NICO HOLDINGS LIMITED ANNUAL REPORT 2009 contents mission, Vision And VALUes stAtement Mission, Vision and Values Statement 3 Five Year Highlights 4 Summarised List of Shareholders 6 Chairman’s Statement 8 Board of Directors and Secretary 10 Managing Director’s Report 12 Executive Management 15 Lilongwe City Mall 16 NICO Asset Managers Limited 18 MISSION STATEMENT NICO Insurance (Zambia) Limited 19 To create value for NIKO Insurance (Uganda) Limited 20 all stakeholders NIKO Insurance (Tanzania) Limited 21 VISION NICO General Insurance Company Limited 22 To be the leader 2 in financial services 3 NICO Life Insurance Company Limited 23 NICO Technologies Limited 24 OUR VALUES NBS Bank Limited 25 Integrity, care, ethical values, quality services, Corporate Governance and Code of Ethics 26 health and safety, Directors’ Report 29 transparency, accountability, corporate governance practices Board of Directors and Secretary 30 Statement of Directors’ Responsibilities 32 Certificate of the Actuary 33 NICO HOLDINGS LIMITED Independent Auditors’ Report 34 NICO HOLDINGS LIMITED Statements of Financial Position 35 T 2009 T 2009 R Statements of Comprehensive Income 36 R Statements of Changes In Equity 37 L REPO L REPO A A Statements of Cash Flows 40 ANNU ANNU Notes to the Consolidated and Separate Financial Statements 41 SHARE PRICE (Tambala) FIVE YEAR HIGHLIGHTS 1000 900 800 700 2005 2006 2007 2008 2009 600 Gross Income (MK million) 6,058 9,016 11,219 14,132 17,916 500 Profit Before Tax (MK million) 437 1,093 1,729 2,667 3,237 400 Earnings per Share (tambala) 30 74 129 175 192 300 Net Dividend Paid To Shareholders (MK million) 200 229 250 407 407 200 Net Dividend paid per share (tambala) * 19 22 24 39 39 100 Total Assets (MK million) 17,062 23,240 35,342 44,293 57,764 0 2005 2006 2007 2008 2009 Net Assets (MK million) 1,804 1,833 2,837 4,725 6,272 Share Price (tambala) 270 360 800 950 900 Net Asset Value Per Share (tambala) 173 176 272 453 601 Price To Book Value (times) 1.6 2.0 2.9 2.1 1.5 NET DIVIDEND PER EARNINGS PER SHARE SHARE Price Earnings Ratio (times) 9.0 4.9 6.2 5.4 4.7 (Tambala) (Tambala) 200 40 Market Capitalisation (MK million) 2,816 3,755 8,344 9,909 9,387 180 * Dividend paid out of the year’s profits 30 160 140 25 120 20 100 15 80 60 10 4 5 40 5 20 0 0 GROSS INCOME PROFIT BEFORE TAX 2005 2006 2007 2008 2009 2005 2006 2007 2008 2009 (Million Kwacha) (Million Kwacha) 20,000 3,200 3,000 18,000 2,800 16,000 2,600 2,400 14,000 2,200 TOTAL ASSETS 7,000 NET ASSETS 12,000 2,000 60,000 (Million Kwacha) (Million Kwacha) 1,800 6,000 10,000 1,600 50,000 1,400 8,000 5,000 1,200 1,000 40,000 6,000 4,000 800 4,000 600 30,000 NICO HOLDINGS LIMITED NICO HOLDINGS LIMITED 400 3,000 2,000 200 20,000 2,000 0 0 2005 2006 2007 2008 2009 2005 2006 2007 2008 2009 T 2009 10,000 T 2009 R 1,000 R 6,058 9,016 11,219 14,132 17,916 437 1,093 1,729 2,667 3,237 0 0 2005 2006 2007 2008 2009 2005 2006 2007 2008 2009 L REPO L REPO A 17,062 23,240 35,342 44,293 57,764 1,804 1,833 2,837 4,725 6,272 A ANNU ANNU 6 7 SUmmArised list of shAreholders GENERAL PUBLIC C/O NATIONAL P/B 945, MALAWI 22.89% INTERNATIONAL 1818 H STREET N.W. WASHINGTON UNITED 11.60% (Malawian & Foreign) BANK,FMS BLANTYRE FINANCE CORPORATION, 20433 DC OF AMERICA STATES (American) NICO EMPLOYEES TRUST, C/O NATIONAL P/B 945, MALAWI 1.10% (Malawian & Foreign) BANK,FMS BLANTYRE MILLENNIUM C/O NICO PO BOX 501 MALAWI 1.35% INVESTMENTS LIMITED HOLDINGS BLANTYRE MILLENNIUM C/O RACANE P O BOX 1524 MALAWI 10.0% (Malawian) LIMITED HOLDINGS LIMITED ASSOCIATES BLANTYRE (Malawian) SANTAM LIMITED, P O BOX 3881 TIGER VALLEY SOUTH 25.10% NICO HOLDINGS LIMITED (South African) 7536 AFRICA NICO HOLDINGS LIMITED AFRICAP LLC, 5847 SUITE 850 HOUSTON USA 27.91% (American) SAN FELIPE TEXAS 77057 T 2009 T 2009 R R 100.00% L REPO L REPO A A ANNU ANNU chAirmAN’S stAtement 2009 was a challenging year following the effects of the general world economic meltdown. As are part of the larger community, were also affected by the crisis as were our clients albeit to a different degree. Despite these challenges, we maintained depressed investment returns from the focus on our core businesses. In stock exchange and shortage of foreign particular, we paid special attention to exchange. However, despite these our strategic priorities of retaining our challenges, the overall performance for the existing business, gaining deeper market Group has been commendable. penetration for our products, creating new products and, developing new markets. In pursuit of