Annual Report
TABLE OF CONTENTS
1. GROUP SALIENT FEATURES 2
2. GROUP STRUCTURE 3
3. CHAIRMAN’S STATEMENT 4
4. GROUP CHIEF EXECUTIVE OFFICER’S REPORT 7
5. MANAGING DIRECTOR’S REPORT – CBZ BANK LIMITED 9
6. MANAGING DIRECTOR’S REPORT – CBZ BUILDING SOCIETY 11
7. MANAGING DIRECTOR’S REPORT – CBZ ASSET MANAGEMENT (PVT) LTD 13
8.MANAGING DIRECTOR’S REPORT – OPTIMAL INSURANCE COMPANY (PVT) LTD 15
9. ANALYSIS OF SHAREHOLDERS 17
10. CORPORATE GOVERNANCE STATEMENT 18
11. STATEMENT OF DIRECTORS’ RESPONSIBILITY 21
12. REPORT OF THE DIRECTORS 24 26 13. REPORT OF THE INDEPENDENT AUDITORS
14. FINANCIAL STATEMENTS: CONSOLIDATED INCOME STATEMENT 28 CONSOLIDATED BALANCE SHEET 29 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 30 CONSOLIDATED CASH FLOW STATEMENT 31
15. GROUP ACCOUNTING POLICIES 32
16. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 44
17. RISK MANAGEMENT REPORT 61
18. COMPANY BALANCE SHEET 67
19. NOTICE TO MEMBERS 68
20. SHAREHOLDERS’ CALENDAR 69
21. COMPANY DETAILS 70
CBZ Holdings 2008 1 Annual Report
GROUP SALIENT FEATURES
Historical Cost
2008 2007 2006
$ ‘Quint $ ‘Quint $ ‘Quint
Total assets 5 467 558 - -
Total net advances 431 124 - -
Impairment losses on advances 9 803 - -
Gross advances 443 198 - -
Total deposits 1 390 280 - -
profit after taxation 975 081 - -
Capital adequacy (%) – CBZ Bank 22.20 18.60 32.80
Capital adequacy (%) – CBZ Building Society 65.00 51.00 61.00
Headline earnings per share ($’ trillion) 1 426 - -
Dividends per share (cents) - - -
Dividend cover (times) - - -
Return on average assets excluding acceptances (%) 35.67 29.49 19.40
Return on equity (%) 41.60 35.73 1 109
Interest margin as a % of average assets excluding acceptances 5.86 10.13 30.82
Non interest income as a % of total income 88.53 78.64 28.78
Cost to income ratio (%) 1.57 15.57 26.97
Permanent staff complement 923 1 389 836
2 CBZ Holdings 2008 Annual Report
GROUP STRUCTURE CBZ HOLDINGS 31 DECEMBER 2008 LIMITED
100% 100% 100% 100% 100% 58.5% 100% CBZ ASSET CBZ BUILDING 38.4% OPTIMAL CBZ BUILDING TRANSCONTINENTAL CBZ BANK MANAGEMENT t/a CBZ SECURITIES CBZ PROPERTIES SOCIETY (PVT) INSURANCE (PVT) LIMITED SOCIETY EQUITY GROWTH LIMITED DATVEST (PVT) LTD LTD FUND (PVT) LTD (Dormant)
100% 100% 60% STARLIGHT 100% ADV100%OCENT PROPERTY INVESTMENTS MAVELLA DEVELOPERS STARLIGHT (PVT)AVON CLETDT Investments (PVT) LTD (PVT) LTD
This is the It provides a This is the It provides Private equity A subsidiary commercial wide range of securities mortgage investment, company that banking arm investment trading arm of finance, deposit project finance, offers short of the Group. opportunities the Group. taking and IPOs, mergers term insurance It provides all to individuals, money market & acquisitions, products. banking services corporate and investments. rights offers. Property Ownership and products institutional Development and ranging from investors. The Management. savings accounts subsidiary to corporate creates and investment, loan grows value syndication and through restructuring, investments trade financing, mainly on the treasury equity and functions and money markets. assets finance.
CBZ Holdings 2008 3 Annual Report
CHAIRMAN’S STATEMENT
Introduction
It is a pleasure to present the results of CBZ Holdings Limited. During the year 2008, the Group achieved notable results given the prevailing adverse economic conditions characterized by unprecedented Inflation rates among other challenges.
Financial Highlights – Historical Cost
• Profit before taxation for the Group at $1 363 396 quintillion is up 3.1 trillion percent compared to $43 751 billion for 2007. • Profit after taxation at $975 081 quintillion is up 2.98 trillion percent from $32 742 billion in 2007. • Basic earnings per share at $1 426 trillion increased by 2.7 trillion percent from $52 654.77 last year. • Non interest income as a percentage of total income is 89% up from 79% Mr. R V Wilde in 2007. Group Chairman • Cost to income ratio at 2% is down from 27% in 2007 on the back of increased non interest income and robust cost containment strategies being implemented by the Group. • Total balance sheet increased by 2.46 trillion percent to $5 467 558 quintillion. • Shareholders funds increased by 2.56 trillion percent to $2 344 216 quintillion due to the capital and revenue reserves that increased by 2.33 trillion and 3.0 trillion percent respectively.
Operating Environment
The operating environment remained constrained as evidenced by continued shortages of foreign currency, frequent power and water cuts, escalating prices of basic commodities and production inputs.
Inflation
The official rate of inflation opened the year at 100 580.2%, rose sharply to reach 231 million percent by the end of July 2008. Monthly inflation, whose growth signifies the existence of inflationary pressures in the economy, rose sharply from 120.8% at the beginning of the year, to reach 2 600.2% by the end of July 2008. Thereafter no official figures were released by the Central Statistical Office.
The rise in the rate of inflation during the period under review was due to a number of factors, which include among others high money supply growth in an environment characterized by declining formal economic activity, pass-through effect of parallel market activities on prices of goods and services, entrenched self-fulfilling inflation expectations, as well as speculative tendencies in virtually all sectors of the economy.
During the Monetary Policy update of 30 July 2008, the Central Bank instituted currency reforms under which a new currency in revalued denominations was introduced.
In an effort to cushion the household sector from the shortages of goods and services in the economy, the Central Bank introduced and allowed warehouses, retail shops, fuel service stations and fuel companies to charge in foreign currency after obtaining licenses. The licensed warehouses and retail shops as well as service stations operated under given guidelines. The dispensation to charge in foreign currency was later extended to the property and real estate sectors.
Money Market
Surplus conditions were experienced during the greater part of the year; these were driven by significant liquidity injections to finance government expenditures on the 2008 elections, gold and foreign currency purchases as well as
4 CBZ Holdings 2008 Annual Report
CHAIRMAN’S STATEMENT (CONTINUED)
disbursements in support of agricultural mechanisation initiatives and other social activities.
Offsetting these injections were withdrawals, largely in the form of statutory reserve payments and government revenue collections. Short term interest rates fluctuated; reflecting changes in the daily money market liquidity conditions.
Stock Market
Against the background of low rates of return on the money market, the stock market remained bullish throughout the year. Lack of short dated paper on the market, as government sought to restructure its growing domestic debt, gave impetus to the firm trading on the stock market.
Activity on the stock market came to an abrupt halt on 17 November 2008 after the Reserve Bank of Zimbabwe put in place stringent requirements for stockbrokers to trade on the market. The benchmark industrial shares index closed the year at the November level of 7 533 084 trillion points while the mining shares index closed at 7 575 857 530 trillion points.
Social Responsibility
The Group continues to recognise the importance of being a socially responsible corporate citizen through assistance to the under privileged members of society particularly in these turbulent economic times. During the year, financial and material assistance were granted to various sectors that include education, health, sport, arts and charitable organisations.
Dividend
The Board decided to pass the declaration of a final dividend for the year ended 31 December 2008. This decision was a result of the need to utilise the funds for other investments that would add value to the shareholders’ funds.
Outlook
While the Government through the Central Bank has put in place a number of measures and initiatives to help the productive sectors, which include the farm mechanisation programme, there is, however, need to urgently put in place and implement measures and policies that help shore up investor / business confidence in the economy. The newly constituted inclusive government is a welcome development in the country as this will give the business planning platform and put in place effective production plans. Measures to access balance of payment support from the international community cannot be over emphasised as this will help reduce the financing of the national budget from domestic banking sources.
The macroeconomic policies announced through the national budget as well as the monetary policy statement should be implemented consistently and accountably with minimum policy reversals.
Appreciation
My appreciation goes to all stakeholders, the Boards of the Group companies, our valued customers, Management and Staff for their support in achieving these good results.
R V WILDE CHAIRMAN
25 March 2009
CBZ Holdings 2008 5 Annual Report
BOARD OF DIRECTORS
Mr. R V Wilde: 63 years Mr. N Makuvise: 46 years Chairman Group Chief Executive Officer
Dr. J P Mangudya: 45 years Mr. E Mugamu: 51 years Mr. F B Chirimuuta: 52 years Managing Director Non-Executive Director Non-Executive Director
Dr. R Mabeza-Chimedza:57 years Mr. S G R Harnden: 64 years Mrs R. Pasi: 40 years Non-Executives Director Non-Executive Director Non-Executive Director
Mr P Zimunya: 50 years Mr N Nyemudzo: 34 years Mrs V M Chasi: 43 years Executive Director – Risk Management Executive Director - Finance Legal Corporate Secretary
6 CBZ Holdings 2008 Annual Report
GROUP CHIEF EXECUTIVE OFFICER’S REPORT
1. Introduction
The thrust of my 2007 report was the establishment of the CBZ Group. This was achieved mainly through acquisitions. It was my hope that 2008 would be a year of consolidation. It, however, turned out to be a year for the struggle to survive due to adverse operating conditions.
The challenges that we faced in 2007 further worsened in 2008. On the economic front, the country faced more challenges which created operating difficulties for the Group. The world economic meltdown did not help the situation either.
The diversified Group we set up did help to strengthen our balance sheet. This created a strong foundation which should assist us to exploit new opportunities as they arise.
Although 2008 was a difficult year for the financial services industry, the positive performance we are reporting shows the high level of resilience in the Group. Mr. N Makuvise Group Chief Executive Officer 2. Market Conditions
The market conditions in 2008 were generally bad for business and in particular for the financial services industry worldwide.
Political instability, and the hyper-inflationary environment experienced in Zimbabwe created difficulties for virtually all businesses. The deteriorating worldwide economic conditions further worsened the already bad operating environment.
Production volumes continued to deteriorate throughout the industry. This was the result of the shortage and lack of foreign currency which could not support the required levels for the purchase of raw materials, e.g. spare parts and inputs. The situation was compounded by the erratic supplies of power and water.
The local currency lost its purchasing power and as such banks had very little business to conduct in the last quarter of the year. The closure of the stock exchange in November 2008 also destroyed the one market that was doing well.
3. Performance
The Group’s financial performance as reported in the Chairman’s statement was commendable given the outlined operating environment.
The hyper-inflationary conditions created major operating challenges for the Group. The subsidiaries, however, managed to produce a set of financial results that reflected the Group’s strong resilience given the rough operating conditions.
As the year was focused more on survival, we are happy with the results achieved. They clearly indicate that we did not suffer an erosion of capital which is good for the future.
4. Social Responsibility Activities
The Group continued with its sponsorship programmes to support community initiatives in the year under review.
The main activities focused on were soccer, music, health and education. The programmes provided the Group with visibility within the community it operated.
CBZ Holdings 2008 7 Annual Report
GROUP CHIEF EXECUTIVE OFFICER’S REPORT (CONTINUED)
5. Strategic Priorities
The Group’s thrust to provide convenience and quality service to clients continued in 2008. The improvement in service delivery remained a major focus by the Group companies. The establishment of a group wide IT platform continued during the year to meet the above stated objectives. In the process, there was a strong focus on the enhancement of the Group subsidiaries synergies. The more the companies cooperate the better it will be for our clients.
One of the major strategic priorities for the Group in 2008 related to capital preservation. The hyper-inflationary environment eroded capital hence there was need to work hard to preserve it.
6. Prospects for the Coming Year
I consider the prospects for the coming year as promising. This is predicated on the potential political stability and improved economic operating environment. The Inclusive Government is expected to provide the much anticipated political stability and the recently announced economic policies should allow for economic growth. In the event that all these expectations materialise, and I must say there are very positive signs, political stability and economic growth will provide major business opportunities for the financial services sector. It is on the basis of this optimism that I am able to project better performance for the CBZ Group.
The improved operating environment should provide a spring board for the CBZ Group to grow after a year of survival and consolidation.
7. Acknowledgment to Stakeholders
The CBZ Group thrives to serve the interests of its shareholders, clients, staff and society. It is my great pleasure to express my appreciation to all these stakeholders for their continued support in our endeavour to build the CBZ Group into a major market player.
The support we have received from our shareholders during the difficult year is most appreciated. We shall further cooperate with them to ensure that we continue to protect and grow the value of their investments in our company.
The difficult operating environment presented challenges for the company to meet its clients’ needs. Despite these challenges, our valued clients continued to support us and in the process they clearly spelt out what sort of services they require from us. We will continue to focus on excellent service delivery which is one major requirement of our clients.
Our staff members were not spared from the challenges that the economy faced in the year under review. Despite these difficulties, our staff worked hard to satisfy the demands of our clients. I want to thank them sincerely for the commitment to duty. The Boards of Directors of all Group companies and management also provided the much needed direction for the companies to survive the difficult circumstances. I thank everyone for their perseverance.
The CBZ Group recognizes the role played by authorities in guiding its operations. We thank them for their support. The Group also supports social responsibility activities. Our support in education, health, sport and art will continue to be taken care of.
I continue to appreciate the support granted to me in the consolidation of the CBZ Group. I wish to request everyone not to tire now as good results will come soon.
N MAKUVISE GROUP CHIEF EXECUTIVE OFFICER
25 March 2009
8 CBZ Holdings 2008 Annual Report
MANAGING DIRECTOR’S REPORT – CBZ BANK LIMITED
I am pleased to report on the performance of the Bank for the year ended 31 December 2008.
The Bank managed to survive and grow its foot print countrywide during this difficult period which among other things was largely characterised by:
• Highly informal economic activities • Runaway inflation • Import based retail system • Consumptive business transactions • Distortions on the foreign exchange market • Cash shortages • Declining industrial capacity.
