Annual Reports 2014

A Pan-African Financial Services Group - Building Partnerships for Business Success.

Kenya • Uganda • South Sudan • Rwanda • DR Congo • Tanzania

2014 Annual Report &Financial Statements

UAP HOLDINGS LIMITED

3Kenya • Uganda • South Sudan • Rwanda • DR Congo • Tanzania

UAP HOLDINGS LIMITED Annual Report & Financial Statements 2014

Our focus lies in building solid

foundations for solid partnerships

4 Kenya • Uganda • South Sudan • Rwanda • DR Congo • Tanzania


Contents

Business Review

Vision, Mission & ValuesBoard MembersSubsidiary DirectorsUAP Executive ManagementChairman’s StatementGroup Managing Director’s ReportSustainability and Corporate SocialResponsibility ReportFive Year Financial Highlights

05 06 11 14 20 23 29

33

Corporate Governance

Financial Statements

Corporate Governance StatementDirectors’ ReportStatement of Directors’ ResponsibilityReport of the Independent Auditor

35 43 44 45

Consolidated Statement of Profit or LossConsolidated Statement of Other Comprehensive IncomeConsolidated Statement of Financial PositionCompany Statement of Financial PositionConsolidated Statement of Changes in EquityCompany Statement of Changes in EquityConsolidated Statement of Cash FlowsNotes to Financial statements

46

47

48 49 50 52

53 54

20Chairman’s Statement

23Group Managing Director's Report

46Financial Statements

29Sustainability and Corporate Social Responsibility Report



Who we areUAP Group (UAP) is a Pan-African Financial Services Group with interests in Insurance, Investment Management, Property Development & Investments, Securities Brokerage and Financial Advisory. Currently, UAP Group has 12 businesses operating in Kenya, Uganda, South Sudan, Rwanda, DR Congo and Tanzania.

90+YEARSAND STILL COUNTING

Where we are goingTo be Africa’s revolutionary

financial services group.

What we focus onTo enhance quality of life by delivering peace

of mind and financial freedom through an exceptionally motivated team that delivers what customers want, when and where they want it.

What we care about

• We build life long relationships• We do what we say and say what we do

• We are a pleasure to deal with• We are passionate about our work

- and it shows!


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James Muguiyi Non-Executive Director (71)Mr. Muguiyi is a Non-Executive Director at UAPHL, having previously served as Group Managing Director. During this time he has overseen the growth of the Group’s business in Kenya and expansion into Uganda in 2004 and South Sudan in 2006. He has presided over the group restructuring in 2008 and the demerger of the Life Insurance Business from General Insurance Business in Kenya.

Between 1988 and 2001, he was the Deputy Managing Director. During this time, he oversaw the merger of Provincial Insurance with Union Insurance to form UAP Provisional Insurance in 1994. Mr. Muguiyi is a director of several other companies and is Chairman of Centum Investment Company Limited, a company listed on the Nairobi Securities Exchange. He is a Fellow of the Institute of Certified Public Accountants of Kenya (FCPA (K)) where he was at one time the Chairman. He is also a Certified Company Secretary (CPS (K)) and a Chartered Management Accountant (ACMA).

Profiles of Board of Directors of UAP Group

Dr. Joseph Barrage Wanjui, CBS Chairman (78)Dr. Wanjui, the Chairman of the Board has a long and illustrious career in the Kenyan corporate scene, the most prominent being the Chief Executive of East Africa Industries (which later became Unilever). He is a graduate of Ohio Wesleyan University, (BA Physics and Mathematics) and Columbia University, (MSC Engineering).

Dr. Wanjui was the Chancellor of the University of Nairobi and was previously the Chairman of CfC Stanbic Bank Limited. He is also chairman and Board member of a number of other Kenyan and international organizations. Dr. Wanjui has been a director of the Company since 1986 and the Chairman of the Board since 1998. In recognition of his exemplary contributions to positive change in society, he received the Chief of the Order of the Burning Spear (CBS) of the Republic of Kenya award.

Dominic Kiarie Group Managing Director (44)Mr. Kiarie is the Group Managing Director of UAP Holdings Limited. He joined the Group on 1st August 2011 having worked with the British-American Group for the past 7 years as the founding Chief Executive Officer & Managing Director of British-American Asset Managers. Prior to that, he worked in the Investment Banking and Investment Management fields in United Kingdom, South Africa and Kenya, and has served in Executive Directorship roles in the Financial Services Sector for over 8 years.

Mr. Kiarie holds a Masters of Philosophy (M. Phil) Degree in Finance from the University of Cambridge, United Kingdom, a Bachelor of Science Degree in Actuarial Science from The Sir John Cass Business School, City University, London, a Diploma in Actuarial Techniques and a Certificate in Finance and Investments both from the Institute of Actuaries, London. He has also attended numerous courses locally and abroad on leadership, strategy, corporate finance and investments, amongst others.

Lotfi Baccouche Independent Non-Executive Director (52)Mr. Baccouche is a Senior Partner – Insurance Markets at Parker Fitzgerald, UK. He is a seasoned insurance executive and consultant with over 17 years of in depth industry experience garnered from Bermuda, Europe, USA, Australia, Tunisia and the United Kingdom. Mr. Baccouche has worked with both the European and United Kingdom insurance regulators and has advised senior management teams and the boards of directors at major insurance companies in Europe and United Kingdom on implementation of key strategies for multinational companies.

He holds an MSc in Engineering from Cornell University, New York, USA and a BSc in Industrial & Operations Engineering from University of Michigan, Michigan, USA.



Susan Nkirote Omanga Independent Non-Executive Director (55)Susan is the CEO and founder of Exclamation Marketing Ltd. She previously served in senior marketing positions at Colgate Palmolive, Boots Kenya, Barclays Bank, and Standard Chartered. From 2004 -2012 she served as a non-executive Director in the Group Board of KCB where she was also Chairman of KCB Foundation, Director S & L Mortgages for 2 years and Director KCB Uganda for 4 years.

Susan sits on the Board of Longhorn Publishers and Kenya Tea Packers Limited (KETEPA). She is also an advisory board Member at the University of Nairobi’s Green Horn Mentorship programme, a member of the Marketing Society of Kenya, the Public Relations Society of Kenya (PRSK) and the International Advertising Association (IAA). Susan holds an Associate of Applied Science Degree in Business Management from North West Community College, Powel, Wyoming and a Bachelor of Science Degree in Business Management with a Minor in Advertising from Rocky Mountain College in Billings Montana.

Profiles of Board of Directors of UAP Group (continued)

Jonas Armtoft Non-Executive Director (52)Jonas was appointed to the Board in March 2013 as an additional director. Jonas is a senior investment manager at Swedfund International AB and is currently heading the Swedfund Regional Office in Nairobi, Kenya. Jonas has a legal background and holds a Masters of Laws degree (LLM) from the University of Lund and a Law degree from the Queen Mary and Westfield College in London. Jonas has been working with investments and project finance since 1994 primarily in Kenya and Ethiopia but also in Latin America and Eastern Europe.

