December2008 In thousandsofMalawiKwacha 51
Annual Report 2008 NICO HOLDINGS LIMITED Annual Report 2008 NICO HOLDINGS LIMITED NOTES TO THE FINANCIALSTATEMENTS (continued)
3.Significant accounting policies (Continued) 3.23 Segmental reporting (continued)
Business segments
Life Insurance and General Banking Investment Information For theyearended31December2008 Pension business Insurance business business Holding Technology business Eliminations Total 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 In thousandsofMalawiKwacha Gross revenue 3,632,301 2,961,907 3,819,467 3,056,304 3,937,318 2,846,967 1,063,289 690,782 122,759 117,359 (1,338,869) (1,022,101) 11,236,265 8,651,218 Profit before tax 739,444 769,508 824,206 556,511 1,124,074 412,764 661,896 323,401 23,044 20,595 (705,540) (353,566) 2,667,124 1,729,215 Profit after tax 710,520 711,693 644,688 481,404 778,727 264,210 607,219 334,975 19,309 25,343 (705,540) (358,033) 2,054,923 1,449,167 52 Other information Segment assets 16,701,999 13,273,747 7,412,223 7,793,507 20,420,122 14,211,794 1,736,771 1,395,808 91,343 73,423 (2,152,122) (1,405,913) 44,210,336 35,342,367 Segment liabilities 15,384,840 12,170,879 5,487,405 6,821,142 18,578,264 12,970,734 487,543 539,154 39,460 46,779 (1,232,756) (579,315) 38,744,756 31,969,373 Capital expenditure 471,182 102,696 44,145 34,198 425,831 632,332 30,727 12,349 9,311 5,509 - - 981,196 787,085
Segment cashflows From operating activities 831,156 698,051 286,504 445,660 1,797,109 842,876 46,547 8,670 37,624 6,685 - - 2,998,940 2,001,942 From investing activities (511,433) (390,117) (93,895) (86,253) (433,221) (632,332) 321,469 448,774 (6,317) (5,054) (757,671) 200,940 (1,481,068) (464,042) From financing activities (457,000) (285,000) (78,539) (61,918) (278,675) 1,083,160 (336,334) (393,646) - (362) (970,073) 554,772 (180,475) 654,341 NOTES TO THE FINANCIALSTATEMENTS (continued)
Geographical segments
Malawi Zambia Tanzania Uganda Eliminated Total 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 For theyearended31December2008
Gross Revenue 9,084,659 8,176,942 2,167,315 902,988 1,098,900 542,316 224,259 55,293 (1,338,869) (1,026,321) 11,236,265 8,651,218 Profit before tax 3,050,957 1,984,086 238,570 72,227 74,615 48,031 4,522 (21,563) (705,540) (353,566) 2,667,124 1,729,215 In thousandsofMalawiKwacha Profit after tax 2,520,342 1,711,429 150,434 93,765 54,868 34,395 34,819 (21,963) (705,540) (358,033) 2,054,923 1,459,593
Other information Segment assets 43,460,347 33,731,662 1,661,574 1,613,858 1,008,102 1,233,052 232,434 169,708 (2,152,121) (1,405,913) 44,210,336 35,342,367
53 Segment liabilities 37,718,241 30,026,734 1,365,498 1,383,103 817,868 1,053,991 75,905 84,859 708,379 (704,589) 38,744,756 31,969,373 Capital expenditure 734,572 774,053 28,094 9,825 2,949 2,237 3,489 2,663 - - 981,196 787,085
Segment cashflows From operating activities 2,919,989 1,562,869 132,156 128,690 (69,886) 84,050 16,681 (16,332) - - 2,998,940 2,001,942 From Investing Activities (720,041) (496,579) (75,268) (128,299) 76,599 (51,204) (4,687) 11,100 (757,671) 200,940 (1,481,068) (464,042) From financing activities 781,633 328,059 (30,339) (8,459) 2,268 - 36,036 22,634 (970,073) 554,772 (180,475) 654,341
Annual Report 2008 NICO HOLDINGS LIMITED Annual Report 2008 NICO HOLDINGS LIMITED Credit obligations intheevent thatactual future experience isworse than thatassumedinthefinancialsoundness. Liquidity and otherpricerisk. due to changes in market prices. Market risk comprises of three risk types namely currency risk, interest rate risk liabilities andassets. ofmaturities the mismatchingbetween is there when arises risk Liquidity instruments. financial with associated Market discharge itscontractual obligation. and Audit Committee. and ad-hoc reviews of risk management controls and procedures, the results of which are reported to the Finance in regular risk both undertakes Division framework Services Compliance Group’s and Risk Thefunctions Division. management Services these the Compliance in and risk Risk by assisted is with the Committee Audit of and Finance compliance Group’s adequacy The Group. the by the faced monitoring risks reviewing the to for for relation and responsible procedures, and is policies Committee management Audit and Finance Group’s The constructive and disciplined a develop to aims procedures, control environment, inwhich allemployees theirrolesandobligations. and understand standards management and training its through and Group The activities. Group’spolicies the and management conditions, marketRisk in changes limits. reflect to to regularly reviewed adherence are systemsand risks monitor to and controls and limits risk appropriate set to Group, the byfaced risk the analyze and identify to established are Group’spolicies The management risk and non-executive membersandreportregularlytotheBoard ofDirectorsontheiractivities. monitoring Group’sand riskmanagementpoliciesintheirspecifiedareas. All Board Committeesdeveloping have bothexecutivefor responsible are Committees These Committee. Credit and Committee Remuneration risk Group’s the of management framework. oversight and The BoardtheFinanceand hasestablished Audit Committee, Appointments and establishment the for responsibility overall has Directors of Board The 4.2 Capital as follows:- The main categories of financial risks associated with the financial instruments held by the Group are summarised 4.1 4.
Risk Management Risk Managementframework Financial risksoverview risk adequacy risk
risk NOTES TO THE FINANCIALSTATEMENTS (continued)
– –
– Credit market
Liquidity risk
risk – risk capital
risk
arises is
is the
the adequacy
For theyearended31December2008 from risk
risk that
that the risk the
In thousandsofMalawiKwacha
inability the is fair
Group the value
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commitments instrument will fluctuate to meet
to
The Group and its individually regulated operations have complied with all externally imposed capital requirements throughout theperiod. requirements capital imposed externally all with complied have operations regulated individually its and Group The affordedpossible withgreatergearingandtheadvantagessecurity byposition. asoundcapital be might that returns higher the between balance a maintain to need the recognises Group the and recognised and to sustain future development of the business. The impact of the level of capital on shareholders’ return is also investor, maintain to as marketso confidenceand base creditor capital strong TheGroup’sa maintain to is policy sheet exposure. according to specified requirements that seek to reflect the varying levels of risk attached to assets and off-balance Banking operations are categorised as either trading book or banking book, and risk-weighted assets are items. consolidation,investments otherregulatory ofbanksandcertain determinedincluded intheregulatory capital not are that subsidiaries in investments of amounts carrying the include capital from deductions Other capital. 2 tier of part as included be may that allowances impairment collective of amount the on restrictions are There instrumentsvalue relatingtounrealisedgainsonequity such reserve asavailable-for-sale. fair the of element the and allowances impairment collective liabilities, qualifying includes which capital, 2 Tier differently foradequacypurposes. capital treated are but equity in included are that items to relating adjustments regulatory other and assets, intangible and reserve translation earnings, retained premium, share capital, share ordinary includes which capital, 1 Tier two tiers: ratio of to capital total risk-weightedtotal assets as disclosed below. The Bank’s is capital analysedregulatory into In implementing current capital requirements, Reserve Bank of Malawi requires the Bank to maintain a prescribed 4.3.1 These ratiosaremonitoredregularly. level. confidence acceptable the within solvency sustained ensure will that levels capital required determine to deviations from the main assumptions affecting the Group’s business. There are methods regulatory that are used The Group must maintain shareholders’ funds that will be sufficient to meet obligations in the event of substantial 4.3 Capital adequacyrisk Banking NOTES TO THE FINANCIALSTATEMENTS (continued) For theyearended31December2008 In thousandsofMalawiKwacha 55
Annual Report 2008 NICO HOLDINGS LIMITED Annual Report 2008 NICO HOLDINGS LIMITED 1st July 2006 to 31st December 2008 which1st Julyto31stDecember2008 2006 itcompliedwith. Reserve the with formrequirement reserve liquidity to subjected been has It requirement June2006. 30 ended months 24 of period Bankfora reserve liquidity the from exempted was registered Limited Bank a NBS with liabilities. or deposit Malawi total of Bank Reserve with month’spreceding the averageof 15.5%percent amount than less not of basis, weekly reserve a on calculated house, discount liquidity a maintain to required is Bank The c) requirement asatthebalancesheetdate: In accordance with Section 27 of the Banking Act 1989, the Reserve Bank of Malawi has established the following theBank’sAs at31December2008, Ratio 2was–38%). Liquidity 30%(2007 Ratio 2 -Liquidity theBank’sAs at31December2008, Ratio 1was–39%) liquidity 31%(2007 1 Ratio -Liquidity The ReserveBank ofMalawi hasissuedthefollowing guidelinesonthemanagementofliquidity: b) Total (Tie2Capital) capital Revaluation reserves Capital Management theBank’sAt 31December2008, available was capital 12% ofallitsriskbearingassets andcontingentliabilities. The Bank’s available Tier 1 capital is required to be a minimum of 6% of its risk bearing assets and contingent liabilities. Capital Adequacy Requirement a) 4.3.1 4.3 4. Core Capital ( Core Capital Tie 1Capital) Net Profit -Current period(60%) Retained EarningsPrior Years Share Premium Paid upsharecapital Risk Management(Continued) Liquidity ReserveRequirement Prudential AspectsofBankLiquidity The Bank’s regulatorycapitalpositionasat31December2008wasfollows:- Banking (Continued) Capital adequacyrisk(Continued) NOTES TO THE FINANCIALSTATEMENTS (continued)
the courseofcollection)dividedbydepositsmustbeatleast20%. total chequesin and currency foreign in account suspense less assets liquid (total liquidity Net : total by divided currency) deposits mustbeatleast30%. foreign in account suspense less assets liquid (total liquidity Net : For theyearended31December2008 In thousandsofMalawiKwacha 56 1,673,230 1,448,522 224,708 467,237 246,667 419,670 314,948 2008 1,014,031 228,310 785,721 246,667 314,948 158,526 65,580 2007 • • including: risk, credit the of oversight for responsible is Committee, Credit the to reporting department, Credit separate A Committee. Credit its to risk credit of management the for responsibility delegated has Directors of Board The a) 4.4.1 a as reported but independently managed is securities component ofmarket riskexposure. trading on arising risk credit purposes, management For consolidates and all elementsofcreditriskexposureconsiders (such asindividualobligordefault risk,andsectorrisk). Group the purposes, reporting management risk For securities. investment and banks meet its contractual obligations, and arises principally from the Group’s loans and advances to tocustomers failsinstrument financial a and to othercounterparty or customer a if Group the to loss financial of risk the is risk Credit 4.4 is margin solvency Group The regulations. these tonetpremium. andreserves calculated astheratioofcapital with compliance are Group’s There operates. the it with which in associated countries the contingencies all no in regulations solvency the all with complied has Group The Solvency Margin 4.3.2 • • • • and statutory requirements. and statutory regulatory with compliance and procedures legal and documentary reporting, and grading risk assessment, Establishing Formulating limits, priortofacilities beingcommitted tocustomersby thesamereview process. Credit Management by approval require facilities Larger Committee, HeadofCredit,Bank’s Officers. CreditCommittee ortheBoard ofDirectorsasappropriate. Credit unit business to allocated are Limiting Reviewing is usedindeterminingwhereimpairmentmay berequiredagainstspecificcreditexposures. facedloss financial risk focusof to degree and attendant the on management risks. Thesystemgrading risk Reviewing Developing advances), andby issuer, creditratingbandand market liquidity. and product types. Regular reports are provided to Credit Committee on the credit quality of portfolios and and portfolios of quality credit the on appropriate corrective actionistaken. Committee Credit to provided are reports Regular types. product and Credit Risk Management ofcreditrisk Banking NOTES TO THE FINANCIALSTATEMENTS (continued) Insurance &others concentrations
and compliance
and credit the assessing
maintaining authorisation policies
of of
credit business For theyearended31December2008 in exposure the
consultation structure risk. Group’s
units In thousandsofMalawiKwacha Credit to
for counterparties, with risk
with Committee the
agreed gradings
approval the 57 business
exposure assesses
in geographical and order
renewal units,
limits, all to credit categorise covering
including of location
credit exposures collateral
and
facilities. those exposures industries in
for excess requirements,
Authorisation selected according (for of designated
industries loans to
credit limits and the
Annual Report 2008 NICO HOLDINGS LIMITED Annual Report 2008 NICO HOLDINGS LIMITED Total amounts carrying Carrying amount Carrying Neither pastduenorimpaired Carrying amount Carrying Past duenotimpaired Carrying amount Carrying Allowance for impairment Total > 24months 13-24 months Individually impaired 1-6 months 7-12 months Carrying amount Carrying Allowance for impairment • h cryn aon o fnnil ses ersns h mxmm rdt xoue h mxmm xoue to exposure credit riskatthereportingdatewas:- maximum exposure.The credit maximum the represents assets financial of amount carrying The b) Individually impaired Carrying amount Carrying • • 4.4.1 4.4 4.