Key Achievements for the Year
Despite these challenges, the Bank managed to record key notable achievements that included the following: Dr. J P Mangudya Managing Director • Expansion of the delivery channels through opening of four (4) branches in Rusape, Chipinge, Murehwa and Muzarabani. This was undertaken in order to increase convenience to our customers throughout the country as guided by our goal of service excellence. • Retention of key personnel during the time when the brain drain was at its peak as a result of economic difficulties. This was achieved through a number of management interventions. • Preservation of value on the balance sheet through a combination of flexible strategies in order to cushion the Bank against the adverse market conditions.
International Global Ratings
The Bank’s international rating remained high showing international confidence in our operations and performance. The rating was “A” compared to “A+” for the previous year and this marginal decline was largely attributed to the perceived high country risk.
Business Operations
The Bank’s key business arms remained focused during this difficult period and each made significant contributions to the overall profit level during the year. These arms include treasury, retail banking, corporate and merchant banking and investment banking. The focus for all these units was on customer service excellence, value creation and preservation. The commitment to duty and the unwavering support given by the support units of the Bank resulted in the achieved good performance.
Risk Management
The risk management systems played a pivotal role during the period under review to complement business operations. Much of the focus was on operational risk as a result of the many policy changes that were experienced during this period.
In addition the harsh trading environment meant that issues of liquidity and profitability required a delicate balancing mechanism. I am pleased to say that both Management and the Board oversight function were key to the successes attained during the period under review.
International, industry and internal performance benchmarks were used consistently to ensure that the Bank’s Risk Management processes were properly aligned so as to yield the desired results and trend controls. This resulted in the Bank achieving commendable asset quality, low operational risk and balanced liquidity positions during the year 2008.
CBZ Holdings 2008 9 Annual Report
MANAGING DIRECTOR’S REPORT – CBZ BANK LIMITED (CONTINUED)
Information Technology
The Bank continued to use robust technology to enhance customer service delivery and manage risk. Although e-banking was largely not used during this period due to operational difficulties in the environment, the Bank remained focused to re-launch the services once the situation permits. The Bank continued to receive positive rating on the IT platform and operations from both internal and external rating agencies.
Compliance
The Bank continued to foster strong emphasis on full compliance with both statutory and other regulations affecting its operations. This was a deliberate approach given the high risks that faced financial institutions during this period.
Outlook
The formation of the Government of National Unity, has presented a platform that enables proper planning and management. This has also brought with it opportunities and different challenges. The Bank would need to refocus its activities and take advantage of the opportunities while managing the risks that come with the changes in order to remain on course of its vision to be the most respected bank in Zimbabwe by its customers, staff, shareholders, regulators and the community.
Appreciation
On behalf of Staff and Management, I would like to thank the Board for the support and guidance received during the year under review.
My special thanks go to our customers and various stakeholders including our staff for their valuable support and loyalty during this very difficult period.
DR. J P MANGUDYA MANAGING DIRECTOR
25 March 2009
10 CBZ Holdings 2008 Annual Report
MANAGING DIRECTOR’S REPORT – CBZ BUILDING SOCIETY
Introduction
It is pleasing to report the remarkable performance for the financial year ended 31 December 2008, despite the unprecedented challenges in the operating environment.
Key Achievements
Besides the outstanding financial performance as noted in the Group Chairman’s statement, CBZ Building Society had the following key achievements:-
• Successful change over of the ATM and POS systems to a more robust and user friendly Group based system. This will enhance service delivery and increase opportunities for Group synergies that will benefit our clients.
• General maintenance of a strong balance sheet underpinned by physical assets through implementation of appropriate strategies. This strong balance sheet enabled the Society to meet the minimum capital requirement of USD10 million. Mr. C CHIMUTSA Managing Director • Retention of the customer base across the country through continued representation without compromising on the business viability and excellent customer service.
International Global Ratings
Despite the country and mortgage based industry adverse ratings, the Society received an “investment grade” rating of “BBB” during the year under review.
Society’s Operations
The Society’s operations remained focused on maintaining good relationships with its clients and managing risks associated with the worsening operating environment.
Mortgage Advances
Despite unfavourable conditions for mortgage lending, 460 applications worth $4.071 quintillion were approved during the 12 month period to 31 December 2008.
Information Technology
The Society faced information technology challenges emanating from an old computer system and these included the failure to cope with the increasing number of zeroes, being a result of hyperinflation. The replacement of the Society’s computer system with a more robust banking system was under way and the project implementation was at an advanced stage. We believe this move will increase convenience to our customers.
CBZ Holdings 2008 11 Annual Report
MANAGING DIRECTOR’S REPORT – CBZ BUILDING SOCIETY (CONTINUED)
Outlook
It is anticipated that the successful implementation of the Government of National Unity should bring political and economic stability within the country and the financial sector in particular. The stability on both fronts will provide opportunities as well as new risk factors for the industry. The Society is ready to play a significant role in the provision of housing finance and other financial services to Zimbabweans both locally and abroad.
Appreciation
The period under review was the toughest year for the Society. With the support of the shareholder, board, management, staff and valued clients, we managed to achieve commendable results.
I would like to thank the Board for its valuable advice and guidance. I also want to express my appreciation and gratitude to management and staff for their continued dedication and commitment to growth and success of the Society in these trying times.
C CHIMUTSA MANAGING DIRECTOR
25 March 2009
12 CBZ Holdings 2008 Annual Report
MANAGING DIRECTOR’S REPORT – CBZ ASSET MANAGEMENT (PVT) LTD T/A DATVEST
Introduction
The operating environment during the year under review remained challenging with unprecedented hyperinflation levels, power and water cuts; with shortages of material inputs crippling the operations of industries resulting in reduced output. The huge distortions in the foreign currency exchange rates resulted in high levels of speculative activities, which helped sustain trading on the Zimbabwe Stock Exchange. In addition the speculative activities had also assisted in keeping most firms liquid.
The company performed well up until the stock market ceased trading on 17 November 2008 following the intervention of the Central Bank. The non-trading on the stock market had a severe impact on the whole industry which included stockbrokers, asset managers, transfer secretaries, banking institutions, long term investors, small investors, insurance sector, ZIMRA and the two largest players in the system – the owners of the listed companies and Pension funds.
Mr. S K TURK The Central Bank introduced a 1.5% (Stabilization Fund) and a 3.5% retention Managing Director fee to the cost of transacting on the Zimbabwe Stock Exchange, bringing the total cost to 16%, of which 12% would be channelled to the Government. The transaction costs were very prohibitive to both local and international investors and resulted in very low trading volumes on the stock market in general. In any event this cost was too high compared to the other stock market costs worldwide, and it was hoped that the position would be reconsidered.
However, despite the above scenario, the company’s balance sheet remained fairly strong as the number of private investors and unit trust holders grew satisfactorily during the year. There were no significant changes to the company’s business model. The money market returns remained negative throughout the year attracting no investor interest.
Staff Issues
The company was reasonably successful in retaining its skills despite having lost a few staff members to the diaspora. In these circumstances, management would like to express its gratitude to all staff members for their commitment and loyalty to the firm particularly over the last few months.
Information Technology
In terms of information technology, the company successfully migrated to the new IT platform without any major challenges. As a result, the system managed to withstand the negative impact of the increasing number of zeroes without crushing as witnessed by some competitors in the sector. Management was however, continually looking at improving the IT platform for the convenience of its customers. In addition, the Holding Company’s strategy of implementing a common IT platform for the Group companies would immensely improve the level of synergies amongst the subsidiary companies.
Compliance
All the necessary and or required board meetings took place during the year with good attendance by all board members.
The Group’s internal auditors conducted an audit on the company’s activities and all their recommendations were
CBZ Holdings 2008 13 Annual Report
MANAGING DIRECTOR’S REPORT – CBZ ASSET MANAGEMENT (PVT) LTD T/A DATVEST (CONTINUED)
complied with. The external I.T. auditors also performed an audit and where appropriate, their recommendations have been implemented within the agreed parameters. However, the company remained on standby for the Reserve Bank of Zimbabwe on site examination.
Capital Adequacy
During the year, the Central Bank introduced a USD denominated level of capital adequacy for asset managers in the sum of USD2 500 000. The Association of Investment Managers (AIMZ) has sought clarification of what items would constitute the figure. In addition, the Central Bank was being engaged on the possibility of reducing the amount. However, the matter was still under consideration.
Outlook
Our hope was that the implementation of the Government of National Unity would bring in the much needed political and economic stability in the coming year. Obviously political stability was anticipated to attract international investors who would inject the funds required to stimulate production in our industries. The revival of all the industries would naturally benefit the operations of the company, which are currently at a standstill.
The company was therefore preparing itself for the changes and opportunities that would present themselves once the economic situation improves. There was definitely going to be an increase in new products and competitors on the market, hence the need for the company to appropriately reposition itself in the circumstances.
Directorship and Appreciation
The company welcomes Mr Paul Brien who accepted appointment to the Board in the first quarter of the year. The non-executive directors continue to provide support and guidance to management, which has had a positive impact on our operations and performance. Regrettably though, Mrs. L. Masterson resigned from the Board in December 2008.
We would like to extend our most sincere gratitude to our staff members for their commitment, customers, stakeholders, the Group companies for their support and of course the regulators.
S K TURK MANAGING DIRECTOR
25 March 2009
14 CBZ Holdings 2008 Annual Report
MANAGING DIRECTOR’S REPORT – OPTIMAL INSURANCE COMPANY (PVT) LTD
Introduction
The country’s Gross Domestic Product (G.D.P) continued to decline during the year under review. This was a result of declining agricultural and manufacturing production, which were affected by the unprecedented hyperinflation levels, shortage of inputs and foreign currency; and erratic power supplies. The country’s adverse economic performance was further exacerbated by political unrest following the inconclusive March and June elections that had also caused increased government expenditure.
The hyper inflationary environment increased the cost of living, leading to a deterioration in general living standards. This situation negatively impacted on the levels of demand for insurance products as industries and individuals focused on survival during the course of the year.
Industry Analysis
The hyper inflationary environment in Zimbabwe has resulted in under insurance relative to the rising asset values, and pricing competition. Participants have attempted to alleviate pricing and cover discrepancies by moving towards Mr. J Whacha implementing quarterly contracts or revaluations, whereby insured values Managing Director and the associated premiums are adjusted for inflation.
Accordingly, the insurer’s risk is limited to the insured value agreed upon in advance. However, in the case of partial losses, particularly relating to the motor book, claims pressures were exacerbated by the rapid depreciation of the currency and sympathetic price escalations for replacement parts. Despite the quarterly revaluations, the hyper inflationary levels eroded margins, as premium receipts failed to keep pace with accelerating operating costs.
In a bid to retain value on premiums, insurers resorted to accepting cash payments only as opposed to 30 days credit period. Unfortunately this was met with resistance from clients and intermediaries, who were reluctant to part with funds that could otherwise be invested elsewhere. As such, insurers suffered as the premium receipts were severely devalued by the time they reached the insurers, which had negative implications for cash flow management and investment returns. On the investment portfolio, the money market offered negative returns due to inflation and low interest rates. The only viable investment remained with the stock exchange which unfortunately crushed on 17 November 2008 after stringent trading policies were introduced by the Central Bank.
However, the industry welcomed the Central Bank’s move allowing insurers to underwrite in foreign currency during the last quarter of the year. Whilst this policy change was welcomed by the industry, it required capital injection in US$.
Operations Review
During the financial year to 31 December 2008 the company wrote a gross premium of $2.9 septillion in historical terms which translated to US$493 000 (using the Old Mutual Implied Rate (OMIR) as the exchange rate). Included in the US$493 000 is US$224 000 gross premiums written under the foreign currency fronting. The best selling product being motor insurance contributing 70% with fidelity guarantees contributing 17%. The property and engineering lines have not contributed as much as is traditional in most companies.
CBZ Holdings 2008 15 Annual Report
MANAGING DIRECTOR’S REPORT – OPTIMAL INSURANCE (PVT) LTD (CONTINUED)
Achievements during the Year
In the year 2008 the company achieved a Gross Premium Written (GPW) growth of 242 299% when the industry average GPW growth rate stood at 135 000%. The Net Premium Written (NPW) growth achieved by the company was 300 180% while the industry average NPW growth was 131 000%. Optimal’s market share nearly doubled during the 1st quarter from 1.2% to 2.2% moving up from number 12 to number 11 on market ranking.
Social Responsibility
The company made donations to selected charitable organizations which cannot survive without donations from well wishers.
Outlook
The coming of the Government of National Unity is hoped to usher in a new era characterised by both political and economic stability. Such developments were expected to bring in new opportunities for both business and insurers who would benefit from the former’s good performance. The company has therefore embarked on new strategies suitable for the challenges that lie ahead in a more stable environment.
J WHACHA MANAGING DIRECTOR
25 March 2009
16 CBZ Holdings 2008 Annual Report
ANALYSIS OF SHAREHOLDERS AS AT 31 DECEMBER 2008
Size of Shareholding No of Holders % Total No of Shares %
1 - 5000 9 999 89.52 8 215 240 1.15 5001 - 10000 433 3.88 3 203 200 0.43 10001 - 25000 349 3.12 5 481 400 0.76 25001 - 100000 211 1.89 10 154 874 1.51 100001 - 200000 66 0.59 9 416 959 1.02 200001 - 500000 48 0.43 15 698 933 2.53 500001 and over 64 0.57 631 973 940 92.60
TOTAL 11 170 100.00 684 144 546 100.00
ANALYSIS BY SHAREHOLDER TYPE
No of Holders % of % of Total Holders No of Shares Total Shares
Individuals 10 415 93.24 40 241 484 5.88 Companies 548 4.91 216 372 525 31.63 Pension Funds 98 0.88 87 615 153 12.81 Nominee Company 60 0.53 105 517 335 15.42 FCDA Resident and Non Residents 22 0.20 217 447 857 31.78 Insurance Companies 21 0.19 3 772 808 0.55 Directors 6 0.05 13 177 384 1.93
TOTAL 11 170 100.00 684 144 546 100.00
SHAREHOLDING STRUCTURE AS AT 31 DECEMBER 2008
Shareholder’s Name No. of Shareholding Shares %
Government of Zimbabwe 110,000,000 16.08 African Investment Sub2 Limited 102,506,675 14.98 Libyan Foreign Bank (New non resident) The 96,609,470 14.12 National Social Security Authority 66,549,780 9.73 CBZ Holdings Ltd Treasury Shares 62,323,448 9.11 Remo Nominees (Pvt) Ltd 36,418,907 5.32 Datvest Nominees (Pvt) Ltd 23,334,516 3.41 Bethel Nominees NO. 2 14,868,659 2.17 Stanbic Nominees (Pvt) Ltd (New non resident) 14,764,063 2.16 Makuvise Nyasha Mr 11,532,645 1.69
Total 538,908,163 78.77
Others 145,236,383 21.23
TOTAL 684,144,546 100.00
CBZ Holdings 2008 17 Annual Report
CORPORATE GOVERNANCE STATEMENT OF CBZ HOLDINGS LIMITED
Corporate Governance, business ethics and effective compliance management systems are increasingly critical to the financial services industry. The Group remains committed to upholding good corporate governance principles and to fairly and honestly inform its stakeholders through fair and understandable disclosure. The Board actively embraces its responsibilities and brings its collective skills and experiences to bear in providing independent, objective and thoughtful oversight and guidance to the Group.