Susan Wakhungu-Githuku Independent Non-Executive Director (55)Susan, a former Fortune 100 Corporate Executive turned entrepreneur, is the Founder and CEO of Human Performance Dynamics Africa, a boutique Organizational Development & Human Resources consulting firm based in Nairobi, Kenya.

Before establishing HPD Africa, Susan worked at the Coca-Cola Company and was until December 2008 the Eurasia & Africa Group Director for Coca-Cola University. Prior to this role, she served as the Coca-Cola Africa Group HR Director based in London and Johannesburg.

Susan spent 10 years working at a senior level in international nongovernmental agencies including CARE, AERC and USAID and is knowledgeable in this sector. She is also the Founder and Publisher of Footprints Press Limited, an independent Kenyan based publishing house specializing in photographic coffee table books on Africa. She holds a Master’s Degree in Development Economics from Strathclyde University, Glasgow, Scotland and Bachelor’s Degrees in Economics and Psychology from St. Lawrence University, New York, USA. She serves on the Board of Diageo - East Africa Breweries and previously served on the Board of Kenya Women’s Finance Trust and Zawadi Educational Trust. Susan is the Chairman of the Remuneration and Human Resource Committee.




Peter Gichuru Njoka Non-Executive Director (43)Mr. Njoka was appointed to the Board on 12 April, 2012 and is Managing Director at The Abraaj Group. He has 16 years’ private equity and corporate finance experience in East Africa. Since joining AKML in 1999, he has been responsible for recommending investments and working with a number of companies, across various sectors, in which Aureos Africa Fund (AAF), Aureos East Africa Fund (AEAF) and ACACIA Fund have participated. He holds a B.Sc. in Mathematics and Physics from the University of Nairobi. Mr. Njoka is also Chairman of Deacons Kenya Ltd, a Director of Athi River Steel Plant Ltd, Seven Seas Technologies Ltd and Micro Africa Ltd, as well as other private companies.

Joyce Anne Wainaina Non-Executive Director (Alternate for Dr. J.B. Wanjui) (48)Joyce-Ann Wainaina is the Citi Country Officer (CCO) for Citibank Zambia, a position she was appointed to in 2011. At Citibank Zambia, Joyce-Ann is responsible for Citi’s business, heads the Management Committees and is an executive member of the Board of Directors. Prior to this role, Joyce-Ann was Citi Transaction Services head for East Africa covering Kenya, Uganda, Tanzania and Zambia, responsible for Treasury and Trade solutions in the region. She previously headed the corporate bank in Kenya.

She has had an extensive career at Citibank in Kenya, South Africa and Zambia covering corporate banking, product management, operations and controls. She joined Citibank in 1990 as an executive trainee / relationship manager. Joyce-Ann serves on several boards including the Junior Achievement Zambia and is the Vice Chairperson for the Bankers Association of Zambia (BAZ). She is also a founding trustee of the J. B Wanjui Education Trust Fund and a Mentor with the Global Give Back Circle (GGBC). She was a former Chairperson of Junior Achievement Kenya, Vice President of the America Chamber of Commerce Kenya and winner of the prestigious Company of the Year Awards 2006, “Manager of the Year” by the Kenya Institute of Management. Joyce-Ann holds B.S Finance from Duquesne University Pittsburgh, USA and M.S Financial Economics, University of London (SOAS).

Davinder Sikand Non-Executive Director (Alternate for Peter Gichuru Njoka) (56)Mr. Sikand is a Senior Partner –Africa with Aureos Capital. He is also managing US$ 40 million Aureos East Africa Fund, fully invested with 14 investments across East Africa and now in exit mode. Mr. Sikand previously managed the Acacia Fund, a US$20 million fund for SME’s in Kenya. Mr. Sikand has been with Aureos since its inception in 2001 and has 24 years’ experience in private equity and investment banking gained in the United States, Europe and East Africa. He holds an MBA from Kellogg School of Business, Northwestern University, USA and qualified with Association of Chartered Certified Accountants (UK).



Skander Oueslati Non-Executive Director (42)Mr. Oueslati was appointed to the Board on 7th May, 2012 and is a Senior Partner with AfricInvest-Tuninvest Group, a Pan-African private equity fund manager, with a primary responsibility for East Africa. He joined AfricInvest in 2008. Prior to that, he was head of Structured Finance at BMCE International in London, which he joined after spending eight years working for the International Finance Corporation (IFC) in Washington, DC, USA. During his time at the IFC, he focused on investments in Telecoms and Infrastructure and executed IFC’s first CFA denominated bond issue in West Africa. Mr. Oueslati holds a Master’s Degree from Massachusetts Institute of Technology (MIT) based in Cambridge, USA and Engineering Degrees from France’s Ecole Polytechnique and Ecole Nationale des Ponts et Chaussees.


George Odo Non-Executive Director (Alternate for Skander Oueslati) (48)George Odo is the Managing Director of AfricInvest in East Africa and the alternate director to Skander Oueslati. He was appointed to the Board in May 2012 and carries over 20 years’ experience in the fields of financial services, private equity, venture capital, agri-business and small and medium enterprise (SME) development. He serves on several Boards across various sectors including Brookhouse International School Limited Kenya, Alios Leasing Finance Zambia, Abacus Parenteral Drugs Limited Uganda, Kiboko Enterprise Limited Uganda, EFC MFI Tanzania, and the Danish Refugee Council for the Horn of Africa. George Odo holds an executive MBA from USIU/Columbia University, and a Bachelor of Commerce degree from Rani Durgavati in India. He is a Certified Public Accountant of Kenya and holds a Partnership Broker Accreditation from the United Kingdom.

James Wambugu Executive Director (48)James Wambugu is the Managing Director of UAP Insurance Kenya and an Executive Director of UAP Holdings. Mr. Wambugu joined UAP in July 2003 and has been involved in the development of the Group’s risk and quality management systems, business expansion and strategy development. He previously worked for PricewaterhouseCoopers in Kenya and the UK, Lonrho Africa and African Lakes Corporation in the fields of audit, transaction structuring and support and risk management.

Mr. Wambugu has extensive experience across many countries in Africa. He holds an MBA and Bachelor of Commerce degrees from the University of Nairobi and a diploma in Advanced Management Programme (AMP) from IESE Business School, Barcelona and Strathmore Business School, Nairobi. He is a Qualified Risk Manager (MIRM) and a Certified Public Accountant of Kenya (CPA (K)).