our strategic priorities, George A. Jaffu we continued to grow our operating Chairman The result of these efforts is that Group infrastructure by developing new products revenues grew by 27% from MK14.1 billion and introducing new services. NBS Bank to MK17.9 billion. This has resulted in profit continued to expand their branch network before tax and transfer to policyholders’ by rolling out more branches. The Bank Just as the huge auction floors are at the heart of Malawi’s tobacco industry, so future benefits of MK5.2 billion, up from also broke new ground by being the first are NICO subsidiaries, NBS Bank and NICO General, key suppliers of specialist last year of MK4.3 billion. Profit before tax bank in Malawi to launch an International banking and insurance services to thousands of growers throughout the country grew by 19% to MK3.2 billion - from Credit Card. The insurance businesses MK2.6 billion on corresponding year. also introduced new ground breaking products. Another milestone in the Group This performance has been negatively was the acquisition of a significant equity Going forward, NICO’s future has never governance. The Board has active affected by several factors, which include stake in SFG Insurance Holdings (Private) looked so bright. The regional platform Committees to facilitate smooth conduct increased incidence of both fire and motor Limited of Zimbabwe. This acquisition that has been created will enable it to of board meetings. These committees claims for our general insurance business, makes NICO the only recognisable leverage on opportunities developing in ensure that matters for discussion are large pension and group life business insurance brand represented in five these markets and gives NICO a strong thoroughly scrutinised, well researched withdrawals by some of our large clients countries on the African continent. competitive advantage. and in line with Board mandates. In this This was the result of retrenchments, regard, I would like to thank the Board 8 Other pre-occupations during the Committees and indeed the entire Board 9 year included commencement of the for their guidance and support during development of what will be Malawi’s the year. I would also like to record my largest shopping Mall in Lilongwe. This gratitude to directors of all our Group is the Lilongwe City Mall, which is being companies for their invaluable contribution. developed by a consortium of investors led by NICO. The Mall is expected to open for In line with those same core values, business by November 2010. Corporate Social Responsibility remains a high priority for the Group. We participate In view of the fact that the economy in community life and are involved at is still recovering the effects of the various levels in all the markets in which economic meltdown, the stock exchange we operate. This is over and above our remained flat. Our share price held firm donations to deserving charities. throughout the year, which we take as a sign of confidence in the Group. This In conclusion, I would like to thank is an encouragement to us to continue Management and staff at every level focussing on our strategic priorities. for their hard work, commitment and NICO HOLDINGS LIMITED dedication to the task in hand during a very NICO HOLDINGS LIMITED In line with the performance and result, difficult year. the Board of Directors is pleased to recommend a final dividend of 24 tambala T 2009 T 2009 R per share. This brings the total dividend for R the year to 39 tambala per share. L REPO The Group’s core values are our unwritten L REPO A A laws of doing business. In this regard, George Jaffu we maintain a high level of corporate Chairman ANNU ANNU Betty Kacelenga Company Secretary Betty Kacelenga was Group H R Executive and Company Secretary throughout 2009. Late in the year she was diagnosed with cancer. After suffering very bravely she passed away at Mwaiwathu Hospital, Blantyre on 30 March 2010. Betty was not only a much loved colleague at work, respected both as a total professional and a very likeable and positive thinking woman. She was also a loving wife to Evans and a very caring mother to her three children, Ritchie, Thoko 10 and Shamiso. 11 Betty was only 49 years old when she died and had been an invaluable member of senior management at NICO Holdings for nine years. She will be missed greatly by all of us at NICO who had the pleasure of working with her. NICO HOLDINGS LIMITED NICO HOLDINGS LIMITED T 2009 T 2009 R R L REPO L REPO A A George A.