Group Wide Ethics Management
The Board consistently takes cognisance of the importance of prudence and integrity in its business conduct. Management and staff continued to observe the Group’s code of ethics through:
• conducting business dealings with integrity and dignity, whilst at the same time, maintaining strict confidentiality; and
• Applying provisions of all relevant rules and regulations and not deliberately assisting in or withholding knowledge of any acts or omissions in violation thereof.
Financial Control and Reporting
The Directors are responsible for ensuring that the Group maintains adequate records for reporting on the financial position of the Group and the results of the activities with accuracy and reliability. Financial reporting procedures are consistently applied within the Group and all financial and related information is constantly reviewed and remedial action taken, where necessary.
Internal Oversight Functions
The Board has overall responsibility for ensuring that the Group maintains a system of internal financial control to provide it with reasonable assurance regarding the reliability of the financial information used within the business and for publication, and to ensure that assets are safeguarded.
Internal Oversight Functions offer independent objective assurance and consulting function designed to add value to and improve the Group’s operations. They help the Group accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and compliance processes.
The Role of the Board of Directors
The Group has an active and engaged board, which shapes and executes successful strategies. The board contributes to organisational performance through fulfilling the following five major responsibilities;
• The board approves the strategic direction of the Group. While the board does not create strategy, its approval sets the organization in motion. Consequently, directors are knowledgeable about the business (the central business issues and non-financial factors that drive the business) so that they can be able to identify winning strategies from risky or problematic ones. The Group has put in place systems and procedures to ensure that, directors are aware of the key issues and drivers of the business.
• The board ensures that resources are used most effectively and efficiently to achieve the strategy hence it oversees the financial actions of the Group. It sets fiscal policy (expenditure policy) and approves large capital expenditures. The Group has systems and structures in place to ensure that, once a strategic expenditure is approved, directors obtain sufficient feedback on whether the expenditure generated the desired benefits.
• The board counsels and advises the Chief Executive Officer. Board members are elected on the basis of their industrial knowledge, functional acumen or strategic relationships they contribute to the Group.
• The board approves the hiring of senior executives, assesses their performance and rewards them appropriately. The directors are also actively involved in succession planning.
18 CBZ Holdings 2008 Annual Report
CORPORATE GOVERNANCE STATEMENT OF CBZ HOLDINGS LIMITED (CONTINUED)
• The board is a watchdog for uncompensated risk and a guardian for compliance. Directors receive sufficient information to effectively address key compliance issues and business risks that can prevent the Group from achieving its strategic goals.
Board Structure
The Board has a balanced mix of Executive, Non-Executive and Independent Non-Executive Directors. The roles of Chairperson of the Board and the Chief Executive Officer are separate and held by different persons.
It has established and appointed committees with defined terms of reference, composition and reporting requirements. The committees have been established and appointed in light of: • The need to increase the effectiveness of the Board by utilising the specialised skills of Board members. • Need to provide support and guidance to management. • Need to ensure effective and independent professional consideration of issues. The Board has established and appointed all board committees as required by the Banking Act (Chapter 24:20) and the Corporate Governance Guideline No. 01- 2004/BSD.
Board Member Names: Status 1. Mr. R V Wilde Independent Non Executive Director (Chairman) 2. Mr. S G R Harnden Senior Independent Non Executive Director 3. Mr. N Makuvise Group Chief Executive Officer 4. Dr. J P Mangudya Executive Director (Managing Director) 5. Mr. P Zimunya Executive Director (Risk Management) 6. Mr. N Nyemudzo Executive Director (Finance) 7. Dr. R Mabeza-Chimedza Independent Non Executive Director 8. Mrs. R Pasi Independent Non Executive Director 9. Mr. E Mugamu Independent Non Executive Director 10. Mr. F B Chirimuuta Independent Non Executive Director
Appointment, Selection, Induction, Training Development, Succession of Directors The Board is involved in the selection and appointment of directors. This selection process considers any deficiencies in the skills of current Board members. The composition of the Board fairly represents the diversity of skills.
The Board actively encourages good candidates to stand for Board appointments. New Board members are introduced to their duties with an appropriate induction process. Each board member is supplied with a Board manual and a copy of standing orders and regulations governing conduct of Board meetings. Every Board member is also supplied with a calendar of meetings showing dates of Board meetings, committee meetings and critical events of the Group. The directors are also provided with all relevant legislation and regulations. The Legal Corporate Secretary manages the induction and training programme for board members.
Board members understand the extent of their relationship with management and the separation of stewardship and management.
Board Meetings
Board meetings are conducted in a manner that encourages open communication, meaningful participation and timely resolution of issues. Sufficient time is provided during Board meetings for thoughtful discussions. Board meetings are facilitated, but not overtly influenced by the Chairperson.
Board meetings provide directors with opportunities to share their knowledge, discuss strategic tradeoffs and lend decision support. In order to benefit the Chief Executive Officer, directors are provided with financial and non- financial information that shows current and anticipated performance. Board meetings provide a forum to use this information to ask key questions, discuss central business issues and offer performance advice.
Board meetings were well attended. This enabled directors to both collectively and individually become and remain effective enhancers of corporate governance performance. The detailed attendance of members of the board at
CBZ Holdings 2008 19 Annual Report
CORPORATE GOVERNANCE STATEMENT OF CBZ HOLDINGS LIMITED (CONTINUED)
board and committee meetings is disclosed in the table hereunder.
COMMITTEE AND BOARD ATTENDANCE REGISTER (January to December 2008)
REMUNERATION & LOANS TERMINATION CORPORATE ASSETS AUDIT LENDING REVIEW BENEFITS GOVERNANCE NOMINATIONS & LIABILITIES RISK MAIN Mr. R V Wilde 0 3 0 4 0 4 0 0 4 Mr. S G R Harnden 0 4 0 4 4 0 4 4 4 Mr. N J Makuvise 4 0 4 0 0 0 0 0 4 Dr. R Mabeza-Chimedza 4 4 0 4 4 0 0 0 4 Mr. E Mugamu 4 0 4 0 0 3 4 4 4 Mr. R Pasi 4 0 4 0 4 0 0 4 4 Mr. F Chirimuuta 2 0 3 0 3 3 3 0 3 Dr. J P Mangudya* 4 4 4 4 4 4 4 4 4 Mr. P Zimunya* 0 4 4 0 0 0 4 4 4 Mr. N Nyemudzo* 4 0 0 0 0 0 0 0 4
* - Executive Directors 0 – Not committee member
All Committees: each held 4 meetings Main Board: held 4 meetings
STATEMENT OF COMPLIANCE
Based on the information set out in this corporate governance statement, the Board believes that throughout the accounting period under review, the Group complied with the requisite regulatory requirements.
As at 31st December 2008 the Group was not involved in any material litigation, dispute or arbitration proceedings which may have had a significant effect on its financial position.
V M Chasi (Mrs) LEGAL CORPORATE SECRETARY
25 March 2009
20 CBZ Holdings 2008 Annual Report
STATEMENT OF DIRECTORS’ RESPONSIBILITY
1. RESPONSIBILITY
The directors are responsible for preparing the Annual Report and the Company and Group financial statements in accordance with applicable law and regulations and in compliance with International Financial Reporting Standards (IFRSs).The Companies Act (Chapter 24.03) and the relevant Statutory Instruments (SI 33/99 and SI 62/99) require the directors to prepare group and parent financial statements for each financial year.
The Group and the Company financial statements are required by law and IFRSs to present fairly the financial position of the Group and parent company and the performance for that period.
In preparation of each of the Group and parent company financial statements, the directors are required to: • state whether they have been prepared in accordance with IFRSs; • prepared the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the parent company will continue in business; • select suitable accounting policies and then apply them constantly; and • make judgements and estimates that are reasonable and prudent;
The directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time, the financial position of the Group and enable them to ensure that the financial statements comply with the Companies Act. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.
Compliance with Companies Act (Chapter 24.03) and Statutory Instruments (SI 33/99 and SI 62/99)
These financial statements which have been prepared under the historical cost convention are in agreement with the underlying books and records and have been properly prepared in accordance with the Group’s accounting policies, and comply with the disclosure requirements of the Companies Act(Chapter 24:03) and the relevant regulations made thereunder. The historical cost financial statements would form the basis of the adjustments required in terms of the requirements set out in IAS 29: Financial Reporting in “Hyper inflationary Economies”
Compliance with IFRSs
Preparation of financial statements in conformity with IAS 29: Financial Reporting in Hyper inflationary Economies
The Zimbabwean economy is recognised as being hyper inflationary for the purpose of financial reporting. These financial statements have not been prepared in conformity with IFRSs in that the requirements of IAS 29: Financial Reporting in “Hyper inflationary Economies” have not been compiled with. The Standard requires that financial statements that report in the currency of a hyper inflationary economy should be stated in terms of the measuring unit current at the balance sheet date. The requirements of all other International Financial Reporting Standards have been complied with under the historical cost convention. The uncertainties in the adverse Zimbabwean economic environment during the year have resulted in limitations in financial reporting. The uncertainties include: • The inflation indices have not been published since July 2008. Subsequent estimates by economists are wide ranging and high (over percentages of hundreds of trillions to quadrillions, in some cases). The use of foreign currency and multiple pricing also distorts the process of measuring inflation.
• Given the chronic hyperinflation, the time lapse between the balance sheet and reporting dates renders the financial information presented in the financial statements less useful and relevant for making economic decisions. Official inflation indices, when available, are only available at month-end periods. Therefore, the use of assumptions to determine inflation in the intervening periods renders the information presented susceptible to estimation errors.
• The difficultly in determining a representative basket of goods to use for determining the inflation indices; • The unavailability of goods on the local market in Zimbabwe Dollars that can be used in populating the inflation model to determine the inflation index; and
CBZ Holdings 2008 21 Annual Report
STATEMENT OF DIRECTORS’ RESPONSIBILITY (CONTINUED)
• The existence of multiple prices for the same item which then requires a lot of subjectivity and judgement in determining the price that will be used to determining the inflation index.
In these circumstances inflation adjusted financial statements are not prepared as required by IAS 29 as such financial statements are considered inherently unreliable.
The adverse uncertainties have been aggravated by: • multiple exchange rates that were significantly varied during the year ended 31 December 2008. If a transaction occurred, more than one rate was recorded at its nominal value, resulting in distortions in financial reporting; • there were multiple prices for the same commodity/service, which price was largely dependant on the mode of settling transactions that ranged from cheque/transfer, cash, fuel coupons, foreign currency etc. The effect is similar to that of the multiple exchange rates described above and would result in distortions in financial reporting; • the introduction of foreign currency licensed operators and the “basing” of most other transactions in foreign currency by the non-licensed operators, created challenges for the Group in determining its functional currency (as between the local currency and a foreign currency);
As a result of these uncertainties and inherent limitations, the directors advise caution on the use of these financial statements for decision making purposes.
2. GOING CONCERN
The Directors have assessed the ability of the Group to continue operating as a going concern and believe that the preparation of these financial statements on a going concern basis is still appropriate. However, the Directors believe that under the current economic environment a continuous assessment of the ability of the Group to continue to operate as a going concern will need to be performed to determine the continued appropriateness of the going concern assumption that has been applied in the preparation of these financial statements.
Significant assumptions and estimation uncertainties relating to assets and liabilities carried at fair value.
Due to the prevailing hyperinflationary conditions in the Zimbabwean economy, there were significant price differentials in the pricing of similar assets and liabilities and this resulted in fair value determination difficulties. This was caused mainly by the following factors:
• no positive correlation in the movement of interest rates, exchange rates and inflation rates in line with the influence of market conditions; • the ability of the markets to determine pricing levels had been negatively affected by the effects of inflation and regulatory influence; and • the Zimbabwe Stock Exchange(ZSE) last traded on 17 November 2008.
These conditions have resulted in a high level of subjectivity in determining fair values and in the application of pricing models for the fair valuation of transactions, assets and liabilities.
The significant assumptions and the estimation uncertainties pertaining to items that are carried at fair value have been disclosed under accounting policy note 1.2.
In view of the preceding paragraphs, the independent auditors’ report for the year ended 31 December 2008 on page 26 has been modified accordingly.
3. CORPORATE GOVERNANCE
The Group adheres to principles of corporate governance derived from the King Reports and the Reserve Bank of Zimbabwe Corporate Governance Guidelines. The Group is cognisant of its duty to conduct business with due care and in good faith in order to safeguard all stakeholders’ interests.
22 CBZ Holdings 2008 Annual Report
STATEMENT OF DIRECTORS’ RESPONSIBILITY (CONTINUED)
4. BOARD OF DIRECTORS
Board appointments are made to ensure a variety of skills and expertise on the Board. Non-executive directors are of such calibre as to provide independence to the Board. The Chairman of the Board is a non-executive director. The Board is supported by various committees in executing its responsibilities. The Board meets quarterly to assess risk, review performance and provide guidance to management on both operational and policy issues.
5. INTERNAL FINANCIAL CONTROL
It is the responsibility of the Board to ensure that effective financial controls are implemented in the Group. Internal controls focus on critical risk areas and are based on established policies and procedures. Adequate segregation of duties is in place to enhance the effectiveness of these controls. The Board monitors the effectiveness of these controls through reviews by the Audit Committee and independent evaluation by the external auditors.
The internal financial controls are designed to:- a. provide reasonable assurance of the integrity and reliability of financial information; b. safeguard income and assets and c. prevent and detect fraud.
6. INTERNAL AUDIT
The internal audit activities have formally defined purposes, authority and responsibility consistent with the Institute of Internal Auditors’ definition of internal auditing and include evaluating the effectiveness of the processes by which risks are identified, prioritised, managed and controlled. To this end a systematic, disciplined and objective approach has been developed to help the Group to accomplish its objectives and assist in evaluating and improving the effectiveness of risk management, control and governance processes. The internal audit activities include reviews of the reliability and integrity of financial and operating information, the systems of internal control, the means of safeguarding assets, the efficient management of the Group’s resources, and the conduct of its operations.