Regular auditsofbusiness units andGroup’s Creditprocessesareundertakenby Internal to centralapproval. of its credit portfolio and for monitoring and controlling all credit risks in its portfolios, including those subject performancemattersand related credit Eachall forquality management. responsible the to is unit business authorities delegated from the Credit Committee. Each business unit has a Credit Risk Officer who reports on Each Group inthemanagementofcreditrisk. Providing Exposure tocreditrisk Risk management(Continued) Credit risk (Continued) (Continued) risk Credit Banking (Continued) NOTES TO THE FINANCIALSTATEMENTS (continued)
business advice,
unit guidance
is Note
required 27 27
For theyearended31December2008 and 10,912,648 10,912,648 12,744,035 12,744,035 1,601,335 1,601,335 230,052
(329,452) (329,452) 300,037 to 559,504 230,052 559,504 184,787 specialist 74,680
Loans andadvances 2008 implement In thousandsofMalawiKwacha to customers
skills 5,229,041 5,229,041 2,646,594 2,646,594 7,919,042 7,919,042 43,407 (237,089) (237,135) 280,496 280,496 112,770 116,485
43,407 51,241 Group’s 2007 to 58 business
credit 990,355 990,355 990,355 990,355 Loans andadvances - units
2008 policies to otherbanks ------
to
promote and 1,637,146 1,637,146 1,637,146 1,637,146 -
2007 procedures, ------best
3,418,008 3,418,008 3,418,008 3,418,008 practice
- with 2008 Audit. Investment ------securities
throughout credit 1,826,129 1,826,129 1,826,129 1,826,129
approval - 2007 ------the - - - -
e) and nosuch collateralwas heldattheyear end. investmentsecurities,against held not reverseborrowingis activity.purchaseof securities usually and Collateral impaired. Collateral generally is not held over loans and advances to banks except when securities are held as part as assessed individually is loan a exceptwhen updated not are generally and borrowing, of time the at assessed collateral of value the on based are value fair of Estimates guarantees. and assets, over securities registered other The Group holds collateral against loans and advances to customers in the form of mortgage interests over property, of amountsowed totheGroup. impairment is not appropriate on the basis of the level of security/collateral available and/or the stage of thatcollection believes Group the but due past are payments principal or interest contractual where securities and Loans d) loan/securities the of terms contractual the to according due interest and agreement. principal all collect to unable be will it that probable is it that determines Group the whichfor securities and loans are securities and loans Impaired c) Against impaired individually Property Equipment Against pastduebutnotimpaired Property Equipment Property Against neitherpastduenorimpaired Equipment Total
shown below: is assets financial against held enhancement security other and collateral of value fair Estimated Past duebutnotimpairedloans Impaired loansandsecurities NOTES TO THE FINANCIALSTATEMENTS (continued) For theyearended31December2008 In thousandsofMalawiKwacha 59 14,450,241 8,909,328 1,599,750 3,199,669 132,503 511,252 97,739 2008 Loans andadvances to customers
11,048,764 1,025,890 1,548,532 8,231,679 162,660 66,603 13,400 2007
Loans andadvances 2008 to otherbanks ------2007 ------
Annual Report 2008 NICO HOLDINGS LIMITED Annual Report 2008 NICO HOLDINGS LIMITED
Southern Region Central Region Northern Region Concentration bylocation:
Bank Corporate Retail Concentration bysector: Carrying amount Carrying ru i as poetd y urnes rvdd y h itreir gaate aiiy o te o-amn of non-payment the for premiums collectedby intermediaries. facility guarantee intermediary the by provided guarantees by protected also is Group segments. Thegeographical and types, product sectors, business counter-parties,to of Groups to risk credit of The Group determines counter-party credit quality internal analysis, and seeks to avoid unacceptable concentration a) 4.4.2 Bank’s ALCO. approvalsfromspecific counterparty or specific transaction settlementrequired free trades settlementon of risk settlementobligations. contractual Settlementtheir fulfilled limits have form parties part both of when the only credit settled approval/limitis monitoring trade process that described ensure earlier.to agent Acceptance clearing settlement/ a through settlements conducting by risk this mitigates Group the transactions of types certain For as contractually agreed. the risk of loss due to the failure of a borrower to honour its obligations to deliver cash, securities or other assets isSettlement risk trades. and transactions settlementof of time the to risk to rise givemay activities Group The g) been have customers disclosed undernote26. to advances and borrower.Loans the of location the with correlation a has which theasset holding branch the of location the on based measured is advances and loans for location by Concentration f) 4.4.1 4.4 4.
Risk management(Continued) Credit risk (Continued) (Continued) risk Credit Banking (Continued) (Continued) Banking Management ofcreditrisk Insurance andothers Settlement risk concentrations ofcreditriskatthereportingdateisshownbelow:- The Groupmonitorsconcentrationsofcreditriskbysectorandgeographiclocation.Analysis NOTES TO THE FINANCIALSTATEMENTS (continued) Note 27 27 27
For theyearended31December2008 10,668,998 12,744,035 12,744,035 12,744,035 8,603,153 1,675,037 3,485,192 400,000 655,690 Loans andadvances 2008 In thousandsofMalawiKwacha to customers 4,445,903 3,375,627 1,042,263 6,597,997 7,919,042 7,919,042 7,919,042 278,782 97,512 2007 60 990,355 990,355 990,355 990,355 990,355 Loans andadvances 2008 to otherbanks - - - - 1,637,146 1,637,146 1,637,146 1,637,146 1,637,146 2007 - - - - 3,418,008 3,418,008 3,418,008 3,418,008 3,418,008 2008 Investment - - - - securities 1,826,129 1,826,129 1,826,129 1,826,129 1,826,129 2007 - - - - The premiumsatthereportingdatewas: agingofoutstanding c) The maximumcreditexposure tocreditriskatthereportingdatewas asfollows: b) amountofeachis representedby thecarrying financialassetinthebalancesheet. At balance sheet date, there were no significant concentrations of credit risk. The maximum exposure to credit risk Group. the than better orto equal haverating that credit counterparties a with only Investmentsand securities allowedliquid are in only finalisation to prior strength of any contract. Thefinancial Groupensuresthatthereisnosignificantconcentrationriskwithinasinglere-insurer. their reviewing by annually considered is re-insurers of creditworthiness The primary as liability Group’s the insurer.discharge however, If not, a does re-insurer failsThis risk. to pay insurance a claim manage for to any used reason, is the Group remains Reinsurance liable for the payment to the policyholder. benefits intermsofthepolicycontract. An appropriatelevel ofprovisions ismaintained. policy unpaid of value underlying by the secured are business insurance short-term of terms in receivable Amounts customers andgeographicareas. a with deals Group the because receivablesaccounts its and banks major of variety companies,reinsurance major of number a among spread are risk, credit of concentration a represent not do instruments financial Group’s The Net outstandingpremiums More thanoneyear Past due10 –12 months Past due7–9month Not pastdue Impairment Total More thanoneyear Past due10 –12 months Past due7–9months Not pastdue Total Others (note25) Reinsurance companies(note25) premiums(note25) Outstanding Impairment losses Exposure tocreditrisk NOTES TO THE FINANCIALSTATEMENTS (continued) For theyearended31December2008 In thousandsofMalawiKwacha 61 2,052,672 2,202,927 1,621,295 2,239,547 2,052,672 4,427,345 (150,255) 298,136 135,126 (61,200) 4,2 101,671 146,325 8,5) (16,242) (89,055) 137,171 Gross 2008 2008 - (36,328) - 1,780,687 1,652,361 1,409,396 4,068,407 1,652,361 5,869,058 (128,326) 139,562 148,290 130,058 (75,756) Gross 2007 2007 -
Annual Report 2008 NICO HOLDINGS LIMITED Annual Report 2008 NICO HOLDINGS LIMITED 31 December 2008 tothecontractual31 December2008 maturity date. All figuresareinthousands ofMalawi Kwacha. at period remaining the on based groupings relevantmaturity into liabilities and assets analysesbelow table The c) the measure to Group’s by limitestablished theReserveBankused compliance withtheliquidity ofMalawi. is calculation identical, not and but similar, borrowings A other month. banks, next the from within deposits maturing any commitments less market liquid and active an is there which for securities customers. For this purpose net liquid from assets deposits to are assets considered liquid net as of including ratio the cash is and risk cash liquidity equivalentsmanaging for Group and the investmentby used measure keyThe b) to subject are procedures and report,includinganyunits. exceptionsA summary andremedialactiontaken,issubmitted regularlyto ALCO. policies liquidity All operating of position liquidity the cover reports Daily (ALCO). Committee conditions. Liability Assetby approval and review market severe more and normal both covering of scenarios a variety under is conducted testing stress liquidity regular and is monitored position liquidity The daily fluctuations andlongertermfundingtoaddressany structural requirements. liquidity through met are units Treasurycovershort-termbusiness any to whole. of a requirements as liquidity Group The the within maintained is liquidity loans sufficient that ensure securities, to inter-bankfacilities, other investment and banks liquid to advances and short-term of up made largely assets assets, liquid then Treasury business. financial short-term futureof their projected portfolio a of from maintains arising profile flows cash projected liquidity other the of details regarding and units liabilities and business other from information receives Treasury losses or riskingdamagetotheGroup’s unacceptable reputation. incurring without conditions, stressed and normal both under due, when liabilities its meet to liquidity have always it sufficient will that as far as is possible, to ensure, liquidity to managing The Group’s approach (a) 4.5.1 riskariseswhenthereismismatchingLiquidity betweenthematurities ofliabilitiesandassets. liabilities. financial its from obligations meeting difficultyin encounter will Group the that risk the is risk Liquidity 4.5 was year the during receivable insurance of respect in impairment for allowance as follows: the in movement The c) 4.4.2 4. Balance at31December Impairment lossrecognisedinincomestatement Balance at1January
Risk management(Continued) Liquidity risk risk Liquidity Residual contractualfinancialliabilities Exposure toliquidityrisk Management ofliquidityrisk Banking Impairment losses(continued) Insurance andothers(continued) NOTES TO THE FINANCIALSTATEMENTS (continued) For theyearended31December2008 In thousandsofMalawiKwacha 62 (128,326) (150,255) (21,929) 2008 (128,326) (100,997) (27,329) 2007