Mr. James WambuguKenyan Managing Director

Hon. Ngenye KariukiKenyan

Prof. J.H. Kimura Kenyan

Ms. Betty-Ann Mboche Kenyan

UAP Insurance Kenya

UAP Subsidiaries Directors’

Mr. Jackson Theuri Kenyan

Mr. Joseph Mucheru Kenyan

Ms. Mary Ann Musangi Kenyan

UAP Investments Kenya

Mr. Joseph Lesiew Kenyan

Mr. Faisal JiwaKenyan

Mrs. HannahGitonga-Mwangi Kenyan

Mr. Kamau Kuria Kenyan Board Chairman

Prof. Patrick Weke Kenyan

UAP Life Assurance Kenya



Prof. Scopas Dima Sudanese

Mr. Wainaina Kenyanjui Kenyan

Mr. David Kuria KenyanManaging Director

Mr. Philip Coulson Kenyan

Mr. Kiriga Kunyiha Kenyan

UAP Insurance South Sudan

UAP Subsidiaries Directors’ (Continued)

UAP RDC

Ms. Rosemary Wanjiku MungaiKenyanManaging Director

Mr. Kamau Kuria Kenyan

Dr. William KalemaUgandanChairman

Dr. Sam Sejjaaka Ugandan

Mr. Faisal Jiwa Kenyan


UAP Life Assurance Uganda

Anthony GithukaManaging Director



UAP Subsidiaries Directors’ (Continued)

Ms. Zipporah MungaiKenyan


Mr. Faisal Jiwa Kenyan

Dr. Sam Sejjaaka Ugandan

UAP Financial Services Uganda

Ms. Zipporah MungaiKenyanManaging Director

Dr. George Mutema Ugandan

Mr. Andrew Kasirye Ugandan

Prof. Gordon WavamunnoUgandanChairman

UAP Insurance Uganda

UAP Insurance Rwanda

Mr. Richard Mugisha Rwandese Deputy Chairman

Ms. Peace Masozera Rwandese

UAP Insurance Tanzania

Mr. Moses Stewart Kaluwa Tanzanian

Mr. Joseph Werema Tanzanian

Ms. Perece Kirigiti Tanzanian



UAP Holdings

UAP Executive Management

Dominic KiarieGroup Managing Director

Amy MokayaGroup Actuarial Manager

Eric KisakaGroup Risk and Compliance Manager

Jackson TheuriGroup Chief Financial Officer

Sophia MuoniGroup Property Manager

Nkirote Mworia Group Company Secretary & General Counsel

Catherine Obwino Group Marketing & Communications Manager

Winnie Pertet Group Human Resource Manager

Thomas Kong’ong’oGroup Chief Information Officer

Simon Muigai Group Facilities Manager

Gerishon Mwangi Group Internal Audit Manager

UAP Investments

KenyaPeter Ng’eno General Manager

Joyce Gitau Head of Business Development

Felistus Karanja Manager, Fund Services

James MosePortfolio Manager

Andrew Gachanja Portfolio Manager



UAP InsuranceKenya

Agnes Mutahi Finance Manager

Esther Kiome Claims Manager

Gideon GithaigaGeneral Manager, Consumer Lines and Mass Distribution

Rose WahomeHuman Resource Manager

Isaac NzyokaGeneral Manager, Medical Business & Customer Service

James WambuguManaging Director

Robert Mbugua Corporate Business Manager

Mwanzo MosetiAg. Principal Officer and CEO

UAP Life Assurance

Kenya

Evans Ndirangu Ag. Finance Manager

Evans NyagahGeneral Manager, Corporate Business

Wanja Kung’uHuman Resource Manager

Ben Ireri General Manager, Retail Business

UAP Executive Management (Continued)



UAP Insurance Uganda

UAP Insurance Tanzania

Nick Itunga Managing Director

Samson Mwangi Finance Manager

Grace Tesha Human Resource Manager

Zipporah Mungai Managing Director

Angella Tusaba Country Finance Manager

Ally Athumani Underwriting Manager

Michael Emmanuel Claims Manager

Simon WaibaleCountry ICT Manager

Paul Nagemi Assistant GM, Medical Insurance

Raymond Komanga Business Development Manager

Itimu Kiruti General Manager, Operations




UAP Life Assurance Uganda


Anthony GithukaManaging Director

Musoke Allan KyambaddeChief Accountant

Joseph Kibuuka Sales Manager - Individual Life

Allan Lwanga Sales Manager Corporate Business

Patrick Abaalo Senior Underwriter

UAP RDC

Kally Kazedi KalalaFinance and Administration Officer

Rosemary Wanjiku Mungai Managing Director



Claudine Mukakibibi Customer Service and Complaints Handling Manager

Annie NibishakaHead of Marketing and Distribution

Jackson KoomeHead of Medical Business

Pauline Wanjohi CEO

Kris Mbaya Finance Manager

Antony MwangiHead of Marketing & Distribution

UAP Insurance South Sudan

UAP InsuranceRwanda

David Kuria Managing Director

Patrick Waweru Business Development Manager

Rose AtemoClaims Manager

Kimanzi Kyalo Underwriting & Reinsurance Manager



The strategic involvement in UAP by Old Mutual will add significant value to our staff, customers and

shareholders.

Dr. Joseph B. Wanjui CBS - Chairman



Chairman's Statement

IntroductionI am pleased to present to you our 2014 Annual Report and Financial Statements. 2014 was another successful year with our gross premium revenues increasing by 16% to Kshs 14.2 billion. Contribution from our regional businesses continues to grow in line with our strategy to diversify our earnings and reduce concentration risk on the Kenyan Market. In 2014, our business outside Kenya contributed 36% of our total income compared to 28% in 2013.

I am pleased with the progress that are making towards achieving our vision of building a pan-African Financial Services Group. The recent acquisition of a 23% stake in the company by Old Mutual gives us an opportunity to accelerate this vision through wider availability of UAP services in more countries, enhanced technical and financial resources and increase in UAP product offering to include banking services. Old Mutual has entered into an agreement to increase its strategic investment in UAP to 60% through planned acquisition of shares that are currently held by 3 Private Equity Investors, subject to regulatory approvals. I will discuss the rationale for this transaction in further detail in this report.

HighlightsI would like to reflect on the key aspects that shaped our 2014 financial performance and provide an overview of the overall strategic direction that the group will take going forward.

Global view of economic and business environment

Uneven global economic recovery as the shift in world economic power continuesIn 2014, mature economies continued to recover from the financial and economic crisis of 2008-2009. However, this recovery remained uneven with a number of setbacks. The US exceeded growth expectations while most other economies grew at a slower rate than previously assumed. Lower oil prices boosted the global economic growth but the positive effect of lower oil prices was off-set by stagnation in the Euro area and Japan, geopolitical events such as the emergence of Islamic state and other security threats across the world, increased market volatility and lower investments.The global economy grew by 3.3%. Emerging Markets and Developing Economies posted a higher growth rate (4.4%) than Advanced Economies which grew at 1.8%. This trend is expected to continue into the future with China expected to replace the US as the world largest economy (by purchasing power parity) in 2015. On current trends, the aggregate purchasing power of the ‘E7’ emerging economies – Brazil, China, India, Indonesia, Mexico, Russia and Turkey – will overtake that of the G7 by 2030.