7. AUDIT COMMITTEE
The Audit Committee, comprising non-executive directors and chaired by an independent non-executive director, meets quarterly to review the internal control environment, audit processes and financial reporting. The internal and external auditors have unrestricted access to the Audit Committee.
8. SOCIAL RESPONSIBILITY
The Group recognises that being a responsible company is more than just about service delivery but good community relations. Pursuant to this, the Group is involved in various charitable endeavours, including educational assistance to the underprivileged children, donations to health institutions, charitable homes and sporting organisations.
9. REGULATION
The Banking, Building Society and Asset Management subsidiaries are subject to regulation by the Reserve Bank of Zimbabwe and the Registrar of Banks and Financial Institutions. Where appropriate, the Group participates in industry-consultative committees and discussion groups aimed at enhancing the business environment.
The financial statements which appear on pages 28 to 67 were approved by the Board of Directors on 25 March 2009.
R V WILDE N MAKUVISE CHAIRMAN GROUP CHIEF EXECUTIVE OFFICER
25 March 2009
CBZ Holdings 2008 23 Annual Report
REPORT OF THE DIRECTORS
We have pleasure in presenting to shareholders our report and the audited financial statements for the year ended 31 December 2008.
1. SHARE CAPITAL
The authorised and issued share capital of the Group is as follows: -
Authorised
1 000 000 000 ordinary shares of 0.000000000000000000000002 cents each.
Issued and fully paid
684 144 546 ordinary shares of 0.000000000000000000000002 cents each
2. ACTIVITIES AND RESULTS
Summarized below is a breakdown of the application of net income attributable to shareholders.
Historical cost
2008 2007 $’Quint $’Quint
Current year dividends - - Retained for future growth 975 081 - 975 081 -
3. DIRECTORATE
Mr. R V Wilde Chairman Mr. N Makuvise* Group Chief Executive Officer Dr. J P Mangudya* Managing Director Dr. R Mabeza-Chimedza Mr. P Zimunya* Mr. N Nyemudzo* (Appointed 1 January 2008) Mr. E Mugamu (Appointed 1 January 2008) Mr. F B Chirimuuta (Appointed 1 January 2008) Mr. S G R Harnden (Appointed 1 January 2008) Mr. R Pasi (Appointed 1 January 2008)
* = Executive
Mrs. V M Chasi Legal Corporate Secretary
24 CBZ Holdings 2008 Annual Report
REPORT OF THE DIRECTORS (CONTINUED)
3.1 Directors’ interest in shares
As at 31 December 2008 the directors held the following direct and indirect beneficial interest in the shares of the company.
N Makuvise 11 532 645 J P Mangudya 1 586 366 F B Chirimuuta 28 498 S G R Harnden 17 000 R V Wilde 6 875 P Zimunya 6 000 13 177 384
There has been no change in directors’ interest subsequent to year end.
4. DIVIDEND ANNOUNCEMENT
The Board has decided to pass the final dividend for the year ended 31 December 2008.
By order of the Board
V M CHASI (Mrs) LEGAL CORPORATE SECRETARY
CBZ Holdings 2008 25
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF CBZ HOLDINGS LIMITED
We have audited the accompanying financial statements of CBZ Holdings Limited set out on pages 28 to 67, which comprise the balance sheet as at 31 December 2008 and the income statement, statement of changes in equity and cash flow statement for the year then ended and a summary of significant accounting policies and other explanatory notes.
Director's Responsibility for the Financial Statements
The directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and the provisions of the Zimbabwe Companies Act (Chapter 24:03). This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Basis of adverse opinion on non compliance with International Financial Reporting Standards
The Zimbabwe economy is recognised as being hyperinflationary for purposes of financial reporting. These financial statements have not been prepared in conformity with International Accounting Standards in that the requirements of IAS 29, (Financial Reporting in Hyperinflationary Economies) have not been complied with. The Standard requires that financial statements that report in the currency of a hyperinflationary economy should be stated in terms of the measuring unit current at the balance sheet date.
26 The non-compliance with IAS 29 arises from the inability to reliably measure inflation due to the interaction of multiple economic factors which are pervasive to the Zimbabwean economic environment as explained in Note 2.
Adverse opinion on non-compliance with International Financial Reporting Standards
In our opinion, because of the significance of the matters described in the Basis for Adverse Opinion paragraph, the financial statements do not give a true and fair view of the financial position of the Group as at 31 December 2008, and of the results of its operations and cash flows for the year then ended in accordance with International Financial Reporting Standards.
Report on legal and regulatory requirements
These financial statements have been properly prepared in accordance with the Group's accounting policies, and comply with the disclosure requirements of the Companies Act (Chapter 24:03).
Emphasis of matter
Without further qualifying our opinion, we draw your attention to the Group's accounting policies, in respect of the following:
Going concern assumption-see Group accounting policy note 1.16
Fair value determination for transactions, assets and liabilities -see Group accounting policy note 1.17 The determination of fair values presented in the financial statements is affected by the prevailing economic environment and may therefore be distorted. This may result in significant variations in fair values, depending on factors and assumptions used in the determination of the fair values.
The significant assumptions and the estimation uncertainties pertaining to items that are carried at fair value have been disclosed in the Group's accounting policies.
ERNST & YOUNG CHARTERED ACCOUNTANTS (ZIMBABWE) HARARE 27 April 2009
27 Annual Report
CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2008
Historical Cost Dec-08 Dec-07 Note $ ‘Quint $ ‘Quint
Interest income 3 160,333 - Interest expense 3 (181) - Net interest income 160,152 - Non interest income 4 1,236,212 - Underwriting income 5 27 - Total 1,396,391 - Operating expenditure 6 (21,983) - Operating Income 1,374,408 - Charge for impairment losses on advances 12.5 (9,803) - Share of associate loss 15.1 (1,209) - Profit before taxation 1,363,396 - Taxation 7.1 (388,315) - Profit for the year 975,081 -
Attributable to: Equity Holders of parent 975,317 - Minority interests (236) - 975,081 -
Earnings per share ($’Trillions)
Basic 8 1,426 - Headline 8 1,426 - Fully diluted 8 1,426 -
28 CBZ Holdings 2008 Annual Report
CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2008
Historical Cost Dec-08 Dec-07 $ ‘Quint $ ‘Quint ASSETS Balances with banks and cash 10 1,899,571 - Money market assets 11 3,972 - Advances 12 431,124 - Technical assets 13 3,043 - Other assets 14 126,136 - Investments 15 548,726 - Investment in associate 15 (1209) - Investment properties 16 588,215 - Property and equipment 17 1,867,016 - Deferred taxation 22 964 - TOTAL ASSETS 5,467,558 -
EQUITY AND RESERVES Share capital 18 - - Capital reserves 1,369,135 - Treasury shares 18.1 - - Revenue reserves 18.2 975,317 - Equity and reserves attributable to equity holders of the parent 2,344,452 - Minority interests 18.3 (236) - Total equity and reserves 2,344,216 - LIABILITIES Deposits 19 1,390,280 - Technical liabilities 20 8,496 - Other liabilities 21 837,518 - Deferred taxation 22 822,804 - Current taxation payable 7 64,244 - TOTAL LIABILITIES 3,123,342 -
TOTAL LIABILITIES AND EQUITY AND RESERVES 5,467,558 -
R V WILDE N MAKUVISE CHAIRMAN GROUP CHIEF EXECUTIVE OFFICER
25 March 2009
CBZ Holdings 2008 29 Annual Report
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2008
Share Share Treasury Capital Revenue Minority Total capital Premium shares Reserve reserves interests Equity $’ Quint $’ Quint $’ Quint $’ Quint $’ Quint $’ Quint $’ Quint
2007 Balance at the beginning of the year ------Recapitalisation of subsidiaries ------Share capital issued ------Share premium ------Fair value adjustment on ------Available for sale instruments ------Revaluation of property and equipment ------Deferred taxation on revaluation of property and equipment ------Profit for the year ------Balance at the end of the period. ------
2008 Balance at the beginning of the year ------Recapitalisation of subsidiaries ------Share capital issued ------Share premium ------Fair value adjustment on ------Available for sale instruments ------Revaluation of property and equipment - - - 1,867,016 - - 1,867,016 Deferred taxation on revaluation of property and equipment - - - (497,881) - - (497,881) Profit for the year - - - - 975,317 (236) 975,081 Balance at the end of the period. - - - 1,369,135 975,317 (236) 2,344,216
30 CBZ Holdings 2008 Annual Report
CASHFLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2008
Historical Cost Dec-08 Dec-07 Note $ ‘Quint $ ‘Quint
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before taxation 1,363,396 - Non cash items: Fair value adjustment (1,136,940) - Impairment losses on advances 9,803 - Share of associate company’s loss 1,209 - Unearned premium 32 - Claims provision (IBNR) 2 - Operating profit before changes in operating assets and liabilities 237,502 -
Changes in operating assets and liabilities Deposits 1,390,280 - Advances to customers (440,927) - Money market assets (3,972) - Other assets (129,213) - Other liabilities 846,014 - 1,662,182 -
Taxation Corporate tax paid (113) - Net cash inflow from operating activities 1,899,571 -
Net increase in cash and cash equivalents 1,899,571 - Cash and cash equivalents at beginning of year - - Cash and cash equivalents at end of year 10 1,899,571 -
CBZ Holdings 2008 31 Annual Report
1. GROUP ACCOUNTING POLICIES
The following paragraphs describe the main accounting policies applied consistently by the Group.
1.1 BASIS OF PREPARATION
Historical cost convention The consolidated financial statements are prepared on the historical cost basis except for certain financial instruments and investment properties, which are stated at fair value and freehold land and buildings, which are stated at open market values.
The financial statements are presented in Zimbabwe Dollars rounded to the nearest Quintillion ($ Quint). Due to effects of currency debasing and rounding off, comparative figures have herewith been presented as nil figures.
Basis of consolidation The Group financial statements incorporate the financial statements of the Company, its subsidiaries and associate company. Subsidiary undertakings are those companies in which the Group, directly or indirectly, has an interest of more than one half of the voting rights and is able to exercise control of the operations. The results of subsidiaries acquired or disposed of during the year are incorporated from the dates control was acquired and up to the date control ceased.
The financial statements of the subsidiaries and associate company are prepared for the same reporting period as the parent company, using consistent accounting policies.
All intra-group balances, transactions, income and expenses; profits and losses resulting from intra-group transactions that are recognised in assets and liabilities are eliminated in full.
Minority interests represent the portion of profit and net assets that is not held by the Group and are presented separately in the consolidated income statement and within equity in the consolidated balance sheet, separately from parent shareholders’ equity. Acquisitions of minority interests are accounted for using the parent entity extension method, whereby, the difference between the consideration and the book value of the share of the net assets acquired is recognised as goodwill.
Compliance Statement
I) Compliance with IFRSs The Zimbabwe economy is recognised as being hyperinflationary for purposes of financial reporting. These financial statements have not been prepared in conformity with International Financial Reporting Standards (IFRS) in that the requirements of IAS 29, (Financial Reporting in Hyperinflationary Economies) have not been complied with. The Standard requires that financial statements that report in the currency of a hyperinflationary economy should be stated in terms of the measuring unit current at the balance sheet date.
The non-compliance with IAS 29 arises from the inability to reliably measure inflation due to the non publication of the inflation figures by the Central Statistical Office in Zimbabwe (CSO). The last inflation figures were published in July 2008.
ii) Compliance with legal and regulatory requirements These financial statements have been properly prepared in accordance with the accounting policies set out below, and comply with the disclosure requirements of the Companies Act (Chapter 24:03) and the relevant Statutory Instruments (SI 33/99 and SI 62/99)
Judgements made by the directors in the application of these accounting policies that have significant effect on the financial statements and estimates are discussed herein. These policies have been consistently applied to all the years presented.
32 CBZ Holdings 2008 Annual Report
GROUP ACCOUNTING POLICIES (CONTINUED)
1.2 SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS
In the process of applying the Group’s accounting policies, management made certain judgements and estimates that have a significant effect on the amounts recognised in the financial statements as stated below:
Fair value measurement principles The fair value of financial instruments is based on their market price at the balance sheet date before deducting transaction costs. If a market price is not available, the fair value of an instrument is estimated using the discounted cash flow techniques. Where discounted cash flow techniques are used, estimated future cash flows are based on management’s best estimates and the discount rate is market related at the balance sheet date for an instrument with similar terms and conditions.
The fair value of money market investments has been determined by reference to quoted prices for similar investments on the market. Where there is no quoted market price, the fair values are determined by reference to a valuation model approved by management.
Loans issued at discounted rates Staff loans issued at lower than market rates have been fair valued at inception. The rates used are those of similar loans and receivables issued in an arms length transaction. The average term of the loans has been determined based on the history of the repayment period.
Impairment losses on loans and advances The Group reviews individually significant loans and advances at each balance sheet date to assess whether an impairment loss should be recorded in the income statement. In particular, judgement by management is required in the estimation of the amount and timing of future cashflows when determining the impairment loss. In estimating these cashflows, the Group makes judgements about the borrower’s financial situation and the net realisable value of collateral. These estimates are based on assumptions about a number of factors and actual results may differ, resulting in future changes to the allowance.
Estimation of property and equipment useful life The determination of estimated useful life for property and equipment is carried out at each reporting date.
Estimation of property and equipment residual values The residual values of property and equipment are determined at each reporting date for motor vehicles only as the intention is to sell them for value at the end of their useful life. Residual values are not determined for all other assets as the intention is to use them to the end of their useful life.
Valuation of equity investments The value of investments in equities listed on the Zimbabwe Stock Exchange (ZSE) has been determined by reference to the prices as published on the day of last active trading on the bourse. The 17th of November 2008 was deemed the last day of active trading as a host of trading regulations thereafter effectively saw the exchange record nil trades for the remainder of the year. Subsequent impairment tests were conducted to determine the appropriateness of the values included in the financial statements.
Liquidity The Group manages its liquidity by maintaining an adequate ratio of net liquid assets to customer liabilities.
Financial instruments Financial instruments are initially recognised in the balance sheet at cost. Subsequent to initial recognition, financial instruments are measured at fair value with the exception of instruments that do not have a market price that is quoted in an active market and whose fair value cannot be reliably measured. In this case the financial instrument is subsequently measured at cost less impairment losses.