affect oftheGroup. theliquidity its cover to may which more, or resources years 5 liquid within due maturities and significant obligations contractual has the are followingobligations. Group The The calls. such meet to available funds maturing of minimum proportion the on limits sets Board due. Thecash when that obligations payrisk to the is cost reasonable risk a at availableLiquidity be claims. not may from resources cash available its on calls daily to exposed is Group The 4.5.2 customer behavioural assumptionswhenthereisindicationthatashift inoneormoreof the variables. and product the reviewsdaily. committee gaps The these monitors and gaps liquidity anticipated for limits and customer and guidelines by setting mismatch product this manages for (ALCO) committee made liability The bank’s asset are assumptions. behavioural adjustments any before mismatch the shows analysis gap maturity The Financial assets Financial assets Cash andbankbalances Cash andbalanceswithbanks Investment securities Investment securities Insurance receivables Loans andadvances Other assets Other assets Total financialassets Total financialassets Other liabilities Financial liabilities Current andsavings accounts Financial liabilities Insurance funds Term depositaccounts Total financialliabilities Foreign Currency denominateddeposits Net liquiditygap Other borrowed funds Cumulative liquidity gapCumulative Other liabilities Total financialliabilities Net LiquidityGap Cumulative LiquidityGap Cumulative Insurance andothers NOTES TO THE FINANCIALSTATEMENTS (continued) For theyearended31December2008 In thousandsofMalawiKwacha (14,898,274) (1,138,944) (1,985,779) (2,562,222) (1,093,407) (1,445,227) (1,445,227) (8,266,249) (8,266,249) (1,915,551) (8,416,911) (2,307,619) 6,606,183 1,816,566 4,195,302 1,116,995 (576,443) 1 month 1 month 344,315 114,910 250,000 651,600 279,465 71,020 Up to Up to 63 1,090,732 (9,539,386) (1,273,137) (1,810,210) (1,810,210) 1,037,694 315,142 477,972 (407,533) (52,582) (53,038) 294,881 100,000 months months 437,073 537,073 2,737 (456) 1-3 1-3 - - - - -
(3,623,265) (5,916,121) 2,782,472 1,059,659 1,598,022 4,530,034 1,102,833 1,747,562 (376,546) (495,189) (906,769) (906,769) 210,319 (118,643) 328,044 695,308 Months Months 3-12 3-12 ------
(2,055,708) (1,779,945) (2,830,713) (1,050,768) (2,057,231) 6,656,433 1,468,636 1,804,865 1,045,515 5,916,121 8,746,834 2,407,446 152,281 285,536 350,215 (1,523) 20,262 1 year 1 year Over Over - - - - -
(20,420,124) 13,036,370 20,420,124 (2,856,871) (2,363,848) (4,632,530) (1,093,407) (3,358,387) (5,220,718) (2,918,889) (8,416,911) 1,282,960 6,673,643 1,452,925 1,452,925 3,418,008 1,816,566 2,149,180 1,376,514 3,047,427 966,742 Total Total - -
Annual Report 2008 NICO HOLDINGS LIMITED Annual Report 2008 NICO HOLDINGS LIMITED dates. The Group does not have an interest rate exposure on off balance sheet items. All figures are in thousands thousands in are of Malawi Kwacha.figures All items. sheet balance off on exposure rate interest an have not does Group The dates. maturity or pricing contractual of earlier the by categorised amounts carrying at sector banking the in liabilities Group’sand the assets are table the in Included risk. rate interest to exposure the summarises below table The d) and financial positionoftheGroup. results overall the to relation in significant currently not is it but ALCO, by monitoring regular to subject is by held Treasury securities on debt standing) credit obligor/issuer’s in the to changes relating (not risk spread Credit c) a and curves yield in movement asymmetrical no (assuming balancesheetposition)wasconstant asprovided below. rates interest market in decrease or increase an to sensitivity Group’s the of analysis An curves. yield all of portion 12-month than greater the in fall or rise curves 50bp a and yield all in rise or fall pararel (bp) point 100 basis a include basis monthly a on considered are that scenarios of the Group’s financial assets and liabilities to various standard and non-standard interest rate scenarios. Standard The management of interest rate risk against interest rate gap limits is supplemented by monitoring the sensitivity portfolios non-trading on is given below.position gap rate interest by Group’s the of basis summary day-to-day A on market. the risks on the activities manages and monitoring limits these with compliance for body monitoring the is ALCO The is risk future rate the Interest in rates. interest fluctuations bands.by havingpre-approvedforre-pricing and limits gaps rate interest monitoring market through principally managed in from change a loss of of because risk instrument the financial is of values exposed fair or are flows cash portfolios non-trading which to risk principal The b) review oftheirimplementation. risk management policies (subject to review and approval by Finance and Audit Committee) and for the day-to-day Overall authority for market risk is vested in ALCO. The Bank’s ALCO is responsible for the developmentproprietary of detailed and making market from arising positions portfolios Trading include togetherwithfinancialassetsandliabilitiesthataremanagedonafair valueposition taking, basis. portfolios. and non-trading Department, and Treasury the by trading held between are risk mainly market to exposure its separates Group The a) 4.6.1 control market riskexposures parameters,whileoptimisingthereturn withinacceptable onrisk. and manage to is management risk market instruments. of financial objective Theof holdings its of value the or rates exchange foreign prices, equity changesto relating (not spreads credit and obligor’s/issuer’sthe in rate, affectwill standing) credit Group’sthe interest income as such prices, market in changes that risk the is risks Market 4.6 4. Market risk Interest rategapanalysis Exposure toothermarketrisks–nontradingportfolios Exposure tointerestraterisk–nontradingportfolios Management ofmarketrisks Banking Risk management(Continued) NOTES TO THE FINANCIALSTATEMENTS (continued) For theyearended31December2008 In thousandsofMalawiKwacha 64 interest rateadjustment Assets subjectto Loans andadvances: Securities: Other Total assets(RSA) ratesensitive Demand accounts Liabilities subjecttointerestrateadjustment: Savings deposits Time deposits Other borrowings Other Total liabilities(RSL) ratesensitive Asset /LiabilityGap Cumulative Gap Cumulative Net position as a percent of total assets Net positionasapercentoftotal RSA as apercentofRSL NOTES TO THE FINANCIALSTATEMENTS (continued) For theyearended31December2008 (2,938,898) (2,918,888) 3,965,746 1,026,848 1,026,848 1,816,566 2,149,180 (20,010) 135% Zero rate 5% In thousandsofMalawiKwacha - - - - (11,997,865) 13,036,370 13,036,370 (1,972,996) (2,307,620) 1,038,505 2,065,353 (7,717,249) Floating 109% rate 5% - - - - 65 (2,070,784) (4,486,137) (4,486,137) (4,136,137) 350,000 350,000 months 8% 0-3 (20)% ------(1,711,808) (141,024) (141,024) 500,000 500,000 months 358,976 355% 3—6 2% ------2,282,472 2,282,472 2,277,103 Fixed Rate Instruments 42,512% months 565,295 (5,369) (5,369) 6-12 11% ------(850,831) (565,295) Over 12 (850,831) 285,536 285,536 months (3)% 34% ------
(20,420,124) (2,918,888) 13,036,370 20,420,124 (1,972,996) (4,632,530) (3,178,461) 2,149,180 5,234,574 (7,717,249) 100% Total - - -
Annual Report 2008 NICO HOLDINGS LIMITED Annual Report 2008 NICO HOLDINGS LIMITED The Group’s strategies on the management of investment risk is driven by the Group’s investment objectives objectives investment Company Group’s the of needs the cash-flow by meet to returns, driven beating is inflation and risk adjusted risk superior investment achieve to are which of management the on strategies Group’s The Long term insurance contracts: and contractually non-interest-bearing. Short-term insurance liabilities are is not directly Group sensitive to the the of level of portfolio market interest this rates, in as they assets are undiscounted financial the of characterised by portion interestraterisk. non-equity The instruments. market money and equivalents cash and cash with liabilities insurance the matched has Group the contracts, insurance For short-term Short-term insurance contracts: requirements. arelimitedby parametersestablished managementandstatutory organisation orindustry variety of modeling methods. The Group’s holdings are diversified across industries, and concentrations in any one quality, high of liquid securities. portfolioPortfolio diversecharacteristics are analysed a regularly and equity price risk is in actively managed through investinga by returns relative competitive earn to is objective Group’s The valuefair andaretherefore susceptibletomarket fluctuations. at valued are equities in investments Certain prices. equity and rates interest in changes by about brought investmentsthe of value fair in change a from arises risk. risk market The to exposed are operations Group The a) 4.6.2 of millions At 31December2008 in expressed amounts (all positions currency foreign significant Malawi Kwacha): following the had Bank The e) 4.6.1 4.6 4. Balances withcorrespondent banks Assets Cash invaults Forward contracts Loans andadvances tocustomers Other Total assets Liabilities Customer deposits Forward contracts Total liabilities Net balancesheetposition Market risk(Continued) Interest andequities Insurance andothers Currency risk Banking (Continued) Risk management(Continued) NOTES TO THE FINANCIALSTATEMENTS (continued) For theyearended31December2008 In thousandsofMalawiKwacha (1,008,917) (1,089,130) 1,315,718 685,865 559,536 226,588 (80,213) 70,317 US$ - -
66 (23,006) (23,006) 30,613 29,876 7,607 GBP 737 - - - -
(52,785) (52,785) 51,348 58,763 1,283 5 978 6,132 Euro - - -
20,927 12,228 12,175 (8,699) (8,699) 8,103 ZAR 649 - - -
(1,093,407) (1,173,620) 1,426,021 (80,213) 775,192 566,317 252,401 84,512 Total - -
carrying by measured date value oftheassetsandliabilities. maturity of earlier the by trading categorised and values, fair at assets rates Group’s the interest to includes sensitive It risks. liabilities rate interest to exposure Group’s the details table following The of theGroup,Investment Managerwillrebalancetheportfolio. guidelines or policy by investment the with basis accordance in not quarterly are a risks rate on interest the Where monitored Directors. are of Board the risks rate policies interest with overall Group’s accordance The Board. in the by Manager up set Investment the procedures by and basis daily on managed is risk rate interest Group’s The one to up of maturity with cash agreements excess repurchase month. Any rates. short-term in interest invested are market Group of the levels of prevailing equivalents the cash in and fluctuations to due risk rate interest value fair to exposure significant to subjected therefore and assets financial interest-bearing significant holds Group The b) policies with accordance in Manager Directors. Investment the by basis daily of board the by basis a quarterly place. a in on procedures monitored Group’sTheand are positions overallmarket on managed is risk market Group’s The and to obtain the best value in terms of administrative investment costs associated with the Group’s investments. 2008 Government Securities Financial assets Loans anddebentures Term deposits Total Assets Bank overdraft Financial liabilities Total Liabilities Government Securities Financial assets 2007 Loans anddebentures Term deposits Short termdeposits Total Assets Bank overdraft Financial liabilities Loans Total liabilities Interest raterisk NOTES TO THE FINANCIALSTATEMENTS (continued) For theyearended31December2008 In thousandsofMalawiKwacha 67
Less than 4,852,434 1,208,369 1,553,544 4,866,105 2,347,049 7,646,672 7,614,347 (203,213) (203,213) 309,268 124,250 (59,676) (59,676) 1 year - 1 yearand 1,357,741 373,808 983,933 58,500 58,500 above (8,543) (8,543) ------5,226,242 2,375,932 1,553,544 4,866,105 9,155,718 2,347,049 7,705,172 (203,213) (203,213) 124,250 367,768 (68,219) (59,676) (8,543) Total