Sub-Saharan Africa continues to post accelerated growthSub-Saharan Africa’s growth improved to 4.5% in 2014 compared to 4.2% in 2013. This Improvement was as a result of infrastructure investment and increased agriculture production. Excluding South Africa, the average growth for the rest of the region was 5.6%. This is a faster pace than other developing regions, excluding China.Despite headwinds, growth is projected to pick up to 5.1% by 2017, lifted by infrastructure investment, increased agriculture production, and buoyant services. The positive outlook is subject to downside risks arising from a renewed spread of the Ebola epidemic, violent insurgencies, lower commodity prices (particularly oil), and volatile global financial conditions.

The GDP Growth in the Greater Eastern and Central African countries that we operate in was relatively stable with Kenya (5.5%), Uganda (3.1%), South Sudan (13.1%), Rwanda (5.9%), DRC (9.5%) and Tanzania (6.8%) all recording GDP growth.

This growth presents a significant opportunity for continued expansion of our businesses.

Overall performanceThe Group recorded a 16% growth in total insurance premium from Kshs 12.7 billion to Shs 14.8 billion. Total income increased by 31% from Kshs 12.7 billion to Shs 16.7 billion. Profit before tax increased by 4% from Kshs 2.2 billion to Kshs 2.3 billion. We continued to diversify our business in line with our strategy which resulted in contribution from our Life Assurance, Property and Asset Management operations contributing 28% of our income up from 22% in 2013.

The Group’s total comprehensive income was Kshs 2.8 billion excluding gains of Shs 1.9 billion that arose from disposal of shares held by our non-life business.

The Group’s net assets increased from Kshs 14.7 billion to Kshs 17.1 billion and our total assets increased from Kshs 33.1 billion to Kshs 42.1 billion as a result of the good financial performance during the year.

Shareholding changesTwo of our anchor shareholders, Centum Investment Company and Dr Chris Kirubi sold their combined 23.3% stake in the company to Old Mutual in January 2015. This sale was to enable Chris and Centum obtain funds for significant large scale projects that they are currently undertaking. Old Mutual has wishes to make a strategic investment in UAP and has subsequent to the transaction entered into an agreement with the 3 Private Equity funds which hold 37.3% of UAP Shares (Aureos, Africinvest and Swedfund) to purchase their shares which will increase Old Mutual’s share holding to 60%.



Your board of directors is of the view that this strategic investment by Old Mutual will add significant value to UAP staff, customers and shareholders in the following areas:

• Our staff will now have opportunities to benefit from world class training offered by Old Mutual and also secondment opportunities to learn new skills in Old Mutual Operations around the world;

• Our customers will benefit from increased technical capabilities as UAP will be able to draw on greater technical skills and experiences from other Old Mutual markets. Our customers will also benefit from a wider product offering (including banking solutions from Old Mutual investee companies) and a wider distribution network that will bring our services closer to our customers; and

• Our shareholders will benefit from co-investing with a partner who has significant technical capability and financial resources to accelerate investments in new innovations, technology platforms and accelerated business expansion.

I would like to take this opportunity to thank Chris and Centum for their significant contribution to the growth of UAP from a Kenya based Insurance Company to a regional Financial Services Group.

I am confident that our partnership with Old Mutual puts UAP in a very strong position to take advantage of growth opportunities in African Markets whilst providing greater capabilities to respond to emerging competitive challenges.

Governance and board performanceYour board has continued to discharge its duties diligently with the support of the company’s subsidiary company boards. All the boards effectively carried out their board work plan for 2014 in accordance with the board charter and work plan for each board.

During the year, Sir Gordon Wavamunno retired from his position as a UAP Holdings Limited board member to enable him focus on his role as the Chairman of UAP Insurance Uganda. Our businesses in Uganda have grown significantly and we expect that closer focus by Gordon will lead our business there to greater heights. Gordon was replaced by James Wambugu, the Managing Director for UAP Insurance Kenya, on the Group Board. James has significant experience in risk management and business strategy areas and his addition to the group board will add significant value to our various businesses.

I take this opportunity to thank Gordon for his significant contribution and formally welcome James to the Group Board.

All the new directors in the Group went through board induction programme designed to not only introduce them to UAP Group, but also provide them with necessary tools to better execute their corporate governance mandate. More details on the operations of the board is provided in the statement on corporate governance on page 35

Results and dividendsThe Group’s profit after tax and non-controlling interest is Kshs 1.7 billion. The board recommends a final dividend of Kshs 1.70 per share (2013: Kshs 1.7per share) amounting to Kshs 359 million (2012: Kshs 359 million). This is based on your board’s assessment that we need to continue providing a cash return to our shareholders while retaining enough resources in the business to fund expected growth in order to maximize both present and future returns to our shareholders. Therefore, Kshs 1.3 billion will be retained in the business for this purpose.

Future prospects and strategyOur strategic partnership with Old Mutual provides significant opportunities that were previously not available to UAP. In particular, this partnership will enable us increase the range and coverage of our bancassurance products and services and also, following regulatory approvals cross sell our products to existing Old Mutual insurance, investment management and banking customers.

In order to fully take advantage of these opportunities, we will review our business model subsequent to regulatory approval of the shareholder transactions and re-align our business to fully take advantage of these opportunities. This will be a priority project for UAP.

We will also review our employee management processes to create additional global mobility and career development opportunities for our employees. This will enable our employees benefit from significant skills transfer and training opportunities available at Old Mutual based on Old Mutual experience from their operations in markets outside Africa. This is a big step towards becoming a world class financial services operator.

Lastly, we will jointly review our technology platforms and adopt the best in class platforms to enable UAP offer world class customer experience and create an even greater opportunity for innovative customer solutions.

Appreciation I would like to thank our customers for giving us an opportunity to serve them, our shareholders for their continued support, my fellow directors for their wise counsel and the Management and staff for their hard work that is taking the UAP Group forward.

Dr. JB Wanjui CBS

Chairman27 March 2015

Chairman's Statement (Continued)



The Group recorded a 31% growth in total revenues on the back of strong growth in all our

business units.

Dominic Kiarie - Group Managing Director



Group Managing Director’s Report

It is my pleasure to present to you a review of the UAP Group’s performance and operations for the year ended 31 December 2014. 2014 was another monumental year in our Group’s history:

• The Group’s total revenues increased by 31% to exceed Kshs 15 billion for the first time in the Group’s history;• Contribution from our businesses outside Kenya increased from 28% to 36% of total revenues;• Our Tanzania business which was acquired in 2013 broke even; and • Our Life Assurance business in Kenya’s market share improved from position 8 to position 7.

Financial PerformanceThe group recorded a 31% growth in total revenues on the back of strong growth in all our business units. In particular:• Gross insurance premium revenue was up 16% to Kshs 14.8 billion from Kshs 12.7 billion. • Total income increased by 31% to Kshs 16.7 billion from Kshs 12.7 billion.• Profit before tax increased by 4% to Kshs 2.3 billion from Kshs 2.2 billion. This increase excludes Kshs 1.9 billion realised from sale of equity investments held by our general insurance businesses• Total assets were up 27% to Kshs 42.1 billion from Kshs 33.1 billion.