Available for sale financial instruments are carried at fair value based on their market price at balance sheet date. The fair value adjustment is adjusted for through the statement of changes in equity.
CBZ Holdings 2008 33 Annual Report
GROUP ACCOUNTING POLICIES (CONTINUED)
1.3 INVESTMENT IN ASSOCIATES
The Group’s investment in associates is accounted for in accordance with the equity method. An associate is an entity in which the Group has significant influence but in which the entity does not exercise indirect or direct control.
Under the equity method, the investment in the associate is carried in the balance sheet at cost plus post-acquisition changes in the Group’s share of net assets of the associate. Where there has been a change recognised directly in the equity of the associate, the Group recognises its share of any change.
The reporting dates of the associate and the Group are identical and the associate’s accounting policies conform to those used by the Group.
Profits and losses resulting from intra-group transactions are eliminated to the extent of the interest in the associate.
1.4 INVESTMENT PROPERTIES
a) Recognition criteria Investment properties are those properties held for earning rental income and / or for capital appreciation. Some of these properties are partly occupied by the Group for its business activities. To this extent the Group’s own use does not exceed 20%.
Investment properties are measured initially at cost, including transaction costs. The carrying amount includes the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met; and excludes the costs of day to day servicing of an investment property. Subsequent to initial recognition, investment properties are stated at fair value. Investment properties are stated at fair value which has been determined based on valuations performed by the directors as guided by reports from professional valuers. Owing to a host of macro economic challenges faced by the country, and the effective dollarisation of the economy, local currency (Z$) property values were effectively rendered meaningless. The directors therefore determined property valuations in United States Dollars (US$) as guided by reports from the professional valuers as at 31 December 2008, converted to Z$ at a prescribed rate of US$1: Z$35 quadrillion.
The professional valuers adopted the following method and assumptions (per the December 2008 valuation reports):
Residential Property: active market by reference to recent property transactions of similar properties.
Commercial: Office space and industrial: A level of subjectivity has been applied in determining market values owing to the lack of market evidence arising from a relatively inactive market.
The area of judgement exercised is in respect of the impact of market fundamentals: exchange rates, i nflation indices and interest rates; on property values as well as judgement in adjusting the limited property transactions in respect of location and condition to the subject property being valued.
b) Transfers to and from investment properties Transfers are made to or from investment property only when there is a change in use. If an investment property becomes more than 20% owner occupied, it is reclassified as property, plant and equipment in accordance with IAS 16 and its fair value at the date of its classification becomes its cost for accounting purposes for subsequent recording.
c) Derecognition Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognised in the income statement in the period of derecognition.
34 CBZ Holdings 2008 Annual Report
GROUP ACCOUNTING POLICIES (CONTINUED)
1.5 PROPERTY AND EQUIPMENT
Property and equipment are stated at gross carrying amount excluding costs of day-to-day servicing less accumulated depreciation and where applicable accumulated impairment in value. Such cost includes the cost of replacing part of such property and equipment when that cost is incurred if the recognition criteria are met. Gross carrying amount represents either cost or in the case of revalued property, at the date of its undertaking.
An item of property and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement in the year the asset is derecognised.
Valuations are done by a professional valuer.
Property and equipment are depreciated over their estimated useful lives on a straight line basis such that the cost or valuation of the assets are reduced to their estimated residual values. The estimated useful lives at the end of this reporting period are:
Buildings 40 years Computer and other equipment 5 years Furniture 10 years Leasehold improvements 10 years Motor vehicles 3 – 5 years
The carrying values of property and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.
The asset’s residual values, useful lives and methods of depreciation are reviewed and adjusted if appropriate at each financial year end.
Freehold land and buildings are shown at open market value while subsequent additions between valuation dates are shown at cost.
Any revaluation surplus is credited to the asset revaluation reserve included in reserves in the balance sheet except to the extent that it reverses a revaluation decrease of the same asset previously recognised in profit or loss in which case the increase is recognised in profit or loss. A revaluation deficit is recognised in profit or loss except where a deficit directly offsets a previous surplus on the same asset. This is directly offset against the surplus in the asset revaluation reserve.
1.6 FOREIGN CURRENCIES
The presentation and functional currency is Zimbabwean Dollar (Z$). Transactions in foreign currencies are initially recorded at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the rate ruling at balance sheet date. All exchange differences are taken to profit and loss.
1.7 TAXATION
Deferred taxation Deferred income tax is provided using the liability method on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
CBZ Holdings 2008 35 Annual Report
GROUP ACCOUNTING POLICIES (CONTINUED)
Deferred tax liabilities are recognised for all taxable temporary differences except:
• where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and at the time of the transaction affects neither the accounting profit nor taxable profit or loss; and
• in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences and unused tax losses to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and unused tax losses can be utilised except:
• where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and at the time of the transaction affects neither the accounting profit nor taxable profit or loss; and
• in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.
Deferred tax relating to items recognised directly in equity is recognised in equity and not in the income statement.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
Current taxation Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the balance sheet date.
Capital gains tax Deferred tax arising on valuation of property and equity investment is computed at the applicable capital gains tax rates ruling at the balance sheet date.
Value added tax Revenue, expenses, and assets are recognised net of Value Added Tax (VAT) except: • where the VAT incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case the VAT is recognised as part of the cost of the acquisition of the asset or as part of the expense item as applicable and; • receivables and payables that are stated with the amount of VAT included.
36 CBZ Holdings 2008 Annual Report
GROUP ACCOUNTING POLICIES (CONTINUED)
1.8 FINANCIAL ASSETS
Initial Recognition A financial instrument is a contract that gives rises to both a financial asset of one and a financial liability of another enterprise. Financial instruments held by the Group include balances with banks and cash, money market assets, advances, investments and deposits.
Financial assets in the scope of IAS 39 are classified as either financial assets at fair value through profit or loss, loans and receivables, held to maturity investments and available for sale financial assets as appropriate. When financial assets are recognised initially they are measured at fair value, plus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs. The Group determines the classification of its financial assets after initial recognition and where allowed and appropriate re-evaluates this designation at each financial year-end. All regular way purchases and sales of financial assets are recognised on the trade date i.e. the date that the Group commits to purchase the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the market place.
Subsequent measurement
The subsequent measurement of financial assets depend on their classification as follows:
Financial assets at fair value through profit or loss Financial assets classified as held for trading are included in the category ‘financial assets at fair value through profit or loss’. Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near term. Derivatives, where applicable, are also classified as held for trading unless they are designated and effective hedging instruments. Gains or losses on investments held for trading are recognised in income. (These include certain investments and money market assets).
Financial assets at fair value through profit and loss are carried in the balance sheet at fair value with gains or losses recognised in the income statement.
Held to maturity investments Non-derivative financial assets with fixed or determinable payments and fixed maturity are classified as held- to- maturity when the Group has the positive intention and ability to hold to maturity. Investments intended to be held for an undefined period are not included in this classification but other long-term investments that are intended to be held to maturity such as bonds are included. Held-to-maturity instruments are subsequently measured at amortised cost. This cost is computed as the amount initially recognised minus principal payments plus or minus the cumulative amortisation using the effective interest method of any difference between the initially recognised amount and the maturity amount. This calculation includes all fees and amounts paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums and discounts. For investments carried at amortised cost, gains and losses are recognised in income when the investments are recognised or impaired as well as the amortisation process. (These include certain investments and money market assets).
Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are carried at amortised cost using the effective interest method. Gains and losses are recognised in income when the loans and receivables are derecognised or impaired as well as through the amortisation process. (These include advances, technical assets, and other assets).
Available-for-sale financial assets Available-for-sale financial assets are those non-derivative financial assets that are designated as available-for-sale or are not classified in any of the three preceding categories. After initial recognition, available-for-sale financial assets are measured at fair value with gains or losses being recognised as a separate component of equity until the investment is derecognised or until the investment is determined to be impaired at which time the cumulative gain or loss previously reported in equity is included in the income statement.
CBZ Holdings 2008 37 Annual Report
GROUP ACCOUNTING POLICIES (CONTINUED)
The fair value of investments that are actively traded in organised financial markets is determined by reference to quoted market bid prices at the close of business on the balance sheet date. For investments where there is no active market fair value is determined using valuation techniques. Such techniques include using recent arm’s length market transactions; reference to the current market value of another instrument which is substantially the same; discounted cash flow analysis and other pricing models. (These include certain investments and money market assets).
Fair value of financial instruments The fair value of financial instruments that are actively traded in organised financial markets is determined by reference to quoted market bid prices at the close of business on the balance sheet date. For financial instruments where there is no active market, fair value is determined using valuation techniques. Such techniques may include using recent arm’s length market transactions; reference to the current fair value of another instrument that is substantially the same; discounted cash flow analysis or other valuation models.
Cash and cash equivalents Cash and cash equivalents comprise cash balances on hand, cash deposited with the Central Bank and other Banks.
Treasury Shares Where the Group purchases its own equity, the consideration paid including any attributable incremental external costs net of income taxes is deducted from total shareholders’ equity until they are cancelled. Where such shares are subsequently sold or reissued any consideration received is included in shareholders’ equity. No gain or loss is recognised in income or loss on the purchase, sale, issue or cancellation of the Group’s own equity instruments.
1.9 FINANCIAL LIABILITIES
Initial recognition Financial liabilities are recognised initially at fair value and in the case of loans and borrowings, directly attributable transaction costs.
Subsequent measurement The measurement of financial liabilities depends on their classification as follows:
Financial liabilities held for trading Financial liabilities held for trading, comprising financial instruments other than derivatives are recorded in the balance sheet at fair value. Changes in fair value are recognised in ‘Net trading income’. Interest expense is recorded in ‘Net trading income’ according to the terms of the contract or when the right to the payment has been established. (These include money market deposits).
Financial liabilities designated at fair value through profit or loss Financial liabilities at fair value through profit or loss are recorded in the balance sheet at fair value. Interest incurred is accrued in interest expense according to the terms of the contract. (These include money market deposits).
Other financial liabilities are at amortised cost. (These include demand deposits, call deposits, savings and other deposits and foreign currency account balances.)
Derecognition of financial assets and liabilities
Financial assets A financial asset (or where applicable a part of a financial asset or part of a Group of similar financial assets) is derecognised where:
• the rights to receive cash flows from the asset have expired; • the Group retains the right to receive cash flows from the asset but has assumed an obligation to pay them in full without material delay to a third party under a ‘pass-through’ arrangement; or • the Group has transferred its right to receive cash flows from the asset and either (a) has transferred substantially all the risks and rewards of the asset or (b) has neither transferred nor retained substantially all the risks and rewards of the asset but has transferred control of the asset.
38 CBZ Holdings 2008 Annual Report
GROUP ACCOUNTING POLICIES (CONTINUED)
Where the Group has transferred its rights to receive cash flows from an asset and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Group’s continuing involvement in the asset. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to pay.
Where continuing involvement takes the form of a written and/or purchased option (including a cash-settled option or similar provision) on the transferred asset, the extent of the Group’s continuing involvement is the amount of the transferred asset that the Group may repurchase except that in the case of a written put option (including a cash-settled option or similar provision) on an asset measured at fair value the extent of the Group’s continuing involvement is limited to the lower of the fair value of the transferred asset and the option exercise price. Financial liabilities A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
Where an existing financial liability is replaced by another from the same lender on substantially different terms or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability and the difference in the respective carrying amounts is recognised in profit or loss.
1.10 IMPAIRMENT OF FINANCIAL ASSETS
The Group assesses at each balance sheet date whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred “loss event”) and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant difficult, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such changes in arrears or economic conditions that correlate with defaults.
Assets carried at amortised cost The carrying amount of the asset shall be reduced either directly or through use of an allowance account if there is objective evidence that an impairment loss on loans and receivables carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate (i.e. the effective interest rate computed at initial recognition). The amount of the loss shall be recognised in profit or loss.
The Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, and individually or collectively for financial assets that are not individually significant. If it is determined that no objective evidence of impairment exists for an individually assessed financial asset whether significant or not, the asset is included in a group of financial assets with similar credit risk characteristics and that group of financial assets is collectively assessed for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognised are not included in a collective assessment of impairment.
If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed. Any subsequent reversal of an impairment loss is recognised in the income statement to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date.
Assets carried at cost If there is objective evidence that an impairment loss on an unquoted equity instrument that is not carried at fair value because its fair value cannot be reliably measured or on a derivative asset that is linked to and must be settled by delivery of such an unquoted equity instrument has been incurred the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset.
CBZ Holdings 2008 39 Annual Report
GROUP ACCOUNTING POLICIES (CONTINUED)
Available-for-sale financial assets If an available-for-sale asset is impaired, an amount comprising the difference between its cost (net of any principal payment and amortisation) and its current fair value less any impairment loss previously recognised in profit or loss is transferred from equity to the income statement. Reversals in respect of equity instruments classified as available- for-sale are not recognised in profit. Reversals of impairment losses on debt instruments are reversed through profit or loss if the increase in fair value of the instrument can be objectively related to an event occurring after the impairment loss was recognised in profit or loss.
Other assets The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less cost to sell and its value in use and is determined for an individual asset unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets. Where the carrying amount of an asset exceeds its recoverable amount the asset is considered impaired and is written down to its recoverable amount. In assessing value in use the estimated future cash flows are discounted to their present value using a pre- tax discount rate that reflects market assessments of the time value of money and the risks specific to the asset. Impairment losses of continuing operations are recognised in the income statement in those expense categories consistent with the function of the impaired asset.
An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimate used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined net of depreciation had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss unless the asset is carried at the revalued amount in which case the reversal is treated as a revaluation increase. After such a reversal the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount less any residual value on a systematic basis over its remaining useful life.
The Group complies with the regulatory guideline in respect of its impairment policy and considers those guidelines when assessing impairment in accordance with the requirements of International Accounting Standard (IAS 36 – Impairment).
1.11 REVENUE RECOGNITION
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured and the risks and rewards have passed to the Group.
Trading Income The Group includes profits or losses and fair value adjustments on held for trading financial instruments both realised and unrealised in income as earned.
Interest Income Revenue is recognised in the income statement on an accrual basis using the effective interest rate method, that is the rate that exactly discounts the estimated future cash receipts through the expected life of the financial instrument to the net carrying amount of the financial asset.
Commission and fee income The Group recognises commission and fee income on an accruals basis when the service is rendered. Commission income on acceptances and bills is credited to income over the lives of the relevant instrument on a time apportionment basis.