Annual Report 2008 NICO HOLDINGS LIMITED Annual Report 2008 NICO HOLDINGS LIMITED Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the with associated market credit, causes than other of factors external from variety and infrastructure and technologywide personnel, Group’sprocesses, a from arising loss indirect or direct of risk the is risk Operational 4.7 values fairapproximatedtheir 2007,liabilities and assets 2008 financial December of 31 amounts at As carrying the e) any riskoflossresultingfromaconcentrationinvestments inoneasset,assetclassorsector. instruments of portfolio diversified a minimise to as so diversifiedwell is constructing portfolio its that by markets.ensure varioustherefore on will traded Group The Manager Investment Group’s the by managed is risk Price prices market individual in an to changes specific of factors by result caused a whether as risk), investment, itsissuerorallfactors affecting fluctuate currency allinstruments traded inthemarket. or will rate interest instrument from the arising of those than value (other that risk the is risk price Other d) 2008 was asfollows December at as risk currency to Exposure imbalances. term short address to necessary where rates spot at currencies Malawi foreign the selling or than buying by other level, minimal a to kept currencies is in exposure net held the that ensures liabilities Group the Kwacha, and assets monetary other of respect In (ZAR). Rands African South Kwachaand Zambia (ZK) (USH), (TZS), Shillings TanzaniaShillings Uganda (US$), Dollars US (GBP), Pound than other Malawithe Kwacha currency foreignits through subsidiaries. and a Britishprimarily are risk Thethis to rise currenciesgiving in denominated are that balances reinsurance on risk currency foreign incurs Group The seeking of purpose the for investments end was inZambia, Tanzania andUganda. foreign to respect year at currencies differentforeign in to Exposure growth. regional is and investments of diversification international risk currency to exposure Group’s The rates. Currency risk is the risk that the value of a financial instrument will fluctuate owing to changes in foreign exchange c) 4.6.2 4.6 4. Outstanding premiums Outstanding Due fromreinsurancecompanies Other Total assets Outstanding claims Outstanding Due toReinsurance companies Other Total liabilities Net balancesheetexposure Operational risks Market risk(Continued) Fair valuesversuscarryingamounts Other pricerisk Currency risk Insurance andothers(Continued) Risk management(Continued) NOTES TO THE FINANCIALSTATEMENTS (continued) For theyearended31December2008 In thousandsofMalawiKwacha 60,365 60,365 60,365 ZK ------68 313,946 (176,252) 206,921 (81,760) 137,694 (94,492) 107,025 TZS - - 399,024 356,427 (105,684) (78,656) 462,111 (12,876) 58,516 4,571 USH - (125,730) (125,730) 166,462 191,750 25,288 (14,152) 66,019 US$ - - 1,028,172 564,657 (280,743) (112,771) (407,667) 620,506 377,954 (14,152) 58,516 Total • • • • • • • • • corporate behaviour. OperationalrisksarisefromalloftheGroup’s operationsandarefaced by allbusinessentities. of standards accepted generally and requirements regulatory and legal from arising those suchas risks liquidity and • is risk operational address to overall Group’s for controls standards themanagementofoperationalriskinfollowing areas: of implementation and development assigned to senior management within each business unit. the This is responsibility supported by the development of for responsibility primary The and creativity. initiative restrict that procedures control avoid to effectivenessand cost overall with Group’sreputation the to The Group’s objective is to manage operational risk so as to balance the avoidance of financial losses and damage using established statistical techniques. statistical using established estimated those from vary may year one any during events of size and number actual the and random, nature, The contracts. insurance of portfolio a for theirbyevents are, Insurance expected. than greater is provisioningclaims of severity and frequency the that is and risk principal pricing the to applied is probability of theory The and analyses scenario analyses. sensitivity models, measurement risk internal include methods of These risks. types overall and individual insured for risks both exposures risk insurance monitor and assess to methods several uses Group The of emergingissues. new products or that exceed set limits, pricing guidelines, centralised management of reinsurance and monitoring The Group manages its insurance risk through underwriting limits; approval procedures for transactions that involve investment activities. timing the surrounding and uncertainty insurance its through the risk marketperils to exposureto has contract. also the Group other Theunder exposed claims of or severity is and Group financial the such As accident, event. liability, insurable an property, to from arise relate may organisations may that or risks Such persons from risk. the loss to of risk subject the directly assumes are Group that the by out carried activity insurance primary The 4.8.1 4.8 Risk mitigation,includinginsurancewherethisiseffective. and Ethical andbusinessstandards; Training andprofessional development Development ofcontingencyplans Requirements for thereportingofoperationallossesandproposedremedialaction; procedures toaddresstherisksidentified; Requirements ofcontrolsandprocedures; Documentation andotherlegalrequirements; Compliance withregulatory Requirements for thereconciliationandmonitoringoftransactions; designed toensurethecorrectness, completenessandvalidityofalltransactions; Requirement Short terminsurancerisks Risk managementobjectivesandmitigatinginsurancerisk NOTES TO THE FINANCIALSTATEMENTS (continued)
for for
appropriate the periodic For theyearended31December2008
segregation assessment In thousandsofMalawiKwacha
of of
duties, operational 69
including risks
independent faced, and
the authorisation adequacy
of of
controls transactions and
Annual Report 2008 NICO HOLDINGS LIMITED Annual Report 2008 NICO HOLDINGS LIMITED • • • contract. The Group is therefore exposed to the risk that claims reserves will not be adequate to fund historic fund to adequate be not will reserves claims that risk the to exposed therefore is Group contract. The after the end of the contract term, subject to pre-determined time scales dependent on the nature of the insurance The Group is liable for all insured events that occurred during the term of the contract, even if the loss is discovered 4.8.5 to policyholders agrees with respecttocededinsuranceifany re-insurerfails tomeettheobligationsitassumes. its to liable re-insurer remains the Group the However, paid. is agreements, claim the event the in reinsurance amount the ceded the of reimburse terms the retained Under risk coverage. limits each of maximum of to characteristics circumstances amount on certain based The in losses. subject risk, of specified effect the of the evaluation Group’s the minimise These on and agreements. depends various risk under the losses spread underwriting agreements to exposure reinsurance limit to risk insurance cedes Group The 4.8.4 • The corecomponentsofthereinsuranceprogrammecomprise: Group. the of net the exposure and programme reinsurance the of effectiveness tothe measure and to aggregation order in monitor losses to catastrophe tools simulate modeling of number and a local uses the Group on The market. placed is reinsurance have cover international This could capital. Group’s that the risk or of earnings year current accumulation the or on events impact single significant from a risks reduce to cover reinsurance obtains Group The 4.8.3 Group endeavours tominimiserisks. the methods, reserving good and prices handling claims focused client adequate conditions. and risk underwriting, selectiveThrough produce can information this on based underwriting selective and resources, data maintained on risks the change and re-price to right extensiveOnly expertise,wellclaims. fraudulent reject and the deductibles impose to ability the has has renewal.also It Group The renewal. at contract the of conditions and terms the Most outcome. general the insurance contracts of are variability annual in the nature reduces and this the underwriters havethat believedthe right is to it refuse such,renewal as or to and, changeyears of number a over risks The strategy underwriting seeks diversity to ensure a balanced portfolio and is based on a large portfolio of similar 4.8.2 4.8 4. liquidators bonds. public liability, guarantees. personalaccident,fidelity A catastrophe, which provides protection to limit losses on each and every loss and every risk or series of series or losses oroccurrence ofoneevent risk every and loss every and each on losses limit to protection provides which catastrophe, A policies. risks all including strike riot, explosion, lightning, fire, following profits of Loss and Damage Material from An A Short terminsurancerisks(continued) Claims development Reinsurance risk Reinsurance strategy Underwriting strategy motor, fire bonds Risk management(Continued) Excess NOTES TO THE FINANCIALSTATEMENTS (continued) surplus Accident and of guarantees treaty loss and Cover which liabilities quarter For theyearended31December2008 for covers fire excess share business and In thousandsofMalawiKwacha of Contractors treaty loss accepted which covering, 70 All covers by risk way performance, motor plus of facultative erection own maintenance, damage all arrangements. risks, covering engineering supply, property The customs cover risks, damage, ranges and and
4.8.6 to besufficient tofundtheactual claimspaid. Consequently, of positive the Group has a claims history development, created i.e. overthe reserves time proved appropriate has it that ensure to information practices. regardingitsclaims exposures andadoptssoundreserving steps reasonable all takes Group the risk run-off Tomanage risk). (run-off claims any oneclassofbusiness. inlosses Group’sthe insurance. the limits of marketand policy the insurance with re consistent Thisexposureis areas specialised to exposure limited very with business insurance of lines major all to exposure has Group The and classofbusiness. segment geographical by risk concentration Group’sthe the resources. monitors upon Group heavilyThe impact eventsof eventcouldseries particular or a where mayarise risk of concentrations process, insurance the Within circumstances. the reduce to treaties net exposure to the reinsurance Group. In addition, are underwriters allowed to buy facultative reinsurance in non-proportionate certain specified and proportionate of combination a buys It resources. capital protect and losses to exposures its control to order in underwrites it risks the of portion a reinsures Group The 4.9.2 risks over anumberofyears and,assuch, itisbelieved thatthisreducesthevariabilityofoutcome. The strategy underwriting seeks diversity to ensure a balanced portfolio and is based on a large portfolio of similar 4.9.1 techniques. statistical using established estimated those from vary may year one any during events of size and number actual the and random, nature, The contracts. insurance of portfolio a for theirbyevents are, Insurance expected. than greater is provisioningclaims of severity and frequency the that is and risk principal pricing the to applied is probability of theory The and analyses scenario analyses. sensitivity models, measurement risk internal include methods of These risks. types overall and individual insured for risks both exposures risk insurance monitor and assess to methods several uses Group The of emergingissues. new products or that exceed set limits, pricing guidelines, centralised management of reinsurance and monitoring The Group manages its insurance risk through underwriting limits; approval procedures for transactions that involve the under claims of severity and timing the contract. surrounding The Groupalsohasexposure tomarket riskthroughitsinsuranceandinvestment activities. uncertainty the to exposed is Group the such As event. are directly subject to the risk. Such risks may relate to life, financial or other perils that may arise from an insurable The primary insurance activity carried out by the Group assumes the risk of loss from persons or organisations that 4.9 Long terminsurancerisks Concentration ofinsurancerisksandpoliciesmitigatingtheconcentrations Reinsurance strategy Underwriting strategy NOTES TO THE FINANCIALSTATEMENTS (continued) For theyearended31December2008 In thousandsofMalawiKwacha 71