During the last 5 years, the Group has achieved a 26% Compounded Annual Growth Rate (CAGR) in gross insurance premium revenues, while total income grew at 31% CAGR over the same period. The growth in the Group’s revenues has been driven by focussed execution of growth strategies in our core insurance operations supported by business diversification to new geographies and new business units such as properties and investment management. I will detail these initiatives further in this report.

Outlined below are the key performance highlights:

Business Unit Performance Total Total Compre Compre hensive hensive Revenues Revenues Income Income 2014 2013 Growth PBT 2014 PBT 2013 Growth 2014 2013 Growth (Kshs’M) (Kshs’M) % (Kshs’M) (Kshs’M) % (Kshs’M) (Kshs’M) %General Insurance 11,948 9,899 21% 1,449 1,441 1% 2,305 2,856 -19%Life Assurance 2,965 2,173 36% (275) 315 -187% (313) 360 -187%Property 1,177 573 105% 768 486 58% 482 349 38%Investment Management/other 598 96 523% 354 (30) 1280% 322 (23) 1500%Total 16,688 12,741 31% 2,296 2,212 4% 2,796 3,542 -21%

Performance Highlights by Geography

Total Total Compre Compre hensive hensive Revenues Revenues Income Income 2014 2013 Growth PBT 2014 PBT 2013 Growth 2014 2013 Growth (Kshs’M) (Kshs’M) % (Kshs’M) (Kshs’M) % (Kshs’M) (Kshs’M) %Kenya 10,751 9,167 17% 1,266 1,559 -19% 2,122 2,983 -29%Uganda 3,369 2,209 53% 710 637 11% 295 542 -46%South Sudan 1,538 996 54% 487 72 576% 525 66 695%Tanzania 775 299 159% 11 33 -67% 32 40 -20%Rwanda 255 70 264% (178) (89) -100% (178) (89) -100%Total 16,688 12,741 31% 2,296 2,212 4% 2,796 3,542 -21%



Group Managing Director’s Report (Continued)

* Total comprehensive income excludes Kshs 1.9 billion gains realised on sale of equity investments held in our general insurance portfolios which were transferred directly to retained earnings in accordance with the Group’s accounting policy.

Update on Strategy Implementation

Business Growth and Expansion Initiatives

During the year, we focussed on consolidating our presence in the countries where we currently have operations and therefore did not enter new markets. We view this consolidation as an important step in positioning our business for the next growth phase. We achieved the following key milestones during the year:

• Full integration of our Tanzania business which was acquired

in 2013 to UAP’s ICT systems. This integration improved the business monitoring and control activities and culminated in the first full year break-even of our Tanzania business;

• Launch of Collective Investment Schemes (CIS) and structured investment products by our Investment Management Business in Kenya following approval by the Capital Markets Authority (CMA);

• Demerger of the Life Assurance operations in Uganda from UAP Insurance Uganda to a new subsidiary, UAP Life

Assurance Uganda. This demerger will enable a dedicated management team and Board of Directors in our Uganda business focus on growing our Life business to market leadership position;

• Commencement of Life Assurance operations in South Sudan as part of our Composite Insurance Business in that market.

All our underlying business units in general insurance, life assurance, property and investment management business units posted strong growth. Further details on each of these business units are set out in the segmental analysis section of my report.

Customer Experience Initiatives

We continue to focus on initiatives aimed at continuously improving our customer experience in line with the UAP mission of delivering peace of mind and financial freedom to our customers. During the year, we implemented the following key initiatives aimed at improving customer experience:

• We enhanced our web capability through the launch of an enhanced UAP website with not only e-Commerce capability, but also other customer ‘self-service’ options including enabling our customers to track the progress of their claims among other capabilities. We believe that

this enhanced website will improve the level of customer convenience and availability of our solutions to our customers across the region;

• We commenced the implementation of a Customer Service Index for all UAP business Units across all territories. This index will supplement the customer experience surveys that we carry out in our various business units enable us track our customer experience on a more real-time basis;

• We improved the functionality of our Customer Relationship Management (CRM) technology to make it easier for our staff and financial advisers to engage with our customers;

• We invested in a world class Investment Management System for our Investment Management business, UAP Investments. This system has unique capabilities such as e-statement generation which will improve our engagement with our customers.

Human Capital

We recognise that as a service business, the quality and commitment of UAP staff is paramount to providing relevant and exceptional service to our customers. We also recognise the importance of ensuring that the interests of our employees, shareholders and other stakeholders are properly aligned. With this in mind, the UAP Group Board recognised that in order to sustain a fast growing business, we need to have in place a robust leadership pipeline. Towards this, we achieved the following key initiatives in 2014:

i) Launch of a Graduate Development Programme (GDP) in order to create a pool of talent to support the growth of the business. The GDP Programme has been rolled out in all the 6 countries that we are currently operating in.

ii) Development of a Leadership training focussed on the business leaders for all UAP businesses focussing on key business leadership areas such as financial management and people management.

We also recruited additional management staff to strengthen key positions at both the Group and subsidiary company level, taking into account the increased business complexity.

Systems and Process Improvements

We continue to review regularly our internal business processes so as to run an efficient and effective business. Key areas of focus in 2014 were the implementation of our core systems in new markets (Tanzania and Rwanda), the implementation of a new system for pension business and the enhancement of our core Insurance and Financial Systems to improve processing efficiency. We also enhanced our support infrastructure to improve regional connectivity and processing speeds.




Segmental Performance

General Insurance

We continue to operate general (i.e. non-life) insurance business in Kenya, Uganda, South Sudan, Rwanda and Tanzania. Our General Insurance business unit, which also includes Medical Insurance business, accounts for 72% (2013: 78%) of our total income. UAP Insurance Kenya accounts for 59% (2013: 67%) of our general insurance gross insurance premium. Our General Insurance business grew by 12% in 2014 and has grown by a Compounded Annual Growth Rate (CAGR) of 24% in the last 5 years as set out below:

During the year, we focussed on the integration and turn-around of our newly acquired business in Tanzania, implementation of the Group ICT platforms in Tanzania and Rwanda and the enhancement of management teams across the region.

The key performance highlights of our General Insurance business are set out below:

Gross Insurance Premium Revenue Underwriting Profit

2014 2013 % 2014 2013 %General insurance (Kshs’M) (Kshs’M) Growth (Kshs’M) (Kshs’M) GrowthUAP Insurance Kenya 7,533 7,686 -2% 303 682 -56%UAP Insurance Uganda 2,438 1,895 29% 148 119 24%UAP Insurance South Sudan 1,183 1,009 17% 108 14 671%UAP Insurance Rwanda 359 138 160% (217) (142) -53%UAP Insurance Tanzania 1,202 591 103% (20) 20 -200%Total general insurance 12,715 11,318 12% 322 693 -54%

Notes: - Tanzania business results for 2013 were for 8 months following acquisition by UAP.