Services rendered The Group recognises revenue for services rendered to customers based on the estimated outcome of the transactions. When the outcome can be reliably estimated, transaction revenue is recognised by reference to the stage of completion of the transaction at the balance sheet date. The stage of completion is measured based on the amount of work
40 CBZ Holdings 2008 Annual Report
GROUP ACCOUNTING POLICIES (CONTINUED) performed. When the outcome cannot be reliably estimated, revenue is recognised only to extent of the expenses incurred that are recoverable.
Dividends Revenue is recognised when the Group’s right to receive the payment is established.
Premiums Premiums written relate to business incepted during the year.
Unearned premiums represent the proportion of premiums written in the year that relate to unexpired terms of policies in force at the balance sheet date, generally calculated on the 1/365 basis.
Basis of accounting for underwriting activities Underwriting results are determined on an annual basis whereby the incurred cost of claims, commission and related expenses is charged against the unearned proportion of premiums.
Claims Claims represent the ultimate cost (net of salvage recoveries) of settling all claims arising from events that have occurred up to the balance sheet date. Claims incurred but not reported are claims arising out of events which have occurred by the balance sheet date but have not yet been reported at that date.
Unexpired risk provision An unexpired risk provision is made for any deficiencies arising when unearned premiums, net of associated acquisition costs, are insufficient to meet expected claims and expenses likely to arise after the end of the financial year from contracts concluded before that date. The expected claims are calculated having regard to events that have occurred prior to the balance sheet date. Unexpired risks, surpluses and deficit, are aggregated where business classes are managed together.
Liability adequacy test At each balance sheet date the liability adequacy test is performed to ensure the adequacy of the contract liabilities net of Deferred Acquisition Costs (DAC). In performing these tests, current best estimates of future contractual cash flows and claims handling and administration costs are used. Any deficiency is immediately charged to the profit and loss initially by writing off DAC and by subsequently establishing a provision for losses arising from liability adequacy tests (the unexpired risk provision). Any DAC written off as a result of this test is not reinstated.
Insurance and investment contracts The company issues contracts that transfer insurance risk and / or financial risk.
Insurance contracts are those that transfer significant insurance risk. Significant insurance risk is defined as the risk of the company paying benefits on the occurrence of an insured uncertain event.
Investment contracts are those that transfer financial risk with no significant insurance risk.
Insurance contracts are classified as short term and include motor, fire, accident, engineering, farming and marine. Premium is recognised over the term of the contract on a proportionate basis. Claims are charged to the income statement based on an estimated liability for compensation. These claims are not discounted as settlement generally occurs within a reasonable period of the claim.
Technical Assets These comprise reinsurance receivables and deferred acquisition costs.
Reinsurance contracts held Contracts entered into by the company with the re-insurers whereby the company recovers losses on insurance contracts issued are classified as reinsurance contracts held.
The benefits to which the company is entitled under its reinsurance contracts are recognised as reinsurance assets.
CBZ Holdings 2008 41 Annual Report
GROUP ACCOUNTING POLICIES (CONTINUED)
The assets consist of short term balances due from re-insurers (classified as reinsurance receivables). The amounts recoverable are measured consistently in accordance with the terms of the reinsurance contracts.
Acquisition Costs Acquisition costs, which represent commission and other related expenses, are deferred over the period in which the related premiums are earned. Commission receivable relating to the unexpired portion of a risk is recognized at the balance sheet date calculated on a 1/365 basis.
1.12 EMPLOYEE BENEFITS
Employee benefits are the consideration given by the Group in exchange for services rendered by employees. In summary such benefits are:
a) Short-term benefits b) Benefits earned by employees under normal employment terms including salaries, wages, bonuses and leave pay. These are expensed as earned and accordingly provisions are made for unpaid bonuses and leave pay. c) Post-employment benefits I) Retirement benefits from the National Social Security Authority which is a defined contribution fund. Costs applicable to this scheme are determined by the systematic recognition of legislated contributions.
ii) The Group operates a defined contribution scheme, the assets of which are held in a separate trustee-administered fund. The pension plan is generally funded by payments from the Group taking account of the recommendations of independent qualified actuaries. The costs are charged to the income statement as incurred.
1.13 CONTINGENCIES AND COMMITMENTS
Transactions are classified as contingencies where the Group’s obligations depend on uncertain future events and principally consist of third party obligations underwritten. Items are classified as commitments where the Group commits itself to future transactions or if the items will result in the acquisition of assets.
1.14 INSTALMENT CREDIT AGREEMENTS
Leases, instalment credit and rental agreements are regarded as financing transactions. The capital amounts and capitalized interest less repayments are included under advances. Finance charges earned are computed at effective rates of interest inherent in the contracts.
1.15 SEGMENT REPORTING
A segment is a distinguishable component of the Group that is engaged in providing products or services (business segment) which is subject to risks and rewards that are different from those of the other segments. Segment income, expenses and performance, include transfers between business segments.
1.16 GOING CONCERN
The Directors have assessed the ability of the company to continue operating as a going concern and believe that the preparation of these financial statements on a going concern basis is still appropriate. However, the Directors believe that under the current economic environment a continuous assessment of the ability of the company to continue to operate as a going concern will need to be performed to determine the continued appropriateness of the going concern assumption that has been applied in the preparation of these financial statements.
42 CBZ Holdings 2008 Annual Report
GROUP ACCOUNTING POLICIES (CONTINUED)
1.17 Significant assumptions and estimation uncertainties relating to assets and liabilities carried at fair value
Due to the prevailing hyper inflationary conditions in the Zimbabwean economy, there were significant price differentials in the pricing of similar assets and liabilities and this resulted in fair value determination difficulties. This was caused mainly by the following factors:
• no positive correlation in the movement of interest rates, exchange rates and inflation rates in line with the influence of market conditions; • the ability of the market to determine pricing levels had been negatively affected by the effects of inflation and regulatory influence; and • the Zimbabwe Stock Exchange(ZSE) last traded on 17 November 2008.
These conditions have resulted in a high level of subjectivity in determining fair values and in the application of pricing models for the fair valuation of transactions, assets and liabilities.
Adoption of Future Reporting Standards
New standards, amendments and interpretations to the existing standards have been published that are mandatory for accounting periods beginning on or after 1 January 2009 or later periods are as follows;
IFRS 2 (Amended) Share-based payments
IFRS 3 (Revised), Business Combinations (effective from 1 January 2009)
IFRS 8 Operating segments (effective from 1 January 2009)
IAS 1 (Revised), Presentation of Financial Statements (effective from 1 January 2009)
IAS 32 (Amended) Financial Instruments: Presentation (effective from 1 January 2009)
IAS 27 (Amended), Consolidated and Separate Financial Statements (effective from 1 July 2009) The Group opted for early adoption of this standard.
IAS 39 (Amended), Financial Instruments: Recognition and Measurement (effective 1 July 2009)
These amendments are not expected to have a significant impact on the Group, for the 31 December 2009 reporting period.
CBZ Holdings 2008 43 Annual Report
Notes to the consolidated financial statements for the year ended 31 December 2008
1. INCORPORATION AND ACTIVITIES The consolidated financial statements of the Group for the year ended 31 December 2008were authorised for issue in accordance with a resolution of the directors on 25 March 2009.
The Group offers commercial banking, mortgage finance, asset management, insurance and other financial services and is incorporated in Zimbabwe.
2. LIMITATIONS OF FINANCIAL REPORTING IN THE GENERAL ENVIRONMENT PREVAILING The uncertainties in the adverse Zimbabwean economic environment during the year have resulted in limitations in financial reporting. These uncertainties and limitations include:
• The i nflation indices have not been published since July 2008. Subsequent estimates by economists are wide ranging and high. The use of foreign currency and multiple pricing, described below, also distorts the process of measuring inflation.
Given the chronic hyperinflation, the time lapse between the balance sheet and reporting dates renders the financial information presented in the financial statements less useful and relevant for making economic decisions. Official inflation indices when available are only available at month-end periods. Therefore, the use of assumptions to determine inflation in the intervening periods renders the information presented susceptible to estimation errors.
In these circumstances, inflation adjusted financial statements are not prepared as required by the International Financial Reporting Standard (IAS 29), Financial Reporting In Hyper inflationary Economies.
• The difficulty in determining a representative basket of goods to use for determining the inflation indices; • The unavailability of goods on the local market in Z$ that can be used in populating the inflation model to determine the inflation index; and • The existence of multiple prices for the same item which then requires a lot of subjectivity and judgement in determining the price that will be used to determine the inflation index; • The measurement of transactions in local currency is dependent on the mode of settlement. As a result, there may be significant variations in the valuation of assets and liabilities.
The uncertainties and limitations have been aggravated by:
• multiple exchange rates that were significantly varied during the year ended 31 December 2008. If a transaction occurred, more than one rate was recorded at its nominal value, resulting in distortions in financial reporting; • there were multiple prices for the same commodity/service, which price was largely dependant on the mode of settling transactions that ranged from cheque/transfer, cash, fuel coupons, foreign currency etc. The effect is similar to that of the multiple exchange rates described above and would result in distortions in financial reporting; • the introduction of foreign currency licensed operators and the “basing” of most other transactions in foreign currency by the non-licensed operators, created challenges for the Group in determining its functional currency (as between the local currency and a foreign currency);
As a result of these uncertainties and inherent limitations, the directors advise caution on the use of these financial statements for decision making purposes.
The Directors have assessed the ability of the company to continue operating as a going concern and believe that the preparation of these financial statements on a going concern basis is still appropriate. However, the Directors believe that under the current economic environment a continuous assessment of the ability of the Group to continue to operate as a going concern will need to be performed to determine the continued appropriateness of the going concern assumption that has been applied in the preparation of these financial statements.
44 CBZ Holdings 2008 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2008 (CONTINUED)
Historical Cost Dec-08 Dec-07 $ ‘Quint $ ‘Quint
3. Interest Interest and similar income Bankers acceptances 3,677 - Overdrafts 156,570 - Mortgage interest 19 - Staff loans - - 160,266 - Short-term money market assets 67 - 160,333 -
Interest expense and similar charges Demand 82 - Savings 5 - Money market deposits 75 - 162 - Overnight borrowings 19 - 181 -
4. Non-interest income Net income from trading securities 4 - Fair value adjustments on financial instruments 548,725 - Fair value adjustments: Investment properties 588,215 - Net income from foreign currencies dealing 93,942 - Commission and fee income 3,900 - Other operating income 1,426 - 1,236,212 -
5. Underwriting income Gross premium income 2,948 - Reinsurance (2,906) - Net written premium 42 - Unearned premium (32) - Net earned premium 10 - Net commission 20 - Net claims (3) - 27 -
6. Operating expenditure Administration expenses 16,857 - Audit fees 5,118 - Staff costs 8 - 21,983 -
Directors (key management)remuneration (included in staff costs) Fees for services as directors - - Pension for past and present directors - - Salaries and other benefits - - - -
CBZ Holdings 2008 45 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2008 (CONTINUED)
Historical Cost Dec-08 Dec-07 $ ‘Quint $ ‘Quint 7. Taxation
7.1 Analysis of tax charge in respect of the profit for the year: Current income tax charge 64,357 - Deferred income tax 323,958 - 388,315 - 7.2. Tax rate reconciliation Notional tax 30.00 30.00 Banking levy 5.00 5.00 Aids levy 0.90 0.90 Permanent differences (7.42) (10.70) Effective rate 28.48 25.20
8. Earnings per share
8.1. Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares in issue during the period. Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into the ordinary shares.
The following reflects the income and share data used in the basic, headline and diluted earnings per share computations:
2008 2007 Earnings $’ Quint $’ Quint
Basic earnings 975,317 - Headline earnings 975,317 - Fully diluted earnings 975,317 -
Number of shares used in calculations* Millions Millions Basic earnings per share (weighted) 684 622 Headline earnings per share (weighted) 684 622 Fully diluted earnings per share 684 622
8.2. Reconciliation between basic earnings and headline earnings
2008 2007 $’ Quint $’ Quint Basic earnings Loss / Profit on sale of 975,317 property and equipment - - Goodwill - - Headline earnings 975,317 -
46 CBZ Holdings 2008 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2008 (CONTINUED)
Historical Cost Dec-08 Dec-07 $ ‘Quint $ ‘Quint
9. Dividends paid and proposed Interim dividend - - Final dividend - - - -
10. Balances with Banks and Cash Balance with the Reserve Bank of Zimbabwe Statutory Reserve 5,776 - Current accounts 5,380 - 11,156 - Balance with other banks and cash Cash local (2) - Cash foreign 275,314 - Nostro accounts 1,610,142 - Interbank clearing accounts 2,961 - 1,899,571 -
The statutory reserve balance with the Reserve Bank of Zimbabwe is non-interest bearing. The balance is based on the value of liabilities to the public.
11. Money market assets Treasury Bills 3,300 - Other Bills 42 - Accrued interest 630 - 3,972 -
Money Market Assets Analysis Held for Trading 3,915 - Available for Sale 57 - 3,972 -
Maturity analysis Demand 57 - Between 1 and 3 months - - Between 3 and 1 year 3,915 - Between 1 and 5 years - - 3,972 -
CBZ Holdings 2008 47 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2008 (CONTINUED)
Historical Cost Dec-08 Dec-07 $ ‘Quint $ ‘Quint 11.1. Financial assets held for trading Treasury bills trading - - Treasury bills issued by government 3,915 - Fair value adjustment - - 3,915 - Financial Assets available for sale and held to maturity Treasury bills available for sale - - Held to maturity 57 - 57 - Money market assets are exposed to fair value interest rate risks as these financial assets’ interest rates are fixed upon purchase until the assets mature.
11.2. Financial assets at fair value through profit and loss Financial assets held for trading - - Financial assets designated at fair value through profit or loss - -
12. Advances Financial sector stabilisation bonds - - Less: Effect of amortisation - -
Bankers acceptances 596 - Overdrafts 21,556 - Loans 276,488 - Mortgage advances 5 - Lease finance - - 298,645 - RBZ funded loans - - Interest accrued 144,553 - Total gross advances 443,198 - Impairment loss (12,074) - 431,124 - The five year Financial Sector Stabilisation Bond is held at amortised cost as there is no ready market for this paper and there is no similar paper in the market.