Annual Report 2008 NICO HOLDINGS LIMITED Annual Report 2008 NICO HOLDINGS LIMITED b) willdifferThe mortality andjointlife between the retirement,voluntary annuitant. on experiencemortality for the population of policyholders including allowance for future improvements.mortality a) this product. The key risks are managed is through not sensible used pricing forand product design. Reinsurance underwriting matched byassets. suitable been have contracts the under payments annuity the which to extent the on depends risk Investment annuity.the of the pricing initial as the through arise managed is risk risks this Longevityand policyholder, the of risks. lifetime the investment for paid and are annuities longevity are product this with associated risks main The associated ofproductaccruewith thistype toshareholders. rewards and risks All expected. than better are experience investment and mortality when arises Profit Payments areoften 5or10 guaranteedtobepaidfor(e.g. aminimumtermregardlessofsurvival years). of his/herlifetime. Annuities may belevel, orescalateatafixedpriceindex. rate,orbeinlinewithasuitable This type of annuity is purchased with a single premium at outset, and is paid to the policyholder for the remainder 4.9.4 any if insurance ceded to respect with policyholders its to re-insurer fails tomeettheobligations itassumes. liable remains Group the However, paid. is claim the Under the terms of the reinsurance agreements, the re-insurer agrees to reimburse the ceded amount in the event 4.9.3 4.9 4. short-term bonds,andthustheGroupensuresthatthey move inlinewitheach other. rate, which may not stay the same overtime. Long-term bonds are more sensitive to changes in interest rate than discount risk a using priced is policy the of outset the at risk rate Interest section. risk credit the under coveredbeen have risk default of Details basis. regular a on position this monitor to used is modelling liability or Asset to need will Group the therefore expected throughoutthetermofpolicytominimiseriskmismatch.buyas andsellassetsasnecessary die not will annuitants dies cases most annuitant in last However, the as just matching). zero to (perfect decline will fund the then expected as die annuitants If fund. the balance to disinvested,be orderwill which(match)in sum with dates, lump coincide redemption the should the of year part income earned on the investment will not usually be sufficient to cover the dates. annuity and redemption The the varying expensewith gilts outgo, and so bonds eachcorporate of consist will contract. mix the asset Theof start Investment risk: Mortality risk: The pricing assumption is based on both historic availablein-house and industry information Long-term insurancecontracts–Immediateannuities Reinsurance risk Risk management(Continued) Long terminsurancerisks(Continued) NOTES TO THE FINANCIALSTATEMENTS (continued) With With this type of product the lump sum premium is available for the Group to invest at the For theyearended31December2008 In thousandsofMalawiKwacha 72 Deposit Admin Individual Life Group Life Immediate Annuity Business Class The Group’s riskanalysis islargelydriven by theclassesofbusinesswritten; 4.9.8 Reinsurance arrangements arealsoinplace toprotecttheGrouponlargeclaims. The Group uses rates that take cognisance experienceof the mortality/claims of the Group as well as the market. Management ofRisk of death. eventthe lifein Group business. insured short-term the writes indemnify TheGroup to designed are Thepolicies 4.9.7 to protecttheGroup. The Group uses properly developed rates, and in the event of death covers, reinsurance arrangements are the in place to benefits Management ofRisk distribute to as so designed are policies The business. policyholder. life individual writes Group The considers Group the 4.9.6 practice In declared. bonuses the on discretion contractual policyholders’ reasonableexpectationswhensetting bonuslevels. complete has Group The Management ofrisk long a on based funds assets the on term rateofreturn. income the The tothepolicyholderthanaunit-linked contractsprovidesecurity contract. morecapital policyholders to distribute to designed are payments bonus The participationfeatures.The Groupwritespolicyholder benefitsbusinesswithdiscretionary 4.9.5 Concentration ofrisk Short-term Insurance–GroupLife Long-Term InsuranceContracts–IndividualLife Long-term insurancecontracts–withdiscretionaryparticipationfeatures NOTES TO THE FINANCIALSTATEMENTS (continued) For theyearended31December2008 In thousandsofMalawiKwacha 73 Low Medium High High Risk Rating
Annual Report 2008 NICO HOLDINGS LIMITED Annual Report 2008 NICO HOLDINGS LIMITED Loan interest Expenses/policy AIDS Mortality increase profitability andamount availableincrease profitability for distribution toshareholdersandpolicyholders. will overruns the in reduction Any market. reduce the to on will passed be cannot increase trends, slight market current Any of view in but lines. profits, product its all in overruns expense experiencing currently is Group The Expenses change inthe results. closely limits cover least 5% free is likely to impact With negatively on AIDS. the business. Decline of in the AIDS statistics is impact atunlikely by to statistics cause the AIDS significantthe in profitably.However,increase by operate major to a able affected been has Group the monitored significantly been not has industry the Currently AIDS present time,andthestiff competitionprevailing inthemarket. (even as low as 5%), might affect the demand for these products in view of the low of elasticity the market at the increase negative a of event the accordingly,in whichrates adjust to need the to rise business. give would This lifeindividual Life,and Group on especially business its affectwouldin rates Group the mortality the shiftAnyin Mortality Rates The Groupissensitive tothefollowing factors: 4.9.9 in 10% plus profit) respect ofmoney available tofundbonusesdepositadministrationpoliciesandimmediateannuities. (with policies life individual on declared are bonuses which from surplus of 20% Assumed Future Shareholder entitlements Other General Investment Return Major assumptions 4.9.8 4.9 4. Sensitivity analysis Concentration ofrisk(continued) Risk management(Continued) Long terminsurancerisks(Continued) NOTES TO THE FINANCIALSTATEMENTS (continued) For theyearended31December2008 N/A (Overrun K3,276) K1,404 +5 Years 100% ASSA SA8590 Heavy 100% of Life Individual In thousandsofMalawiKwacha Estimated at16% netoftax. N/A K1,095 N/A SA8590 Heavy 100% of Annuities Deferred 74 N/A premium 7.5% of N/A A (55) Annuities
30% p.a. N/A + 5 Years 100% ASSA SA8590 Heavy 100% of Life Credit a) • • • • • million MK16,404 i.e. sheet balance Additional were reserves heldasfollows: the in presented per as taken been has MK12,900(2007: million). assets net of Valuation related investment returns, bonuses tobegrantedpolicyholders’ andcurrent reinsurancearrangements. ofmarket expenses, mortality, expected account balance MK68.606 into taking flowsThe million). cash projected (2007: on MK25.069 based been has liabilities (2007: the million million MK25.069 MK78.961 of of (IBNR) Reported (UPR) Not Reserve But Incurred Premium and a million) Unearned an constitutes which carries business Life business Group of Account. portion Investment small the of value the to equal set been have business AdministrationDeposit the for Reserves valuation. of method premium gross a is this used; been has Valuation Soundness actuary. Financial The consulting by independent an 2008 December 31 at as valued been Fund has The 4.9.10 forThe claimsoutstanding aperiodofover Groupdoesnotmaintain 12 months. Claims Build-up diversity the by of theGroup’s investmentmitigated portfolio. Henceitdoesnotposeasignificantrisk. heavily is risk the However, fluctuations. rates interest to vulnerable highly is Group The Interest rates Unallocated policyholdersreserves Contingencies Reserves(mortality, expenses) Resilience Reserves Investment Reserves AIDS Reserves Bonus Reserves Stabilisation Reserves Data Annuities Deposit Administration Group Life Individual Life 31 December 2008 plus investment returns of 22.13% for the year less the amount utilised to fund the the fund to utilised amount the less year the for 22.13% of increased bonusrates returns investment plus 2008 December 31 at as Reserve Stabilisation Bonus the of balance opening the as calculated is and contract administration action intermsofreducingbonuses. Bonus andanexpense reserve madeupofmortality Contingency reserve Resilience Investment calculatedas10% reserves oftheactuarial liability witha5yearhigh risk additiontothecalendaryear.AIDS mortality The The positionoftheFundasat31December(afterallocationsurplus)isfollows:
NOTES TO THE FINANCIALSTATEMENTS (continued) AIDS Fund valuation Stabilisation
reserve reserves
calculated was Reserve. calculated For theyearended31December2008
by This
loading In thousandsofMalawiKwacha is as
essentially the 85%
mortality of valuation 75 the
rate Discretionary
by interest
100%
and of
the Participation ignoring
Actuarial any
3,424,064 15,087,186 Society 1,083,245 9,325,212 feature 255,433 109,481 105,482 577,953 142,116 possible 47,086 17,114 2008
of - of
South management the 11,836,607 6,914,167 2,687,826 285,485 385,027 100,052 763,667 176,550 367,706
Deposit 44,406 95,378 16,341 Africa’s 2007
Annual Report 2008 NICO HOLDINGS LIMITED Annual Report 2008 NICO HOLDINGS LIMITED Unallocated surplus of MK3,424.061 million (2007: MK2,687 million) has been retained intheLife MK2,687million)hasbeenretained Unallocated surplusofMK3,424.061million(2007: Fund. MK1,167.16of balance Lifeforward Fund.carriedof a part leaving as 2009 million year the in paid be will million which of out MK1,467.16surplus MK1,317.16of yearbalance leavingthe a werein million paid MK150been has million fund MK150.00 Lifemillion) of balance wherebya million MK711.692 the in (2007: funds Shareholders’ million total shareholders, MK710.520 to of year the allocation for the (After 2008. in paid million MK307.00 of dividend final excludes million MK756.638 of 2008 January 1 at as surplus of share shareholder’s opening The c) * b) 4.9.11 4.9 4. Bonus-immediate annuity Bonus-Deposit Administration (non-vested) Bonus-Deposit Administration (vested) Surplus before allocations(grosspremiumbasis) Balance at31December(Page 31) Long termpolicyholders’ benefits (Page 32) Revaluation surplusnetofdeferred tax Prior year adjustment Balance at1January Surplus peractuarial report Less: Dividendpaidduringtheyear Surplus after allocationtopolicyholdersbutbefore allocationtoshareholders Unallocated policyholdersreserves Surplus for theyear toshareholders Shareholder’s shareofsurplusasat1January Surplus after allocationtopolicyholdersbutbefore allocationtoshareholders