Life Insurance

Life Insurance business is currently carried out in Kenya by UAP Life Assurance Kenya, in Uganda through UAP Life Assurance Uganda and in South Sudan through UAP Insurance South Sudan. In 2014, we concluded the demerger of our Life Assurance business in Uganda from UAP Insurance Uganda. Our Life Assurance business premiums grew by 49% with the individual life business recording a 64% growth compared to 59% for corporate business. The higher growth in Life Assurance business when compared with General Insurance is in line with our business diversification strategy.

GENERAL INSURANCE PREMIUMS (KSHS M)

General Insurance Premiums (Kshs M)

24% CAGR

5000

10,000

1,5000

2010 2011 2012 2013 2014

0

5,3936,617

8,139

11,38812,715




LIFE ASSURANCE PREMIUMS

Life Assurance Premiums (Kshs M)

49% CAGR

500

1,000

1,500

2,000

2,500

2010 2011 2012 2013 2014

0

425

634916

1,419

2,117

Our Life Assurance business has grown by a CAGR of 49% in the last 5 years as shown below:

Key achievements of the Life Assurance business in 2014 include the successful completion of the demerger process in Uganda and successful strengthening of our management teams across the region through the recruitment of highly talented teams. We expect this investment to contribute to significant business growth in the future.

Outlined below is the performance of the life insurance business:

Gross Premium Revenue Profit before tax

2014 2013 % 2014 2013 %Life Assurance (Kshs’M) (Kshs’M) Growth (Kshs’M) (Kshs’M) GrowthUAP Life Kenya 1,706 1,171 46% (228) 329 -169%UAP Life Uganda 331 178 86% (28) (15) -87%UAP Insurance South Sudan 80 70 14% (19) - -Total Life Assurance 2,117 1,419 49% (275) 314 -188%

The Life Assurance business posted a loss in 2014 due to high increase in actuarial reserves caused by significant growth in new individual life and annuity businesses. However, the value of in-force business increased by over Kshs 100 million which indicates that the reserves increases will result in increases in future profitability.

Investment ManagementInvestment Management business is carried out through UAP Investments in Kenya and UAP Financial Services in Uganda. UAP Investments Kenya commenced operations in 2013 and obtained CIS fund management licenses in 2014. In addition to managing UAP Group investment portfolios to enhance the returns, our Investment Management businesses also provide investment management and advisory services to third parties. In the short period since the launch of these businesses, they have made significant contribution to the management of the Group’s Investment portfolios resulting in market beating investment returns that have supplemented our underwriting results.




Performance highlights- Investment Management:

Total Income Profit before tax

2014 2013 % 2014 2013 % (Kshs’M) (Kshs’M) Growth (Kshs’M) (Kshs’M) GrowthUAP Investments- Kenya 90 12 650% (2) (35) 94%UAP Financial Services- Uganda 11 7 57% (35) (27) 30%Total Investment Management 101 19 432% (37) (62) 40%

Property Investments and Development

Our Property business is carried out through UAP property companies in Kenya, Uganda and South Sudan. During the year, we focussed on letting space at UAP Nakawa Business Park and the completion of the 33-storey UAP Tower in Nairobi and the 15-storey UAP Equatoria Tower in Juba.

The contribution of property to group profits increased from 22% in 2013 to 33% in 2014.

Total Income Profit before tax

2014 2013 % 2014 2013 % (Kshs’M) (Kshs’M) Growth (Kshs’M) (Kshs’M) GrowthUAP Properties Uganda 868 511 70% 541 455 19%UAP Properties South Sudan 309 62 398% 227 31 632%Total 1,177 573 105% 768 486 58%

Future Prospects and Strategic Initiatives We expect UAP businesses to take advantage of continued growth in the economies that we are currently operating in to post significant growth. In order to prepare the Group for this growth, we continue to invest in highly skilled management teams, robust business processing and distribution platforms and new product innovation initiatives.

The partnership between UAP and Old Mutual provides significant opportunities for the UAP Group to expand its customer base and product offering across various markets in Africa. It also accelerates the achievement of our pan-African strategy through ability to offer seamless service across various African markets. UAP will also be able to draw on experiences that Old Mutual has in markets outside Africa and, when combined with our local knowledge and expertise, will enable us develop innovative solutions for our customers.

We will continuously review our business structure and processes to ensure that we remain agile and efficient in order to continue offering excellent services to our customers.

AppreciationI would like to thank all our staff for the support, commitment and effort made in achieving the performance. I also recognise and appreciate the Board’s input, guidance and wise counsel in running our business effectively. I would like to pay tribute to all our business partners including our intermediaries who continue to support us in a great way. We appreciate this and assure them of our best service at all times.

I also wish to thank all our esteemed customers for the faith they have in the UAP brand and the support provided during the year. We look forward to meeting and exceeding all your expectations.

Finally, I wish to appreciate and thank all our shareholders for their continued support to the growth of our businesses and assure them of our strong commitment to deliver outstanding value on their investment.

Dominic KiarieGroup Managing Director27 March 2015




Serenity of the Ndakaini Dam



Sustainability and CSR Report 2014

Education is the most powerful weapon which you can use to

change the world.

Testimonials: ‘I am pleased to inform you that Michael successfully completed

secondary school education at the end of 2013. He obtained a mean grade of B+ in the KCSE. On his behalf we are very grateful

to UAP for the great support that you offered to Michael. He has obtained avery good educational foundation and

has qualified to join university.’Stephen Tabiro, Sponsorship Officer, Starehe Boys Centre (2014).

Our ApproachUAP’s sustainability agenda and social obligation has been driven by our promise to engender a Better. Simple. Life. for our clients, employees, shareholders and the society at large through sustainable corporate social responsibility practices.

Health, Environment, Education/ Child Welfare and Sports continue to be the four thematic areas of focus through which we influence a better life for our stakeholders.

As a key player in the Financial Services sector, we continue to seek ways of enhancing our offering by embedding progressive solutions throughout the region. In order to give back to the community in a meaningful manner, we work with business and community partners to make the process very consultative and engage our staff in these endeavours.

Making Things Better • HealthWe go beyond offering health insurance services to our customers and the community by supporting various medical initiatives aimed at improving the general livelihood of communities around the region. This we achieve through direct initiatives and by partnering with like-minded organizations to offer meaningful solutions to varied health care concerns including the support of medical camps, walks/runs, fund raisers and wellness clinics which have addressed such concerns as eye treatment, heart ailments, cancer, HIV and general wellness awareness.

These initiatives have directly benefitted over 10,000 people in various ways such as receipt of medication, eye care, and counseling. Children with congenital heart conditions receive funding through key umbrella institutions. We also engaged in the collective mitigation of maternal deaths through our contribution to training of midwives and improvement of access to pre-natal care in urban and rural Kenya.

It is through this process of development of shared value that we take pride in what we do.

Making Things Better • Education / Child WelfareTransforming lives through education is a key objective at UAP, and as such, we provide long term education sponsorship for bright and needy children every year. The program supports a number of children who are at various educational levels from primary to university.