12.1. Sectoral analysis Private 110,013 - Agriculture 8,244 - Mining - - Manufacturing 3,305 - Distribution 88,775 - Constructions 761 - Transport 3,359 - Communication 890 - Services 223,224 - Financial organizations 4,627 - 443,198 -
48 CBZ Holdings 2008 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2008 (CONTINUED)
Historical Cost Dec-08 Dec-07 $ ‘Quint $ ‘Quint 12.2. Maturity analysis Demand 262,290 - Within 1 month 180,908 - Between 1 and 3 months - - Between 3 months and 6 months - - Between 6 months and 1 year - - Between 1 and 5 years - - 443,198 -
Maturity analysis is based on the remaining period from 31 December to contractual maturity.
Advances are exposed to cash flow interest rate risk with the exception of statutory funded advances that are exposed to fair value interest rate risk.
12.3. Loans to directors and employees Loans to directors Included in advances are loans to executive directors:- Balance at beginning of year - - Advances made during the year - - Repayment during the year - - Balance at end of the period - -
Loans to employees Included in advances are loans to employees: - Balance at beginning of year - - Advances made during the year - - Effects of amortisation - - Repayments during the year - - Balance at end of period -
12.4. Non performing advances Total advances on which interest is suspended - Impairment - Suspended interest - -
12.5. Impairment of advances Balance at beginning of year - - Charge for impairment loss 9,803 - Interest in suspense 2,271 - Balance at end of year 12,074 -
Comprising: Specific impairments 4,967 - Portfolio impairments 4,836 - Suspended interest 2,271 - 12,074 -
CBZ Holdings 2008 49 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2008 (CONTINUED)
Historical Cost Dec-08 Dec-07 $ ‘Quint $ ‘Quint 13. Technical assets Reinsurance receivables 2,715 - Deferred acquisition costs 328 - 3,043 -
14. Other assets Prepayments, debtors and deposits 2,406 - Miscellaneous assets 123,730 - 126,136 -
15. Investments Listed investments 548,726 - Unlisted investments - - 548,726 - At cost - - At fair value 548,726 - 548,726 - Portfolio analysis - - Trading 333,912 - Available for sale 214,814 - 548,726 -
15.1 Investment in associate company Opening balance - - Share of profits for the period (1,209) - Closing balance (1,209) -
Transcontinental Equity Growth Fund (Pvt) Limited-38.4% Shares at cost - - Share of post acquisition retained profits and reserves (1,209) - (1,209) -
15.2 Investment in subsidiaries Country of incorporation % equity interest 2008 2007 CBZ Bank Limited Zimbabwe 100% 100% CBZ Asset Management (Pvt) Limited Zimbabwe 100% 100% CBZ Building Society Zimbabwe 100% 100% Optimal Insurance Company (Pvt) Limited Zimbabwe 58.5% 58.5% CBZ Properties (Pvt) Limited Zimbabwe 100% 100%
50 CBZ Holdings 2008 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2008 (CONTINUED)
Historical Cost Dec-08 Dec-07 $ ‘Quint $ ‘Quint 16. Investment Properties
Opening balance - - Fair valuation gain 588 215 - Closing balance 588 215 -
17. Property and Equipment
Freehold Leasehold Motor Furniture and Land Buildings Improvements Vehicles other equipment Total $’ Quint $’ Quint $’ Quint $’ Quint $’ Quint $’ Quint 2008 Cost/valuation Opening at 1 January 2008 ------Revaluation 373,079 1,493,937 - - - 1,867,016 Balance at 31 December 2008 373,079 1,493,937 - - - 1,867,016
Accumulated depreciation Opening at 1 January 2008 ------Charge for the year ------Revaluation ------
Balance at 31 December 2008 ------
Net book value at 31 December 2008 373,079 1,493,937 - - - 1,867,016
Historical Cost Dec-08 Dec-07 $ ‘Quint $ ‘Quint 18.Share Capital
Authorised 1 000 000 000 ordinary shares of 0.000000000000000000000002 cents each - -
Issued and fully paid
684 144 546 ordinary shares of 0.000000000000000000000002 cents each. - - 18.1. Treasury Shares Opening Balance - - Movement for the year - - Closing balance - -
Subject to provisions of section 183 of the companies act (Chapter 24.03) the unissued shares are under the control of the directors
18.2. Revenue reserve Revenue reserve comprise: Holding company 100,486 - Subsidiary companies 874,831 - 975,317 -
CBZ Holdings 2008 51 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2008 (CONTINUED)
Historical Cost Dec-08 Dec-07 $ ‘Quint $ ‘Quint 18.3. Minority interests Minority interests comprise: Shares in subsidiary companies - - Share of loss (236) - (236) - 19. DEPOSITS Demand deposits 11,284 - Savings and other deposits 1,096 - Money Market deposits 2,445 - Foreign currency deposits 1,375,438 - Accrued interest 17 - 1,390,280 -
Deposits by source Banks 160,262 - Money Market 110,715 - Customers 1,119,303 - 1,390,280 -
Sectoral analysis of deposits Historical cost
Private 159,284 - Agriculture 4,451 - Mining 554 - Manufacturing 63,499 - Distribution 383,592 - Constructions 395 - Transport 173,797 - Communication 9,524 - Services 126,406 - Financial organizations 162,876 - Financial and investments 305,902 - 1,390,280 -
Maturity analysis Repayable on demand 1,154,962 - Within one month 235,310 - Between 1 and 3 months 8 - Between 3 months and 1 year - - 1,390,280 - 20. TECHNICAL LIABILITIES Reinsurance payables 5,116 - Gross outstanding claims 2 - Gross unearned premium reserve 2,747 - Deferred reinsurance acquisition revenue 631 - 8,496 -
21. OTHER LIABILITIES RBZ funded - - Contingent Liabilities - - Sundry creditors and accounts 837,518 - 837,518 -
52 CBZ Holdings 2008 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2008 (CONTINUED)
Historical Cost Dec-08 Dec-07 $ ‘Quint $ ‘Quint Deferred tax related to items charged or credited directly to equity during the period is as follows: 22. DEFERRED TAXATION Revaluation of property, plant and equipment 497,882 - 497,882 -
The deferred tax included in the balance sheet and changes recorded in the income tax expense are as follows:
Fair value adjustments 295,785 - Prepayments - - Impairment allowance - - Property and equipment - - Other 29,137 - 324,922 -
Total deferred tax liability 822,804 -
The deferred tax included in the balance sheet and changes recorded in the income tax expense are as follows:
Arising from assessed losses 964 - Total deferred tax asset 964 -
CBZ Holdings 2008 53 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2008 (CONTINUED)
23. SEGMENT INFORMATION The Group comprises the following operating units: Banking, Building Society, Asset Management, Short term Insurance, and Property Investments. The following tables present revenue and profit information regarding the Group’s operating segments for the year ended 31 December 2008.
Historic Cost
Segment operational results
Commercial Mortgage Asset Short term Property Other Banking Financing Management Insurance Investment operations Consolidated $’ Quint $’ Quint $’ Quint $’ Quint $’ Quint $’ Quint $’ Quint 31 December 2008 Income Revenue from external customers 292,224 504,850 215,783 2,986 969,568 (589,020) 1,396,391 Inter segment revenue ------Total Income 292,224 504,850 215,783 2,986 969,568 (589,020) 1,396,391
Results
Profit before taxation 276,763 493,850 214,868 (1,424) 969,568 (590,229) 1,363,396 Elimination of Intersegment profit - Profit before taxation 1,363,396
31 December 2007
Income Income from external customers ------Inter segment revenue ------Total Income ------
Results
Profit before taxation ------Goodwill - Profit before taxation -
54 CBZ Holdings 2008 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2008 (CONTINUED)
Historical Cost Dec-08 Dec-07 $ ‘Quint $ ‘Quint Total Segment Assets
Commercial banking 2,572,811 - Mortgage financing 1,230,435 - Asset management 215,893 - Short term insurance 7,974 - Property investment 1,296,233 - Total Segment Assets 5,323,346 - Other operations 144,212 - Total Segment Assets 5,467,558 -
24.CONTINGENCIES AND COMMITMENTS Contingent liabilities Guarantees - - Irrevocable letters of credit - - - -
Capital Commitments Authorised and contracted for 998 - Authorised and uncontracted for 24,850 - 25,848 -
The capital commitments will be funded from the group’s own resources and borrowings
25.FUNDS UNDER MANAGEMENT Pensions 920,707 - Private 199,142 - Unit Trust 7,209 - Money Market - - 1,127,058 -
CBZ Holdings 2008 55 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2008 (CONTINUED)
26. EMPLOYEE BENEFITS Employee benefits are the consideration given by the Group in exchange for services rendered by employees. In summary such benefits are:-
Short term benefits These are earned by employees under normal employment terms, including salaries and wages, bonuses and leave pay. These are expensed as earned and accordingly provisions are made for unpaid bonuses and leave pay.
Post employment benefits Retirement benefits from the NSSA fall under the definition of a Defined Benefit Plan (DBP). Costs applicable to this scheme are determined by the systematic recognition of legislated contributions. NSSA is a multi-employer plan and has been disclosed as a Defined contribution plan. The Group operates a Defined Benefit Plan (DBP), the assets of which are held in a separate trustee-administered fund. The pension plan is generally funded by payments from the Group taking account of the recommendations.
Historical Cost Dec Dec 2008 2007 $ Quint $ Quint NSSA contributions - - Defined contribution scheme - -
RELATED PARTIES
Related Party
Entities with significant influence over the Group
Government of Zimbabwe: Deposits 465,267 Advances - - Balances with RBZ 11,107 -
Compensation of key management personnel of the Group As required by IAS 24: Related Party Disclosures, the Board’s view is that non-executive and executive directors constitute the key management of the Group. Accordingly, key management remuneration is disclosed under note 6.
EXCHANGE RATES The following year end exchange rates were used for financial reporting purposes.
Dec Dec 2008 2007 $ Quint $ Quint
USD 0.035 - ZAR 0.004 - GBP 0.05 -
56 CBZ Holdings 2008 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2008 (CONTINUED)
27. INTEREST RATE REPRICING AND GAP ANALYSIS
2008 Non Up to 1 month to 3 months 1 year to interest Demand 1 month 3 months to 1 year 5 years bearing Total Assets $’ Quint $’ Quint $’ Quint $’ Quint $’ Quint $’ Quint $’ Quint Balances with banks and cash 1,899,469 - - - - 102 1,899,571 Money market assets 57 - - 3,915 - - 3,972 Advances 255,210 175,913 - 1 - - 431,124 Technical assets - - - - - 3,043 3,043 Other assets 122,757 - - - - 3,379 126,136 Investments - - - - - 548,726 548,726 Investments in associate - - - - - (1,209) (1,209) Investment properties - - - - - 588,215 588,215 Property and equipment - - - - - 1,867,016 1,867,016 Deferred taxation - - - - - 964 964 Intangible assets ------
Total assets 2,277,493 175,913 - 3,916 - 3,010,236 5,467,558
Liabilities and equity reserves Deposits 1,154,466 235,310 504 - - - 1,390,280 Technical liabilities - - - - - 8,496 8,496 Other liabilities - - - - - 837,518 837,518 Deferred taxation - - - - - 822,804 822,804 Current taxation payable 64,244 - - - - - 64,244 Equity & reserves - - 2,344,216 2,344,216 Total liabilities and equity 1,218,710 235,310 504 - - 4,013,034 5,467,558
Interest rate repricing gap 1,058,783 (59,397) (504) 3,916 - (1,002,798) - Cumulative gap 1,058,783 999,386 998,882 1,002,798 1,002,798 - -
CBZ Holdings 2008 57 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2008 (CONTINUED)
2007 Non Up to 1 month to 3 months 1 year to interest Demand 1 month 3 months to 1 year 5 years bearing Total Assets $’ Quint $’ Quint $’ Quint $’ Quint $’ Quint $’ Quint $’ Quint Assets Balances with banks and cash ------Money market assets ------Advances ------Technical assets ------Other assets ------Investments ------Investments in associate ------Investment properties ------Property and equipment ------Deferred taxation ------Intangible assets ------Total assets ------
Liabilities and equity reserves Deposits ------Technical liabilities ------Other liabilities ------Deferred taxation ------Current taxation payable ------Equity & reserves ------Total liabilities and equity ------
Interest rate repricing gap ------Cummulative gap ------
58 CBZ Holdings 2008 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2008 (CONTINUED) FOREIGN CURRENCY POSITION
Position expressed in Z$ Historical Cost-2008
US ZAR GBP Other Total $’ Quint $’ Quint $’ Quint $’ Quint $’ Quint Consolidated assets Balances with banks and cash 1,259,628 - - 639,330 1,898,958 Money market assets - - - - - Advances 280,012 - - 151,107 431,119 Technical assets - - - - - Other assets 121,894 - - 863 122,757 Investments - - - - - Deferred taxation - - - - - Property and equipment - - - - - Total Assets 1,661,534 - - 791,300 2,452,834
Liabilities and equity Deposits 843,368 - - 546,416 1,389,784 Other liabilities 522,605 - - 302,872 825,477 Provision for taxation - - - - - Deferred taxation - - - - - Provisions - - - - - Equity & reserves - - - - - Total liabilities and Equity 1,365,973 - - 849,288 2,215,261
Net position 295,561 - - (57,988) 237,573
Foreign currency position
Position expressed in Z$ Historical Cost-2007
US ZAR GBP Other Total $’ Quint $’ Quint $’ Quint $’ Quint $’ Quint Consolidated assets Balances with banks and cash - - - - - Money market assets - - - - - Advances - - - - - Technical assets - - - - - Other assets - - - - - Investments - - - - - Deferred taxation - - - - - Property and equipment - - - - - Total Assets - - - - -
Liabilities and equity Deposits Other liabilities - - - - - Provision for taxation - - - - - Deferred taxation - - - - - Provisions - - - - - Equity & reserves - - - - - Total liabilities and Equity - - - - -
Net position - - - - -
CBZ Holdings 2008 59 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2008 (CONTINUED)
Foreign currency position as at 31 December 2008
Underlying Currency US$ ZAR GBP Other foreign currencies
Assets Cash and short term assets 35,989,359 71,130,242 2,480,691 2,774,021 Advances 8,000,352 - - - Other assets 3,482,679 8,899 4,222 - Investments - - - 109,641 Customers’ indebtedness for acceptances - - - - Total Assets 47,472,390 71,139,141 2,484,913 2,883,662
Liabilities and shareholders’ funds Deposits 24,096,237 79,801,784 1,297,231 1,508,459 Other liabilities 14,931,570 25,068,379 373,042 747,036 Total liabilities and equity 39,027,807 104,870,163 1,670,273 2,255,495
Net position 8,444,583 (33,731,022) 814,640 628,167
60 CBZ Holdings 2008 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2008 (CONTINUED)
28. RISK MANAGEMENT REPORT
The Group subscribes to Risk Management principles and processes. The main focus being to identify, measure, monitor and control all risks inherent in the trading activities of the Group’s operating units. The key objective is to safeguard the Group’s reputation in the financial services market.