Prior year adjustmentofMK86.910 millionrelatedtoprovision for severance pay. Risk management(Continued) consulting actuaries,theCompanyhasallocatedsurplusasfollows: the of advice the On million). MK5,647 (2007: million MK6,341 of surplus a disclosed has Fund The Long terminsurancerisks(Continued) Movements during the year year the during Movements NOTES TO THE FINANCIALSTATEMENTS (continued) Fund valuation(Continued) For theyearended31December2008 In thousandsofMalawiKwacha 76 11,836,607 1,663,527 15,087,186 (1,087,516) 6,341,240 3,424,061 4,891,219 4,891,219 4,741,219 1,587,052 (710,520) (362,505) (756,638) (150,000) 2008 2008 - - 11,836,607 (1,095,138) 1,236,274 3,751,466 2,576,353 3,911,466 3,911,466 8,110,890 2,687,827 5,647,193 (160,000) (608,410) (711,692) (511,947) (32,179) (86,910)* 2007 2007 the fair value. All otherreceivables /payables arediscountedtodeterminethefair value. reflect to deemed is amount year,notional one the than less lifeof remaining a payableswith or Forreceivables The amortisedcostisestimatedasthepresentvalue offuture cashflows, discountedateffective interestrates. - The amortisedcostisestimatedasthepresentvalue offuture cashflows, discountedateffective interestrates. - future expected discounted on principal andinterestcashflows. based calculated is or available, if prices, market quoted on based is value fair The - financial of values fair the estimating in used assumptions and instruments reflectedinthetable. methods major the summarises following The Estimation offair values 4.10
31 December2007 Cash andcashequivalents Trading assets Loans andadvances tocustomers Investment securities Total Trading liabilities Deposits fromcustomers Long termloan Total Cash andcashequivalents 31 December2008 Trading assets Loans andadvances tocustomers Investment securities Total Deposits fromcustomers Trading liabilities Long termloan Total Loans andreceivables Malawi Government LocalRegistered Stocks Malawi Government Treasury Bills Accounting classificationsandfairvalues NOTES TO THE FINANCIALSTATEMENTS (continued) For theyearended31December2008 1,637,146 1,637,146 990,355 990,355 Trading ------In thousandsofMalawiKwacha
Designated 2,461,671 3,418,008 1,826,129 4,104,875 635,542 686,867 at fair value ------
77 receivables 12,747,296 12,747,296 7,919,042 7,919,042 Loans and ------
(16,504,940) (10,921,553) (12,005,412) (1,085,859) (17,555,708) amortised (1,050,768) 18,665 18,665 11,275 11,275 Other cost ------
(16,504,940) (10,921,553) (12,005,412) (1,085,859) (17,555,708) 12,029,134 17,861,191 (1,050,768) 12,747,296 1,837,404 3,436,673 1,637,146 7,919,042 carrying amount 635,542 686,867 990,355 Total
(16,504,940) (10,921,553) (12,005,412) (1,085,859) (17,555,708) 12,029,134 17,861,191 (1,050,768) 12,747,296 1,837,404 3,436,673 1,637,146 7,919,042 635,542 686,867 990,355 value Fair
Annual Report 2008 NICO HOLDINGS LIMITED Annual Report 2008 NICO HOLDINGS LIMITED Interest incomefrombankdeposits 9. Interest incomeonLoans 8. Premium basedfees 7. 6. There were nodiscontinuingoperations,disposalsandacquisitionsofsubsidiariesorassociatesduringtheyear. 5. Interest fromGovernment stocks Fund Managementbasedfees - Treasury bills Investment incomefrom:- Gross written premium–shortterminsurance Gross interestfromBanking Information Technology fees Consultancy - Local registeredstocks Gross life insurancepremium Commission andBank charges Other fee income - Loans anddebentures Gross pensionpremium
- Dividends Rental income Unearned premiumadjustment Other interestincome Reinsurance premium Net earnedinsurancepremium Investment income Incomefrombankingoperations Fees andCommissionincome Insurance Premium Discontinuing operations,disposalsandacquisitions NOTES TO THE FINANCIALSTATEMENTS (continued) For theyearended31December2008 In thousandsofMalawiKwacha 78 (2,187,888) 2,244,530 2,423,306 1,593,330 3,402,439 1,029,686 8,098,224 ,2,1 4,870,492 5,529,417 1,136,146 5,667,994 544,626 (242,342) 979,133 178,776 369,579 975,477 125,721 447,206 377,382 65,513 50,309 46,887 65,172 77,420 (3,982) 2008 GROUP (2,217,620) 1,506,250 2,842,420 6,663,906 1,204,853 1,092,219 1,829,760 4,211,368 1,012,660 392,578 (234,918) 323,510 564,495 298,120 103,898 100,512 701,195 255,574 10,326 67,758 32,945 85,338 51,187 27,278 2007 339,936 339,936 705,539 723,353 6,890 1,335 6,891 2,698 2008 ------COMPANY 368,459 382,673 308,109 308,109 14,214 2007 ------Auditors remuneration 14. Fixed deposits 13. Commission expenses paid 12. Insurance claimsandlossadjustmentexpenses 11. Profit andequipment onsalesofproperty 10. Investment deposits Directors remuneration Recoveries fromreinsurers Exchange gains/(loss) Changes indeferred acquisitioncosts Savings deposits income Other sundry
Staff costs Communication andaccommodationexpenses Depreciation Sundry businesschargesSundry Impairment losses Repairs andmaintenance Other expenses
Administrative expenses Bank interestexpense Insurance contractsacquisitioncosts Other income/(expenses) Net policyholdersclaimsandbenefits NOTES TO THE FINANCIALSTATEMENTS (continued) - Audit fees - Executive - Nonexecutive For theyearended31December2008 In thousandsofMalawiKwacha 79 (2,619,533) (3,825,476) (2,770,527) (1,970,255) (284,689) (586,641) (552,545) (245,863) 150,994 (713,669) (231,619) (104,982) (173,034) (501,946) (112,275) (343,112) (40,071) 34,096 (94,121) (13,733) 93,003 75,347 13,583 4,073 2008 - GROUP (4,942,692) (1,890,198) (3,020,516) (1,657,126) 3,052,494 (323,941) (491,620) (206,982) (465,446) (603,665) (496,887) (243,877) (293,513) (129,348) (103,170) (42,679) (32,784) (84,131) (14,683) (21,010) 26,174 (27,328) 5,785 5,989 2007 (516) (338,200) (149,701) (72,559) (66,524) (26,130) (3,662) (2,526) (9,540) (1,015) (7,558) 1,776 2,711 2008 80 ------COMPANY (270,067) (123,940) (53,403) (43,022) (15,461) (11,908) (30,110) 14,929 (4,634) 1,507 3,273 (2,518) 5,233 2007 453 ------
Annual Report 2008 NICO HOLDINGS LIMITED Annual Report 2008 NICO HOLDINGS LIMITED and Pension businessat15% Current yearat30%,Life tax businessat21% expenseCurrent tax Recognised intheincomestatement 16. Interest onloans 15. Total ontheGroup&subsidiaries incometax Finance leasecharges Origination andreversaldifferences oftemporary Deferred taxexpense Other investment expenses Total incometaxexpense Profit beforetax Reconciliation oftaxcharge Tax at30% Effect oflower rateinlife tax &pensionbusiness Effect income ofnontaxable Effect ofpermanentdifferences gaintax Capital Dividend tax Underprovision fromlastyear
Under theMalawi Taxation Act toanother. itisnotpossibletotransfer lossesfromonesubsidiary tax Income taxexpense Finance Costs NOTES TO THE FINANCIALSTATEMENTS (continued) For theyearended31December2008 In thousandsofMalawiKwacha 80 2,644,371 574,363 (91,448) (92,522) (30,872) 673,329 612,201 574,363 612,201 (88,548) (15,820) (12,997) 37,838 84,109 (1,074) 2008 - - GROUP 1,714,963 (130,156) (106,070) 329,932 329,932 269,622 269,622 514,489 (60,310) (52,789) (55,642) (38,967) 30,326 (2,853) 2007 - - - (211,662) 661,895 198,568 (63,985) 23,261 (64,969) (39,029) 31,416 54,677 54,677 31,416 (2,554) 2008 (984) - - - - COMPANY (106,070) 323,401 (86,431) (87,653) 97,020 (1,222) (3,964) (3,142) (3,142) (5,165) (7,106) (7,106) 2007 7,109 - - - - Diluted earningspershare Basic earningspershare(MK) Weighted averagesharesinissuethroughouttheyear (‘000s) numberofordinary Shareholders (MK’000s) Profit attributable totheordinary interestMK’000 Minority Profit for the periodMK’000 1,043,041thousand),calculatedasfollows:-(2007: MK1,342,445)andaweightedof1,043,041thousandof MK1,821,942(2007: averagesharesoutstanding numberofordinary The was calculationofbasicearnings pershareat31December2008 basedonprofit shareholders attributable toordinary 17. Basic earningspershare NOTES TO THE FINANCIALSTATEMENTS (continued) For theyearended31December2008 In thousandsofMalawiKwacha 81
1,043,041 232,981 1,821,942 2,054,923 2008 1.75 1.75 GROUP 1,342,445 1,043,041 1,459,593 117,148 2007 1.29 1.29
Annual Report 2008 NICO HOLDINGS LIMITED Annual Report 2008 NICO HOLDINGS LIMITED 18. Propertyandequipment
GROUP Balance 2007 asat1January Cost Effects ofchanges inexchange rates Additions Revaluation surplus Transfers Disposals Balance asat31December2007 Balance 2008 asat1January Cost Effects ofchanges inexchange rates Additions Revaluation surplus Transfers withinclasses Transfers toassetsheldfor sale(note26) Transfers toinvestment properties Disposals Balance asat31December2008 Balance 2007 asat1January Accumulated depreciationandimpairmentloss Effects ofchanges inexchange rates Depreciation for theyear Released onrevaluation Eliminated ondisposals Balance asat31December2007 Balance 2008 asat1January Accumulated depreciationandimpairmentloss Transfers Depreciation for theyear Released onrevaluation Eliminated ondisposals Balance asat31December2008 At 31December2008 Carrying amounts At 31December2007 NOTES TO THE FINANCIALSTATEMENTS (continued) For theyearended31December2008 In thousandsofMalawiKwacha 82 1,354,567 1,354,567 buildings Land and 1,415,517 1,415,517 1,415,316 (573,617) (147,047) 944,675 468,384 436,478 166,530 153,242 (11,116) (49,280) (14,384) (10,647) (17,837) 19,670 (5,909) (9,936) (1,533) (7,827) 7,094 7,627 200 200 - - - -
Vehicles 146,006 146,006 154,320 112,314 78,076 (13,652) 49,386 25,260 24,087 81,887 72,432 (17,127) 15,051 Motor 57,449 67,930 67,930 (1,559) (4,951) (1,127) (5,178) (5,178) 1,433 ------
Equipment 1,906,482 1,556,076 1,556,076 Furniture 1,254,111 906,631 459,396 205,783 (18,337) 649,447 649,447 181,879 143,320 849,312 214,149 407,725 317,575 (16,740) 49,280 (8,169) (7,132) (4,897) (9,317) (6,115) 1,008 and ------2,400,023 3,415,369 2,484,171 2,311,100 3,117,599 3,117,599 (573,617) 699,648 245,863 166,530 153,242 536,515 238,137 931,198 (12,310) 769,104 (46,580) (31,925) (20,812) (14,384) (13,347) 717,576 717,576 (11,066) (10,767) (17,837) (3,727) (9,374) (7,827) Total - 18. aus ee eemnd y eeec t osral pie i te rpry akt h rvlain upu is surplus revaluation The market. untilrealised. and isnotdistributable, property recognised directlyinequity the in prices observable to reference by determined were Values a Chartered Valuation Surveyor with KnightFrank onbehalf oftheDirectors. Land and buildings were revalued on open market basis on 31 December 2008 by Don Whayo BSC, MRCIS, MSIM, by Companies inspection the for open of are 16 and Section subsidiaries its shareholders ortheirdulyauthorisedagents. 3, and Group the Schedule of office under registered the required at as maintained are 1984 details Act giving registers, equipment and Property
COMPANY Balance 2007 asat1January Cost Additions Balance asat31December2007 Balance 2008 asat1January Cost Adjustments Additions Disposals Balance asat31December2008 Balance 2007 asat1January Accumulated depreciationandimpairmentloss Depreciation for theyear Balance asat31December2007 Balance 2008 asat1January Accumulated depreciationandimpairmentloss Adjustments Depreciation for theyear Eliminated ondisposals Balance asat31December2008 At 31December2008 Carrying amounts At 31December2007 Property andequipment(Continued) NOTES TO THE FINANCIALSTATEMENTS (continued) For theyearended31December2008 In thousandsofMalawiKwacha 83
Vehicles Motor (2,692) (2,692) 8,729 8,729 8,729 6,037 4,099 5,256 5,256 3,721 3,473 1,157 1,157 2,316 - - - -
Equipment Furniture 30,543 42,892 42,892 30,727 66,795 28,449 28,449 28,825 12,349 14,443 10,751 37,970 (3,653) 17,698 (3,550) (3,171) (2,474) 6,400 and 39,272 51,621 51,621 30,727 72,832 21,797 33,705 33,705 32,547 40,286 12,349 11,908 (6,345) (6,242) (3,171) 17,916 (2,474) 7,557 Total
Annual Report 2008 NICO HOLDINGS LIMITED Annual Report 2008 NICO HOLDINGS LIMITED properties Investment 20. GROUP 19.