Over and above sponsoring the students, some of the UAP staff visit the students in the schools and even participate in parent - teacher meetings. We also assign staff as mentors to the children to guide them through the academic journey and life at large.

Staff TrainingWe also believe investing in our work force better contributes to our business success and motivates our teams. We have therefore consistently offered training platforms that allow our employees access to practical programs both internally and externally. As a testament to our continued commitment in this regard, we recently rolled out an e-learning portal to enhance ease of access to generalist and specialist up-skilling programs.

Child Welfare Child Welfare is a key complementary support to education. In line with this, the UAP teams in Kenya, Uganda and South Sudan have identified with key children initiatives which include children’s homes and talent development centres to which they provide material and moral support to enable the upbringing of homeless children and nurturing of talent in disabled or disadvantaged children.

Nelson Mandela



Sustainability and CSR Report 2014 (Continued)

The UAP Uganda team during a youth development program through sports

Making Things Simple • Financial LiteracyUAP has championed initiatives aimed at creating financial awareness through its investments channels that have so far seen most communities and social groupings embrace the culture of financial planning. By making it fun, interactive and delivering financial advice to the consumer in a practical and personalized manner, we have kept to our long term strategy of ensuring a decent level of financial awareness for all our stakeholders. It’s through this objective that more partnerships have been realized and more and more customers have been empowered to make sound financial decisions and investments.

In order to build an early savings and investments culture fostered by understanding, we also kicked off training programs and partnership initiatives for the younger generation in collaboration with child-focused institutions.

School children enjoy some fun and games during an educational wellness program at their school

Enhancing Life • EnvironmentSustainable Supply of Clean Water

UAP has been involved in the Ndakaini Dam conservation for the past 11 years. We saw a great opportunity to directly impact the lives of millions of people through the provision of clean water supply, while improving the water catchment in the area around the dam.

Geared towards attaining the restoration and care for the environment, our support of the Ndakaini conservation initiative has been driven through a very close collaborative working relationship with the community that is represented by the Ndakaini Dam Environment Conservation Association (NDEKA).

Under this initiative, we have been able to drive tree planting initiatives, as well as organize and execute the popular UAP Ndakaini Half Marathon to raise funds to support the conservation effort.

• Why Ndakaini Dam?

As the old adage goes “Water is Life”; the Ndakaini water reservoir, built by the government, provides over 70% of the water consumed in Nairobi and its environs. By supporting this initiative, we are able to directly impact the lives of millions of consumers through the provision of fresh water. Furthermore, the improvement of the water catchment within Ndakaini’s environs also enables us further impact positively the lives of Ndakaini residents who get a good supply of rainfall that is essential in the agricultural area.

• Our Contribution

UAP in conjunction with NDEKA have worked to go beyond conservation and have given rise to developing socio-economic enterprises associated with the dam and thereby promote Ndakaini as a ‘destination’. Coupled with the enhanced rainfall in the area, the socio-economic well-being of this region has advanced considerably.

Our long term tree planting target is to plant 250,000 trees around the reservoir. To this end, we plant tree seedlings with every rainy season, with the main tree planting drive taking place in April each year. Through the effort of our staff and various organizations that join hands to support the afforestation initiative, about 110,000 tree seedlings have now been planted around the dam.

• Our Ambition

UAP and the conservation teams have their sights on a greater ambition to plant trees in the larger Mau region & into the Aberdare ranges, as our commitment to sustainable environmental conservation is clearly underpinned here.



Sustainability and CSR Report 2014 (Continued)

We have extended the environmental conservation effort to the region through our various teams, and UAP Uganda has been at the forefront of tree planting. They took on the unique initiative of planting 400 fruit trees at Ntinda School of the deaf in partnership with other local companies. The choice of fruit trees was informed by the fact that the trees would provide fruits for the children in due course as well as shade, whilst conserving the environment.

Enhancing Life • Sports With a good mix of business and sports, we build on our values of maintaining lifelong relationships and demonstrate our passion about our work even outside our business parameters, by not only sponsoring sports, but also actively participating in the same. The sporting activities have seen the active involvement of the youth which has thus enabled us have a positive social impact on the

youth across the region, through our provision of well-funded and structured initiatives to nurture their talent. Our areas of support have included athletics, rugby and football, amongst others.

Athletics

The UAP Ndakaini Half Marathon has also been an avenue of developing Kenya’s athletics talent, and Athletics Kenya officially recognized it as a worthy course to conquer. It is one of the toughest courses in the world, which makes it one of the courses most Kenyan athletes competing globally desire to participate in.

Some of the renowned athletes who have participated in the UAP Ndakaini Half Marathon include the late Samuel Wanjiru, Catherine Ndereba, Abel Kirui, Sylvia Kibet and Faith Chepng’etich.

A snap shot of the area surrounding the dam, with much improved tree cover since the inception of the conservation initiative.

Fruit tree planting in Uganda at Ntinda School

UAP employees and their families took part at the annual tree planting event UAP employees and their families took part at the annual tree planting event



Sustainability Corporate Social Responsibility (Continued)

The UAP Ndakaini Half Marathon course has seen participants increase from 297 in 2004 to over 3,000 in 2014, with well over 10,000 others gracing the event as spectators and well-wishers.

The marathon standards have also continued to improve and in 2014 we introduced the Radio-frequency identification (RFID) system in line with world class standards of managing events. RFID is the wireless use of electromagnetic fields to transfer data, for the purposes of automatically identifying and tracking tags – in this case there was a chip attached to runners vests to enable accurate recording of finishing times.

The marathon has also continued to nurture sporting talent in the country, and also promote healthy living by espousing the need for healthy choices such as exercise and correct eating habits. These are promoted through the various marathon preparation sessions including aerobics, zumba, wellness clinics, just to mention a few.

The Cabinet Secretary for Environment, Water and Natural Resources, Prof Judy Wakhungu awards winners of the Men’s 21km race at the 2014 event.

RugbyUAP Kifaru are the 2014 Bamburi Rugby Super Series champions! The franchise team of local university students clinched the 10th edition of the competition in a complete show of fun and commitment to their goal. By always supporting and encouraging the boys in their journey to achieving the fete by attending various matches, practice sessions and providing the requisite material support. UAP employees also shared in their joy and victory igniting true emotion and testimony of sporting bonds.