KEY RISKS REQUIRING SPECIAL MENTION
28.1 Credit Risk This risk is defined as the inability or failure of counter-party to meet commitments with respect to lending, trading, hedging, settlement and other related financial obligations as and when they fall due.
Mitigation of this risk is achieved through strict adherence to the Group’s Credit Policies and use of segregated credit generation, approval as well as monitoring and control processes. Minimum acceptable credit risk grade is derived through compulsory grading matrix undertaken at point of facilities request.
The Group has systems generated credit risk reports used for monitoring and control of the credit function on a daily, monthly and quarterly basis against approved limits, internal benchmarks and industrial standards. To cover its loans from unforeseen eventualities, the Group also takes security from its borrowing clients. The Group’s loans review committees stretching to Board level have complete oversight of this risk.
Credit risk The table below shows the maximum exposure to credit for the components of the balance sheet.
Gross maximum Gross maximum exposure exposure 2008 2007 $’ Quint $’ Quint Cash and balances with Reserve Bank of Zimbabwe (excluding cash on hand) 14 117 - Due from banks 1 610 142 - Financial assets held for trading 3 915 - Loans and advances to customers 431 124 - Other assets 126 136 - Total 2 185 434 -
Contingent liabilities - - Commitments - - Total - -
Where financial instruments are recorded at fair value the amounts shown above represent the current credit risk exposure but not the maximum risk exposure that could arise in the future as a result of changes in values.
CBZ Holdings 2008 61 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2008 (CONTINUED)
Aging analysis of past due but not impaired loans per class of financial assets
Less than 31 to 61 to More than 30 days 60 days 90 days 91 days Total 2008 2008 2008 2008 2008 Historical $’Quint $’Quint $’Quint $’Quint $’Quint
Loans and advances to customers - Corporate lending 76 - - - 76 Small business lending 6 - - - 6 Consumer lending 25 - - - 25 Total 107 - - - 107
Of the total aggregate amount of gross past due but not impaired loans and advances to customers the fair value of collateral that the Group held as at 31 December 2008 was $173.4 Quint (2007: $-Quint).
Less than 31 to 61 to More than 30 days 60 days 90 days 91 days Total 2007 2007 2007 2007 2007 Loans and advances to customers $’Quint $’Quint $’Quint $’Quint $’Quint
Corporate lending - - - - - Small business lending - - - - - Consumer lending - - - - - Total - - - - -
An industry sector analysis of the Group’s financial assets before and after taking into account collateral held is as follows:
Gross Net Gross Net maximum maximum maximum maximum Exposure exposure exposure exposure 2008 2008 2007 2007 $’Quint $’Quint $’Quint $’Quint
Private 110 013 55 987 - - Agriculture 8 244 4 196 - - Mining - - - - Manufacturing 3 305 1 682 - - Distribution 88 775 45 179 - - Construction 761 387 - - Transport 3 359 1 709 - - Communication 890 453 - - Services 223 224 113 603 - - Financial organisations 4 627 2 355 - - Total gross advances 443 198 225 551 - -
Collateral 443 198 225 551 - -
62 CBZ Holdings 2008 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2008 (CONTINUED)
Credit Quality per Class of Financial Assets The credit quality of financial assets is managed by the Group using internal credit ratings. The table below shows the credit quality by class of asset for loan-related balance sheet lines based on the Group’s credit rating system.
Neither past due nor impaired
Past due or High Standard Sub-standard individually grade grade Grade impaired 2008 2008 2008 2008 Total $’Quint $’Quint $’Quint $’Quint $’Quint
Due from banks 1 624 259 - - - 1 624 259 Financial assets designated at fair value through profit or loss 3 915 - - - 3 915
Loans and advances to customers Agriculture 6 715 1 486 42 1 8 244 Manufacturing 2 690 596 17 2 3 305 Commercial 183 824 38 249 1 087 64 223 224 Individuals and Households 89 561 19 836 586 30 110 013 Mining - - - - - Distribution 72 303 16 007 455 10 88 775 Construction 620 137 4 - 761 Transport 3 622 605 22 - 4 249 Parastatals 4 570 - 57 - 4 627 Other - - - - - 363 905 76 916 2 270 107 443 198
Financial Investments Unquoted debt securities - - - - -
Total 1 992 079 76 916 2 270 107 2 071 372
Fair value of financial instruments
Reference is hereby made to accounting policy note 1.17 on significant assumptions and estimation uncertainties relating to assets and liabilities carried at fair value.
Disclosure on comparison of the carrying amounts of these financial instruments to their fair values has been omitted due to the high subjectivity on the determination of such fair values as described in accounting policy note 1.17.
CBZ Holdings 2008 63 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2008 (CONTINUED)
28.2 Market Related Risks These risks arise from the negative changes in market variables of interest rates, foreign exchange rates, equity prices and commodity prices, which can cause substantial variations in income and economic value of the Group if not properly managed.
28.2.1 Liquidity Risk This arises from a mismatch of assets and liabilities cash flows, which can result in a refinancing risk if liabilities have a shorter maturity profile than assets.
The Group has managed this risk through strict conformity to Asset and Liability management processes and requirements, which are driven, by the relevant Management and Board Committees.
Liquidity Risk and Funding Management
Financial On Less than 3 to 1 to Over liabilities demand 3 months 12 months 5 years 5 years Total
Historical As at 31 December 2008
Due to banks ------Other deposits ------Due to customers 1 154 962 235 318 - - - 1 390 280 1 154 962 235 318 - - - 1 390 280
28.2.2 Interest Rate Risk This is the risk that a change in the interest rates will have a negative effect on the Group’s future cash flows or earnings where the repricing terms as well as the maturity structure of the funding liabilities and related assets are not properly matched.
This is adequately managed through Asset and Liability management processes.
28.2.3 Foreign Exchange Risk This risk arises from the changes in exchange rates and originates from mismatches between the values of assets and liabilities denominated in different currencies and can lead to losses if there is an adverse movement in exchange rate where open positions either spot or forward, are taken for both on and off - balance sheet transactions.
The Group manages this risk by ensuring strict control of any exposure to exchange risk by its Treasury function through adherence to Asset and Liability management requirements and benchmarks.
28.3 Operational Risk This risk arises from human error or fraud, inadequate or failed internal processes, systems, non-adherence to procedures or other external sources that result in the compromising of the Group’s income or erosion of the Group’s balance sheet value.
In addition to the installation of a new Banking System with advanced inbuilt controls during the last quarter of 2005, the Group fosters a culture of strict adherence to laid down procedures, policies and industry best practices.
Operational risk is also adequately monitored by the Internal Audit function of the Group with appropriate oversight and intervention from the Board.
28.4 Strategic Risk This is the risk that arises where the Group’s strategy may be inappropriate to support its long term corporate goals due to underlying inadequate strategic planning process, weak decision making processes as well as weak strategic implementation programs.
64 CBZ Holdings 2008 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2008 (CONTINUED)
To mitigate this risk, Group Management Teams craft the strategy with guidance from the Board which is underpinned by Group Corporate Goals. Approval of the strategy is the responsibility of the Board whilst implementation is carried out by Management. Strategy and Goal congruency is reviewed monthly by Management and quarterly by the Board.
28.5 Regulatory risk Regulatory risk, which is defined as the failure to comply with applicable laws and regulations or supervisory requirements, or the exclusion of provisions of relevant regulatory requirements out of operational procedures, was managed and mitigated through:
• Comprehensive and consistent compliance policies and procedures that exist throughout the Group; • A proactive and complete summary statement of the Group’s position on ethics and compliance; • A reporting structure of the Compliance Function that ensured independence and effectiveness; and • Periodic compliance and awareness training targeting employees in compliance sensitive areas.
28.6 Reputation risk This is the risk that arises from the market perception of the manner in which the Group packages and delivers its products and services, how staff and management conduct themselves and how it relates to the general business ethics.
This risk was managed and mitigated through:
• Upgrading operating facilities to ensure that they remain within the taste of the Group’s diversified clientele base. • Ensuring that Staff subscribe to the Group’s code of conduct and general business ethics on and after joining the Group. • Stakeholders’ feedback systems that ensured a proactive attention to the Group’s reputation management.
28.7 Money-laundering risk This is the risk of financial or reputational loss or liability suffered as a result of transactions in which criminal financiers disguise the origin of funds they deposit in the Banking subsidiaries of the Group and then use the funds to support illegal activities.
This risk is managed and controlled through:
• Know Your Customer Procedures; • Knowledge management to facilitate learning and leveraging successes and failures; • Effective use of compliance enabling technology to enhance anti–money laundering programme management, communication, monitoring, and reporting; • Development of early warning systems; and • Integration of compliance activities into individual performance measurement and reward structures.
28.8 Risk and Credit Ratings Reserve Bank of Zimbabwe Ratings CBZ Bank and CBZ Building Society were not examined by the Reserve Bank using the Risk Based Supervised Framework during the year under review.
CBZ Holdings 2008 65 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2008 (CONTINUED)
External Credit Rating
CBZ Bank Limited Rating Agent 2008 2007 2006 Global Credit Rating Co.- Short term - - A1 Global Credit Rating Co – Long term A A+ A
CBZ Building Society Rating Agent 2008 2007 2006 Global Credit Rating Co. – Short term - - - Global Credit Rating Co. – Long term BBB BBB BBB
29. CAPITAL MANAGEMENT The primary objectives of the Group’s capital management are to ensure that the Group complies with externally imposed capital requirements and that the Group maintains strong credit ratings and healthy capital ratios in order to support its business and to maximise shareholder value. Measuring techniques include but are not limited to Capital adequacy ratios , external and internal credit ratings.
The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of its activities. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividend payment to shareholders, return capital to shareholders or issue capital securities. No changes were made in the objectives, policies and processes from the previous years.
30. POST BALANCE SHEET EVENTS-NON ADJUSTING Subsequent to the year end there was a change in the functional currency from the Zimbabwe dollar, to a multi currency system. The Central Statistics Office has officially commenced issuing inflation figures based on the United States Dollar prices.
66 CBZ Holdings 2008 Annual Report
COMPANY BALANCE SHEET AS AT 31 DECEMBER 2008
Historical Cost Dec-08 Dec-07 $ ‘Quint $ ‘Quint ASSETS Balances with banks and cash - - Investments 145,421 - Investments in associate - - Investment subsidiaries - - TOTAL ASSETS 145,421 -
EQUITY AND RESERVES Share capital - - Capital reserves - - Treasury shares - - Revenue reserves 100,486 - Total equity and reserves 100,486 - LIABILITIES Deferred taxation 44,935 - TOTAL LIABILITIES 44,935 -
TOTAL LIABILITIES AND EQUITY 145,421 -
R V WILDE N MAKUVISE CHAIRMAN GROUP CHIEF EXECUTIVE OFFICER
Harare 25 March 2009
CBZ Holdings 2008 67 Annual Report
NOTICE TO MEMBERS
Notice is hereby given that the Nineteenth Annual General Meeting of members of CBZ Holdings Limited will beheld in the Mirabelle Room, Meikles Hotel, Harare, on Wednesday 24 June 2009 at 15:00 hours.
1.ORDINARY MATTERS
(a) To receive and consider the Audited Annual Financial Statements for the year ended 31 December 2008, including the Chairman's, Group Chief Executive's, Managing Directors' reports and the Report of the External Auditors thereon.
(b) To note and confirm the passing of the final dividend for the year ended 31 December 2008.
(c) Directorate
i) To note that in terms of Article 67 of the Articles of Association, directors are required, after serving a period of three years, to retire from the Board by rotation and that in terms thereof there are no directors eligible for retirement this year. ii) To confirm the appointment of Messrs Elliot Mugamu, Francis Bhekisizwe Chirimuuta, Sidney Graham, Rickards Harnden, Never Nyemudzo and Mrs Rebecca Pasi during the course of the year. iii) To confirm the remuneration paid to the directors. iv) To confirm the appointment of the new Board of Directors for CBZ Holdings Limited that will oversee the activities of the Group.
(d) To authorize the directors to fix the external auditors' remuneration for the past year.
(e) To appoint external auditors for the ensuing year.
2. GENERAL
To transact such other business as may be transacted at an Annual General Meeting.
PROXIES
In terms of the Companies Act (Chapter 24:03) a member entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend, speak and on a poll to vote or abstain from voting in his stead.
A proxy need not be a member.
Proxy forms must be received at the registered office of the company not less than 48 hours before the meeting.
BY ORDER OF THE BOARD
V M CHASI (Mrs) BL (Hons), LLB (Zim) LEGAL CORPORATE SECRETARY
Union House 60 Kwame Nkrumah Avenue Harare
25 March 2009
Directors R V Wilde (Chairman), N Makuvise* (Group CEO), Dr J P Mangudya* (Managing), F B Chirimuuta, S G R Harnden, Dr R Mabeza-Chimedza, E Mugamu, N Nyemudzo*, Mrs R Pasi, P Zimunya*.
*Executive Directors
68 CBZ Holdings 2008 Annual Report
SHAREHOLDERS CALENDAR
Financial Year End 31 December 2009
ANTICIPATED DATES
Half year‘s results to 30 June 2009 August 2009
Full year’s results to 31 December 2009 March 2010
Annual Report and Annual General Meeting May 2010
CBZ Holdings 2008 69 Annual Report
GROUP DETAILS
HEAD OFFICE & REGISTERED OFFICE
Union House 60 Kwame Nkrumah Avenue P. O. Box 3313, Harare, Zimbabwe Telephone: (263-4) 748050-79 Fax: (263-4) 758077 www.cbz.co.zw e-mail: [email protected]
TRANSFER SECRETARIES
ZB Transfer Secretaries ZB Centre, 1st Floor Cnr First Street/Kwame Nkrumah Avenue P. O. Box 2540 Harare
LEGAL PRACTITIONERS
Gollop & Blank Legal Practitioners 3rd Floor. G & B House 83 Sam Nujoma Street/ Herbert Chitepo Avenue P .O. Box 262 Harare
AUDITORS
Ernst & Young Chartered Accountants (Zimbabwe) Angwa City Cnr J Nyerere Way/Kwame Nkrumah Avenue P. O. Box 62 Harare
70 CBZ Holdings 2008