CBZ HOLDINGS LIMITED Table of Contents Group Details 2 Group salient features 4 Group Structure 5 Analysis of Shareholders 6 Chairman’s Statement 8 Group Chief Executive Officer’s Report 10 GROUP REVIEW Managing Director’s Report-CBZ Bank Limited 12 Managing Director’s Report-CBZ Asset Management (Private) Limited 14 Managing Director’s Report-CBZ Insurance (Private) Limited and CBZ Life (Private) Limited 16 Report of the Independent Actuary 19 Corporate Social Responsibility Report 20 Corporate Gorvenance Statement 26 Statement of Directors’ Responsibility 31 Report of the Directors 32 CORPORATE CORPORATE GOVERNANCE Board of Directors 33 Report of the Independent Auditor 40 Consolidated Statement of Comprehensive Income 42 Consolidated Statement of Financial Position 43 Consolidated Statement of Changes in Equity 44 Consolidated Statement of Cash Flows 45 Group Accounting Policies 46 Notes to the Consolidated Financial Statements 62 FINANCIAL STATEMENTS FINANCIAL Company Financial Statements 100 Notice to Members 108 Shareholders’ Calendar 109 OTHER 1 CBZ Holdings Limited Annual Report 2012 1 Corporate Information REGISTERED OFFICE 5th Floor, Union House 60 Kwame Nkrumah Avenue Harare, Zimbabwe Telephone: (263-4) 748 050 - 79 Email: [email protected] Website: www.cbz.co.zw TRANSFER SECRETARIES ZB Transfer Secretaries ZB Centre, Ground Floor Cnr First Street/Kwame Nkrumah Avenue P.O Box 2540 Harare, Zimbabwe LEGAL PRACTITIONERS Mawere & Sibanda Legal Practitioners 3rd Floor Chiyedza House 1st Street/ Kwame Nkrumah Avenue P.O Box CY 1376 Causeway Harare, Zimbabwe Dube, Manikai & Hwacha Legal Practitioners 6th Floor, Gold Bridge, Eastgate Complex Cnr Sam Nujoma Street/ Robert Mugabe Avenue Harare, Zimbabwe AUDITORS Deloitte & Touche No.1 Kenilworth Gardens P.O Box 267 Highlands Harare, Zimbabwe 2 CBZ Holdings Limited Annual Report 2012 GROUP REVIEW 3 CBZ Holdings Limited Annual Report 2012 3 Group Salient Features For the year ended 31 December 2012 31 December 31 December 2012 2011 US$ US$ Total assets 1 223.1m 1 055.7m Gross advances 890.1m 812.0m Impairment loss on advances 35.5m 21.7m Total net advances 854.7m 790.3m Total deposits 1 032.4m 829.9m Profit after taxation 45.0m 30.3m GROUP REVIEW Capital adequacy (%) – CBZ Bank 12.90 11.14 Capital adequacy (%) – CBZ Building Society 36.98 33.42 Funds under management –CBZ Asset Management 111.1m 88.2m Total technical assets – CBZ Insurance 4.7m 1.5m Basic earnings per share (cents) 7.39 4.83 Return on assets (%) 4.5 3.6 Return on equity (%) 32.2 25.5 Non-interest income as a % of total income 33.9 39.0 Advances to Deposits ratio (including offshore) (%) 82.8 95.2 Cost to income ratio (%) 57.8 56.5 Permanent staff compliment 1 319 1 275 4 CBZ Holdings Limited Annual Report 2012 Group Structure Group Structure CBZ Holdings Limited Company CBZ Bank Limited CBZ Life Limited CBZ Insurance CBZ Asset CBZ Properties 100% 100% Company (Pvt) Ltd Management (Pvt) Ltd (Pvt) Ltd 58.5% t/a Datvest 100% 100% GROUP REVIEW Core Business Core Property ownership, Commercial banking and Fund management Long term insurance Short term insurance development and mortgage financing and advisory services management 5 CBZ Holdings Limited Annual Report 2012 5 Analysis of Shareholders as at 31 December 2012 Size of shareholding No of holders % of total No of shares % of total 1 - 5 000 9 888 90.19 7 710 150 1.13 5 001 - 10 000 392 3.58 2 883 174 0.42 10 001 - 25 000 328 2.99 5 128 615 0.75 25 001 - 100 000 182 1.66 9 022 696 1.32 100 001 - 200 000 57 0.52 8 377 110 1.22 200 001 - 500 000 50 0.46 15 252 483 2.23 500 001 and over 66 0.60 635 770 318 92.93 TOTAL 10 963 100.00 684 144 546 100.00 GROUP REVIEW ANALYSIS BY SHAREHOLDER TYPE No of holders % of total No of shares % of total Individuals 10 263 93.62 42 572 120 6.22 Companies 490 4.47 285 579 986 41.75 Non Resident 30 0.27 206 705 992 30.21 Pension Funds 120 1.09 107 212 532 15.67 Nominee Company 47 0.43 36 426 977 5.32 Insurance Companies 13 0.12 5 646 939 0.83 TOTAL 10 963 100.00 684 144 546 100.00 TOP 10 SHAREHOLDERS AS AT 31 DECEMBER 2012 Shareholder’s Name Total holding Shareholding % CBZ Holdings Limited 124 278 902 18.17 Government of Zimbabwe 110 000 000 16.08 Libyan Foreign Bank 96 609 470 14.12 National Social Security Authority 73 768 563 10.78 African Investment Sub 2 Limited 46 787 252 6.84 Stanbic Nominees (Private) Limited (New Non Resident & FCA) 42 836 790 6.26 Gun Metal Investments (Private) Limited 14 310 675 2.09 Datvest Nominees (Private) Limited 13 388 070 1.96 Stanbic Nominees NNR Bank of New York 13 274 223 1.94 Commercial Bank of Zimbabwe Employees Share Trust 8 010 802 1.17 Total 543 264 747 79.41 Others 140 879 799 20.59 TOTAL 684 144 546 100.00 6 CBZ Holdings Limited Annual Report 2012 7 CBZ Holdings Limited Annual Report 2012 7 GROUP REVIEW Mr L Zembe Chairman I take great pleasure in presenting our audited financial results for the Profit after taxation 48.4% year ended 31 December 2012, during which period we continued to make inroads in the banking, insurance and asset management frontiers. Once again our performance has delivered consistent value to our shareholders as we continue to grow our income and profits. Total Comprehensive Operating Environment income 51.3% The positive growth rates registered by the economy since the introduction of the multiple currency regime and other market friendly policies in 2009 decelerated during the period under review. The economy has been affected by liquidity constraints, lack of long term funding for industry recapitalisation and a deteriorating infrastructure. As such, the economy, initially projected to grow by Total Deposits 24.4% only 9.4%, grew by 4.4%. It was encouraging, however, to observe the declining trend in Annual Annual and Monthly rate of Inflation % Monthly monthly inflation from 0.46% at the beginning of the year to 0.13% at 0.5 0.6 year end. Annual inflation also declined from 4.31% to close the year 4.5 0.5 4.0 0.4 at 2.91%. The downward trend in inflation was attributed to the fall in 3.5 0.3 3.0 crude oil prices which had exerted a lot of inflationary pressures on 0.2 2.5 0.1 many oil importing countries. 2.0 0.0 1.5 1.0 -0.1 Capital Market 0.5 -0.2 0.0 -0.3 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Trade on the Stock Market remained subdued for the most part Annual Monthly due to liquidity constraints that were still being experienced and the implementation of the country’s indigenisation policy. This saw a decline in the benchmark industrial index, which closed 2012 at CBZH Share Price and Volumes Traded 131.96 points and the mining index which closed the same period Share Price, Cents Volumes, Thousands at 75.7 points. 16.00 25.000 14.00 20.000 The CBZ Holdings stock opened the year at 14 cents and reached a 12.00 low of 5 cents on 23 March 2012, before rising to close the year at 10.00 15.000 8.00 10 cents. With 648 million shares in issue, approximately 90.7 million 10.000 6.00 of the Company’s shares changed hands during the year, 70 million 4.00 5.000 of which were acquired by the Company as treasury shares. The 2.00 Company reached a market capitalisation of US$64.8 million at the 0 30-12-11 30-01-12 30-03-12 30-04-12 30-05-12 30-06-12 30-07-12 30-08-12 30-09-12 30-10-12 30-11-12 30-12-12 close of the year. Volumes Price 8 CBZ Holdings Limited Annual Report 2012 Group Chairman Statement (continued) Overview of the Group’s performance The Group welcomes Mr. Richard Victor Wilde, Mrs. Rebecca Pasi and Mr. Elliot Mugamu, who accepted appointment to the Board as The Group continued to show improved results when compared to Independent Non-executive Directors with effect from 1 June 2012. the same period last year. Below are the key highlights of the Group’s performance for the stated period: Governance Audited Audited The Group is cognisant of its fundamental role in our economy and Year Ended Year Ended therefore strong governance is integral to our long term success. 31 Dec 12 31 Dec 11 The Group has remained compliant with all requirements of the US$m US$m regulatory bodies in its business environment and continually assesses its governance structures to ensure its effectiveness. Financial Performance Profit before taxation 55.6 38.2 Dividend Profit after taxation 45.0 30.3 In line with the Group’s dividend growth policy, and the need to Total comprehensive income 50.1 33.1 uphold shareholder investment value, the Board has declared an Total assets 1 223.1 1 055.7 interim dividend of 0.132 cents per share. A final dividend of 0.172 GROUP REVIEW cents per share has been proposed, and this translates to a total Total equity and reserves 160.7 119.2 annual dividend of US$ 2 081 397, up 21.7% from the 2011 figure.