Balance asat1January Cost GROUP Additions Balance as at 1 January 2007 Balance 2007 asat1January At valuation 2007 Balance at31December Acquisitions Balance asat1January Depreciation Fair value adjustment Charge for theyear Balance at31December2007 Balance at31December Balance 2008 at1January 2008 At 31December amount Carrying Acquisitions Transfers Transfers &equipment(note18) fromproperty Fair value adjustment Balance asat31December2008 Balance 2008 asat1January At valuation COMPANY Additions Balance asat31December2008 Valuation Surveyor with KnightFrank on behalfoftheDirectorson31December2008. Investment propertieswere revalued ontheopenmarket value basisby Don Whayo Bsc,MRICS, MSIM,aChartered Intangible assets NOTES TO THE FINANCIALSTATEMENTS (continued) For theyearended31December2008 In thousandsofMalawiKwacha 84
investment properties 1,249,297 Freehold 239,169 309,000 521,200 647,199 647,199 40,399 85,600 36,092 17,837 - - -
investment properties Leasehold (309,000) 588,344 691,626 691,626 776,795 218,169 176,000 176,000 176,000 101,445 78,791 62,022 73,906 16,422 95,213 21,317 11,804 1,837 2008 - - 1,338,825 1,338,825 2,026,092 1,109,544 141,844 457,338 212,092 176,000 176,000 78,791 78,791 50,025 62,022 11,997 16,769 - 87,437 17,837 Total 2007 - - expected to realise at least amounts at which they are stated in the financial statements. All loans considereddoubtful ofrecoveryhave beenfullyimpaired. loans All statements. financial the are in stated companies are they which at registered amounts Malawi least to at realise relate to which expected of all debentures, and loans the Directors, the of opinion the In It istheintentionofDirectorstoholdallGovernment securitiestomaturity. Certified Deloitte, by 2008 December 31 on basis valuation Public earnings Accountants (Malawi) onbehalfoftheDirectors. the using revalued were shares Unlisted MK2,192 and Exchange Stock Malawi the on listed million) MK1,650million)unlisted. million (2007: MK4,400 (2007: million MK7,399 comprise Shares 21. Otherinvestmentsandloansreceivable
GROUP GROUP Balance 2008 at1January At costorvaluation 2008 Balance 2007 at1January At costorvaluation 2007 Additions Additions Fair value adjustment Fair value adjustment Reclassification Reclassification Disposals Write downs/write offs Balance at31December2008 Disposals Balance at31December2007 NOTES TO THE FINANCIALSTATEMENTS (continued) For theyearended31December2008 In thousandsofMalawiKwacha Receivable receivable Long term Long term (155,904) 155,904 Lease lease 7,422 7,422 ------85 Government Government (5,925,894) Securities securities 1,085,343 6,164,497 1,181,912 (324,984) 216,118 216,118 (42,750) 20,265 19,450 (7,150) - - 5,637,096 2,353,200 3,558,843 2,479,624 9,591,483 1,601,844 5,637,096 (441,946) Shares Shares 40,575 (656) - - -
debentures debentures 1,024,317 265,340 Loans & Loans & (171,365) (527,493) 265,340 715,509 932,310 159,102 (85,118) (9,390) 3,340 - - 6,118,554 11,701,143 (6,609,291) 6,920,581 2,479,624 1,585,304 4,474,844 6,118,554 3,894,114 (438,606) (497,008) (127,868) 19,450 Total Total
Annual Report 2008 NICO HOLDINGS LIMITED Annual Report 2008 NICO HOLDINGS LIMITED Consumables 23. 22. COMPANY 21. Otherinvestmentsandloansreceivable(Continued)
COMPANY Balance at31December
Additions Movement duringtheyear: NICO GeneralInsuranceLtd Balance asat31December NICO Life InsuranceLtd NICO InsuranceUgandaLtd NIKO Insurance Tanzania Ltd NICO InsuranceZambiaLtd NICO Technologies Ltd NBS Bank Ltd
Inventories Investment insubsidiariesatcostlessimpairment NOTES TO THE FINANCIALSTATEMENTS (continued) For theyearended31December2008 In thousandsofMalawiKwacha incorporation Country of Tanzania Uganda Zambia Malawi Malawi Malawi Malawi
86 Shareholding 98,600 41,838 60,555 38,045 Loans 66.67 2008 2008 100 100 100 100 100 60 %
GROUP Amount 380,288 380,672 226,999 851,651 120,000 185,220 104,066 Shares 90,000 65,000 72,458 60,366 2008 2007 384
Shareholding 440,843 479,272 38,429 66.67 Total 2007 2008 2008 100 100 100 100 100 60 % - COMPANY
Amount 440,843 440,843 120,000 185,220 191,520 104,066 816,172 90,000 65,000 60,366 Total 2007 2007 2007 - - • Net loansandadvances areduetomature asfollows: Loans andoverdrafts 27. Accrued investment income 26. premiums Outstanding 25. Trade receivables Balance asat1January 24. • Lease contracts Staff loansandadvances Reinsurance companies–Commission,UPR,IBNR Movement duringtheyear Mortgage advances Assets heldfor sale Reinsurance losses companies-Outstanding Balance asat31December Total loansandadvances Other non-tradereceivables recoverable outoffuture marginsintherevenue fromtherelatedcontracts. Deferred acquisitioncostscompriseexpenses for theacquisitionofinsurancecontractsrecognisedduringperiodandare Fees, rentandotherreceivables Impairment ofloansandadvances
oneyear Within After oneyear Loans andadvancestocustomers Other receivables Deferred acquisitioncosts NOTES TO THE FINANCIALSTATEMENTS (continued) For theyearended31December2008 In thousandsofMalawiKwacha
87 13,073,487 12,744,035 12,744,035 3,406,912 ,2,5 4,332,807 7,228,858 2,052,672 ,1,1 3,629,131 1,319,612 1,192,165 ,1,7 3,586,235 5,515,177 1,745,496 7,921,079 4,427,345 (329,452) 521,936 135,126 187,776 919,935 213,651 573,617 52,140 44,472 25,875 2008 GROUP 4,780,581 1,652,361 2,473,250 5,869,058 8,156,177 7,919,042 7,919,042 (237,135) 148,290 132,618 902,346 430,445 592,790 139,753 439,276 48,023 187,776 29,727 2007 - 16,608 22,499 5,891 2008 ------COMPANY ------15,451 8,073 7,378 2007 ------
Annual Report 2008 NICO HOLDINGS LIMITED Annual Report 2008 NICO HOLDINGS LIMITED sheet date. Translation reserve represents retranslation difference arising on retranslation of foreign investments at the balance Fair valuerepresentsfair reserve value adjustmentonavailable for salefinancialassets. representstransfersGeneral reserve earnings,requiredby fromretained statute andotherregulators. (i) Generalreserve 31. Authorised (‘000) sharecapital Share capital 30. Bank balances 29. Cashandcashequivalents Loans anddebentures 28. (ii) Fair value reserve Short termdeposits Shares Nominal value (MK) (iii) Translation reserve Cash andcashequivalents Term deposits Authorised (MK’000) sharecapital Total otherreserves Bank overdrafts Government securities (‘000) Issued andfullypaidsharecapital statement ofcashflows asshownintheCash andcashequivalents
Nominal value (MK) (MK’000) Issued sharecapital Total numberofsharesissued(‘000) Share premium Revaluation reserve The revaluationandcomprisesthecumulative relatestoproperty increaseinthefair reserve value atthedateofrevaluation. Other reserves Capital andreserves Short terminvestments NOTES TO THE FINANCIALSTATEMENTS (continued) For theyearended31December2008 In thousandsofMalawiKwacha 88 1,300,000 5,436,846 6,379,060 1,043,041 2,944,207 1,043,041 6,175,847 2,501,188 (203,213) 204,033 233,595 428,859 956,983 942,214 105,445 (21,090) 65,000 84,355 52,152 5,391 2008 0.05 0.05 - GROUP 4,838,450 1,300,000 2,551,077 1,043,041 1,043,041 4,898,126 5,771,191 4,866,105 2,347,049 428,859 413,068 124,250 (59,676) 439,151 195,150 237,870 367,768 14,851 65,000 52,152 27,869 2007 0.05 0.05 1,300,000 1,043,041 1,043,041 428,859 58,041 58,041 30,000 65,000 65,257 95,257 95,257 52,152 2008 0.05 0.05 ------COMPANY 1,300,000 1,043,041 1,043,041 428,859 65,000 48,575 63,575 63,575 15,000 52,152 2007 0.05 0.05 ------These loansareatmarket rateofinterest. NIKOrespectively.Insurance of Limited, Uganda capitalisation Insurance and TanzaniaNICO Limited and Limited in Telecom investment for Holdings million Fund MK130 of Pension Bank Standard and Limited Insurance Life NICO At Company level, the loan balance of MK327.8 million includes unsecured loans of MK194 million borrowed from branchthe Blantyre property. The loanisguaranteedby million. NICOHoldingsLimitedinthesumofMK200 renovatingin utilised was and +2% interest prime effectiveat term year 5 2006 Junea for is Pensionloan funds the varied termsofthecontract. The loanisguaranteedby theMalawi Government. The bank repays the loan through offsetting receipts by Malawi Housing Corporation to Malawi Government under Housing Malawi to Corporation loaned for was whichthe credit construction IDA of an low represents cost million housing. MK20 Interest of on loan the Governmentloan Malawi originally The at 7% per annum was suspended. viable The loanisguaranteedby NICOHoldingsinthesumofUS$3million. to lending onward for used be to is loan This drawn. Small be Medium Enterprises to in Malawi that yet are environmentally is friendly. million This 2 loan has a US$ repayment period of which 5 years.of annum per 6.5% of rate fixed agreed an at 2007 January 23 on Limited Bank NBS to 5,000,000 US$ of loan NORSADapproveda an at has arepayment periodof5years commencingon15 July2007 2009. The loanisnotsecured. August in Limited Bank NBS to 3,000,000 agreed US$ fixed rate of 8.6% per annum. of This loan is loan to be used for onwarda lending to Small Medium Enterprises and approved Corporation Finance International Included intheGroup loanofMK1billionare thefollowing loans:- Loans 33. Interestbearingloansandborrowings MK0.19(2007: pershare) share MK 0.27perqualifyingordinary The following dividendswere declaredandpaidby theCompany:- 32. Due between2and5years Terms anddebtrepayment schedule Due within1year
Dividends NOTES TO THE FINANCIALSTATEMENTS (continued) For theyearended31December2008 In thousandsofMalawiKwacha 89 1,003,403 1,003,401 925,208 285,000 78,195 2008 GROUP 993,809 985,266 993,809 194,304 8,543 2007 285,000 327,794 327,794 247,197 80,597 2008 COMPANY 161,041 218,086 379,127 194,304 379,127 2007
Annual Report 2008 NICO HOLDINGS LIMITED Annual Report 2008 NICO HOLDINGS LIMITED GROUP Accrued interestandotherprovision Deferred (assets)andliabilitiesareattributable tax tothefollowing: tax deferred Recognised 34. Property andequipment Deferred (asset)/liability tax Investment propertiesandshares Deferred Tax assetsandliabilitiesmovement intheyear Accrued interest
Exchange gains/losses COMPANY Other assets Property andequipment Deferred (assets)/liabilities tax Investment propertiesandshares Deferred assetsandliabilitiesmovement tax intheyear Other assets
Deferred tax(assets)/liabilities GROUP Property andequipment Investment propertiesandshares Accrued interest Exchange gains/losses Other assets COMPANY Deferred Tax (assets)/liabilities Property andequipment Shares
Deferred tax assets and liabilities liabilities and assets tax Deferred NOTES TO THE FINANCIALSTATEMENTS (continued)
For theyearended31December2008 (89,098) (21,072) (56,629) 53,832 2008 2008 (327) 35 - - - - In thousandsofMalawiKwacha Assets Assets (181,630) (174,524) (16,382) (16,382) (11,544) 19,154 2007 2007 (504) - - - 90 01-Jan-2008 (163,217) Balance 124,950 210,906 159,129 91,473 (11,544) 43,627 24,967 96,455 14,187 10,650 4,725 17,362 2,561 6,902 2008 2008 as at -
Liabilities Liabilities 01-Jan-2008 Recognised statement Balance 265,997 139,975 income (16,363) 96,959 42,264 10,650 10,422 59,301 18,413 (9,076) 6,902 4,445 6,902 2,170 7,306 2007 2007 as at 385 385 19 - - Recognised Recognised statement in equity 124,985 154,277 income (45,471) (21,072) 21,088 (21,285) 78,799 23,263 24,788 14,187 17,036 4,725 3,503 2,560 6,902 2,175 2008 2008 - - - -
31-Dec-2008 31-Dec-2008 Net Net (161,047) (163,217) Balance Balance 154,277 159,129 138,719 137,844 (16,363) (11,544) 96,455 91,473 21,072 10,650 14,187 17,689 (9,076) 2,560 6,902 4,725 6,902 2007 2007 as at as at 385 Repayable ondemand 38. claims Gross outstanding 37. 36. liquidity and rate risk exposures oftheGroup. interest risk, insurance the of given is analysis 27, and 5 detailed a notes In provisions. insurance and liabilities holders’ policy advances, and loans of impairment the about information contain 26, and 4 Notes Key sources ofestimationuncertainty critical the of disclosure and selection development, accounting policiesandestimatestheapplicationoftheseestimates. the committee audit the with discussed Management 35. Repayable withinthreemonths orless Provision for claimsincurred butnotreported(IBNR) General insurancefundatthebeginningofyear
Due tore-insurancecompanies Increase inprovision inUPR Other tradepayables General insurancefundatendoftheyear
Balance atbeginningoftheyear Movement ofprovision for claimsincurred butnotreported(IBNR): Additional provision madeduringtheyear Balance atendoftheyear Deposits andcustomeraccounts Trade payables Unearned premiumprovision Accounting estimatesandjudgements NOTES TO THE FINANCIALSTATEMENTS (continued) For theyearended31December2008 In thousandsofMalawiKwacha 91 15,354,556 10,667,553 1,148,906 1,641,483 1,839,906 1,834,753 3,292,175 4,687,003 148,426 353,360 344,086 353,360 (5,153) 9,274 2008 GROUP 10,667,609 1,027,998 3,648,582 1,250,044 1,839,906 4,695,891 3,307,161 7,019,027 589,862 344,086 261,634 344,086 82,452 16,646 2007 2008 ------COMPANY 2007 ------
Annual Report 2008 NICO HOLDINGS LIMITED Annual Report 2008 NICO HOLDINGS LIMITED y uul gemn, et, eieet vlnay eieet rtecmn ad eudny h severance The redundancy. and allowance was asatDecember31,2008 actuarial liability determined. retrenchment retirement, voluntary retirement, death, agreement, mutual by In terms of Malawi employment Act, severance allowance is payable to employees on termination of employment Severance pay provision the to limited is pension contributions. liability employer’s arrangement, this Under arrangement. contribution defined a is Fund The Pension fund 42. less collected, is theinterestandratedeterminedby reference totheprincipaloutstanding. income investment and rental the using determined taxes and other costs is incurred in the management of the Group whether paid or accrued. that The sum so determined rate a at arrears in quarterly accrues The 1:99. of ratio the in debentures and debenture is shares an linked unsecured of non-convertible form debenture the redeemable in on is 31 December Limited 2016. Properties Interest NBS on in the debenture investment The fair value andchanges infair valueintheperiod. recognisedinincomestatement Recognition andMeasurement,theinvestments inassociateshave beenmeasuredat Instruments: Financial 39 IAS with accordance In statements). financial consolidated these in included been not has associates these Associates”,in “Investmentsof losses and gains recognised total the Group’sof the share 28, IAS with line (In Pensionsbusiness. and Life the through significantly is associates these in investmentThe NBS Properties Limited:-(throughNBSBank Limited): NBS Properties Limited:-(throughNICOHoldingsLimited): NBS Properties Limited:-(throughNICOLife InsuranceCompany Limited): Chichiri ShoppingCentreLimited-(throughNICOLife InsuranceCompany Limited): The Grouphasinvestments inthefollowing associatedcompaniesthroughitsvarious subsidiaries; 41. NIKO Tanzania and 40% at Bank NBS in at 33.33%. reserves and shares the of position minority represents interest Minority 40. Other non-tradepayables 39. Severance pay Expense recognisedintheincomestatement Pension costs
Employee benefits Investments inAssociates Minority interest Other payables NOTES TO THE FINANCIALSTATEMENTS (continued) For theyearended31December2008 In thousandsofMalawiKwacha 92 1,076,704 116,921 763,133 112,901) (4,020) 2008 2008 GROUP GROUP 923,998 486,986 248,931 155,231 93,700 93,700 2007 2007 117,964 49.00% 54.25% 13.00% 2.50% 2008 2008 975 975 - - COMPANY COMPANY 65,250 14,389 14,894 2007 2007 505 - is contained innote14is contained year the during Director’sremuneration executiveDirectors. non executiveand comprise Group the of Directors Transactions withDirectors andExecutive Directors The relationshipwithitsDirectors andExecutive Grouphasarelatedparty Officers. Company Total remuneration isincludedinDirectors’ Remuneration underthehead‘Administrative Expenses’ (note15). numberofsharestheGroupowned thetotal by2008, Executive Directorswas 741,864 741,864) (2007: December 31 at As 42). note (refer programme option Group’sshare the in participate also Directors Executive past andpresentseniormanagersoftheGroup. comprise Limited InvestmentsInvestments Millennium and Millennium Limited and Holdings Millennium Limited both of Holdings shareholders Limited. The Millennium through Group the in shares own Directors Executive provides non-cashbenefitsandgratuities toExecutive Directors. also Group the salaries, their to addition In Directors. executive non and executive comprise Group the of Directors The mortgagestotheDirectorsatyearMK22.3million). total endamountedtoMK52.9million(2007: Transactions withDirectors andExecutive Directors The relationshipwithitsDirectors,Executive Grouphasarelatedparty officers anditssubsidiaries. Group 43. equal tomarket value. 102As at31December2008 employees 102) (2007: have exercised theiroptions. granted to all employees of the Group based on length of service and positions of employees exercisable at a price trust. However, upon listing, arrangements were made for the Trust to acquire 2% of the equity. Options bythehaveheld may be Group the in beenequity MalawiStockthe of of terms 4% In Exchangeto up of maximum rules,a On 16 August 1996, the shareholders approved establishment of a trust for an employee share ownership scheme. Employee Share OwnershipScheme Movement onSeverance Provision Balance broughtforward Amount paid Charge for theyear Balance atyear end Reversal ofactuarial valuation Related parties NOTES TO THE FINANCIALSTATEMENTS (continued) For theyearended31December2008 In thousandsofMalawiKwacha 93 685,880 681,860 (59,919) 65,314 (9,415) 2008 GROUP 545,545 685,880 140,335 2007 - - 54,604 54,604 2008 - - - COMPANY 54,604 54,604 2007 - - -
Annual Report 2008 NICO HOLDINGS LIMITED Annual Report 2008 NICO HOLDINGS LIMITED provided totherelatedparties. related partieswhilsttheothers indicateservices from Limited Holdings NICO by acquired were goods/services the that bracketsindicate in NOTE: amounts The The following transactionstookplaceduringtheyear. relatedparty Transactions withDirectors andExecutive Directors (continued) 43. (Tanzania) Ltd Related Party Africap LLC
Prudential
Investments Limited NICO Technologies Limited
NICO Life Insurance Limited
NBS Bank Limited NICO General Insurance Limited
NICO Insurance (Uganda) Limited NICO Insurance (Zambia) Limited NIKO Insurance Related parties(continued) NOTES TO THE FINANCIALSTATEMENTS (continued) Subsidiary
Relationship Shareholder
Director
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary Subsidiary For theyearended31December2008
Intergroup expenses Type of Management fees transaction Loan
services Consultancy
Technical Support Internal Audit Management fees Impairment Group Life Management fees Internal Audit fees Loan Investment fees Rent Management fees Banking services Insurance premium Insurance claim Management fees Internal Audit fees Investment Management fees Internal Audit Intergroup expenses Management fees Internal auditfees In thousandsofMalawiKwacha 94 transactions MK’000 Value of (173,355) (14,123) 23,000 22,000 70,000 71,000 73,000 28,546 25,505 (6,220) (3,812) (3,612) 2008 1,997 3,836 2,380 5,836 4,309 2,918 2,173 ------Balance at year end MK’000 (198,641) 10,113 (2,053) 1,960 4,570 2,746 2008 657 ------transactions MK’000 Value of (85,549) (15,558) 49,060 65,522 13,621 33,136 16,838 76,589 16,765 (2,900) (1,035) (3,485) (3,328) (5,001) 2,436 4,624 2,070 3,218 2007 939 ------Balance at year end MK’000 (365,671) (7,107) 2,421 6,804 8,695 1,854 3,884 7,594 2007 (717) ------financial statements. the in disclosure or adjustments necessitating occurred haveevents no date, sheet balance the to Subsequent 47. in formed 1984 it isengagedingeneralinsurance,life assuranceandpensions,informationAct, technology andbanking. services, Companies the under Malawi in incorporated Formerly2002. it was called TheCompany National Insurance Group. It is listed on the Malawi Stock Exchange.public As a Group, a is Limited Holdings NICO 46. Dollar(Tsh) United States Dollar(Ush) United States Dollar(ZK) United States Dollar(MK) United States Exchange Rates asat31stDecember 45. 44. At thetimeofapprovinginflation thefinancialstatements, rate was: Inflation ratesasat31December(%) British Pound (MK) South Africa Rand (M Dollar(Tsh) United States Dollar(Ush) United States Dollar(ZK) United States Dollar(MK) United States At thetimeofapproving thesefinancialstatements, exchange rates were as follows; British Pound (MK) South Africa Rand (MK) Letters ofCredit Insurance contracts Total Subsequent events Incorporation Exchange andinflationrates Contingent liabilities NOTES TO THE FINANCIALSTATEMENTS (continued) For theyearended31December2008 In thousandsofMalawiKwacha 95 240,011 267,020 27,009 2008 GROUP 146,926 173,421 (26,495) 2007 1,708.0 4,890.0 1,345.0 5,660.0 2,105.0 1,377.8 10.1% 142.0 219.6 2008 240.3 9.9% 141.9 2008 18.2 16.5 - - - COMPANY 1,705.0 3,965.0 3,550.0 1,124.5 1,212.0 1,674.0 290.9 2007 282.4 140.5 9.7% 141.7 2007 7.5% 18.5 21.4 - - -
Annual Report 2008 NICO HOLDINGS LIMITED