Gladys Chesir, winner of the 21km women’s race at the 2014 event

The Family Fun Run

Participants at the 11th edition of the Half Marathon

UAP Kifaru, the 2014 Bamburi Rugby Super Series Champions celebrate their victory with UAP staff



Five Year Financial Highlights

2014 2013 2012 2011 2010 Kshs ‘000 Kshs ‘000 Kshs ‘000 Kshs ‘000 Kshs ‘000 Gross written insurance premium 14,832,735 12,737,286 9,054,770 7,253,140 5,818,851Gross earned premium 14,158,444 11,559,860 8,462,797 6,602,606 5,374,107Net earned premium 11,263,533 9,014,382 6,533,244 5,194,451 4,147,757

Investment and other income 5,424,470 3,726,954 2,957,379 1,558,619 1,467,755

Total income 16,688,003 12,741,336 9,490,623 6,753,070 5,615,512

Net claims and policy holder

benefits payable (8,074,794) (5,754,811) (3,938,295) (2,926,773) (2,424,829)

Commissions and other

operating expenses (6,316,980) (4,774,785) (3,804,377) (2,614,602) (2,397,257)

Share of loss of associate - - - (1,783) (3,572)

Profit before income tax 2,296,229 2,211,740 1,747,951 1,209,912 789,854 Income tax expense (629,042) (401,339) (366,920) (290,228) (110,979)

Profit after income tax 1,667,187 1,810,401 1,381,031 919,684 678,875 Non-controlling interests (181,211) (152,825) (99,025) (37,469) (150,602)

NET PROFIT ATTRIBUTABLE TO SHAREHOLDERS 1,485,976 1,657,576 1,282,006 882,215 528,273

Other comprehensive income/(loss) 1,128,625 1,730,955 735,900 (691,470) 531,304

Total comprehensive income / (loss) 2,795,812 3,541,356 2,116,931 228,214 1,210,179

Dividends 359,414 359,414 419,130 204,000 204,000

Total distributions 359,414 359,414 419,130 204,000 204,000 Total assets 42,083,725 33,109,989 24,657,973 14,510,400 12,419,344 Total equity 17,198,048 14,761,650 11,620,312 4,647,300 4,633,744

The Group’s total assets as at the end of 2014

The Group’s total income in 2014

16.7Kshs Kshs

BILLION

The increase in Group’s total income in 2014

31% 42.1 BILLION



Five Year Financial Highlights

We see significant opportunities in the markets UAP operates in, and have invested in highly experienced management teams to enable UAP businesses design customer solutions that take advantage of these opportunities.

The Group’s insurance premium revenue increased by 16% to Kshs 14.8 billion.

The Group’s profit before tax increased by 4% to Kshs 2.3 billion.

The Group’s total income increased by 31% to Kshs 16.7 billion

Total assets increased by 27% to Kshs 42.1 billion on account of strong growth in revenues.

Future Outlook



Corporate Governance Report for the Financial Year Ended 31 December 2014In the year under review the Board of Directors focused on implementing the recommendations of the comprehensive corporate governance review carried out in the year ended 31 December 2013. The rationalization of the corporate governance structures and tools resulted in increased commitment to good corporate governance, strengthening of Board and Management accountability, increased shareholder value, interest by investors in the UAP Group and overall public confidence in the Group.

Board of Directors The UAP Groups’ management vests in its Board of Directors as prescribed in the Memorandum and Amended Articles of Association. The Board’s main objective is to establish and monitor the strategic direction for the Group; ensuring competent management of the business; establish and oversee adequate internal control systems; monitor compliance with laws and regulations and report performance to shareholders.

The composition of the Board in the year under review was targeted toward ensuring fair representation of all the major shareholders, as well as, optimization of the appropriate skill, experience, diversity and geographical mix to facilitate effective execution of its mandate. During the year under review, one (1) member of the Board retired and was replaced by an Executive Director. The composition of the Group Board was as follows:

NO. NAME OF BOARD MEMBER MEMBERSHIP NATIONALITY PROFESSION

1. Dr. Joseph Barrage Wanjui Chairman Kenyan Engineer/Entrepreneur

2. Dr. Christopher J. Kirubi* Non-Executive Member Kenyan Entrepreneur

3. Mr. James Muguiyi Non-Executive Member Kenyan Finance/Insurer

4. Mr. James Mworia* Non-Executive Member Kenyan Financial Analyst/Lawyer

5. Mr. Peter Njoka Non-Executive Member Kenyan Investment

6. Mr. Skander Oueslati Non-Executive Member Tunisian Engineer/Investment

7. Mr. Jonas Armtoft Non-Executive Member Swedish Lawyer

8. Mr. Lotfi Baccouche Independent, Non-Executive Member British Engineer/Insurer/Risk Management

9. Ms. Susan Omanga Independent, Non-Executive Member Kenyan Marketing

10. Ms. Susan Githuku Independent, Non-Executive Member Kenyan Human Resource

11. Mr. Dominic Kiarie Executive Member Kenyan Investment/Business

12. Mr. James Wambugu Executive Member Kenyan Audit and Risk Management

13. Mr. Davinder Sikand Alternate to Peter Njoka Kenyan Investment

14. Mr. George Odo Alternate to Skander Oueslati Kenyan Finance

The following changes took place in the period under review:

1) Prof. Gordon Wavamunno ceased to be a Non-executive Member of the Board by resignation on 12 July 2014. 2) Mr. James Wambugu was appointed an Executive Member of the Board on 28 August 2014.

*On 8th January 2015 UAP Holdings Limited (UAPHL) received a notification from Centum Investment Company Limited (“Centum”) and Dr. Christopher John Kirubi (“Dr. Kirubi”) that they have entered into an agreement with Old Mutual for the sale of their respective shares in UAPHL. Centum and Dr. Kirubi together held 23.33% of the issued shares of the company. Subsequently a notice of resignation was received from Dr. Kirubi and the representative of Centum on the Board of Directors (Mr. James Mworia) with effect from 27th January 2015.



Board AppointmentsAll directors have a fixed tenure of office and are required to retire at least every three years with a provision for re-election subject to a favourable performance evaluation by the Board.

Board CharterThe Board Charter adopted by the Group defines the Board’s roles and responsibilities as well as functions and structures in a way that supports the members in carrying out their strategic oversight function. Board Members have been made aware of their individual and collective roles with the purpose of ensuring the Company maximizes long term value for all its stakeholders.

Key components of the Charter are as follows: • Terms of Reference of the Board. • Independence of Directors. • Authorities of the Board and its’ structure. • The Terms of Reference of the Chairman of the Board and those of the Managing Director. • Procedures for dealing with related party transactions. • Board committees and their Terms of Reference.

Conflict of InterestBoard Members are required to deal at arms-length in any matter that relates to the Group and to disclose any conflict of interest in relation to matters that are brought before them for deliberation. A director must refrain from discussion or voting on matters of potential conflict of interests. The Board has implemented strict guidelines which require that all directors declare their interests and a register of interests will be maintained by the Group Company Secretary. Individual Board members are also required to declare their interest before participating in board meetings and are excluded from deliberations in the case of any potential conflicts of interest.

Separation of Role of Chairman from Managing DirectorThe Group Chairman is responsible for managing the Board and providing leadership to the Group while the Group Managing Director is responsible to the Board for strategically overseeing and managing the business units in the UAP Group in accordance with instructions given by the Board. The Group Managing Director directs the implementation of Board decisions and instructions and the general management of the business units with the assistance of the chief executives and management teams.

Board Committees The Board has delegated its authority to the standing Board Committees to enable it effectively carry out its mandate. These Committees of the Board are listed below and each has its own Terms of Reference setting forth the purposes, goals and responsibilities of the Committee as well as qualifications for committee membership, procedures for committee member appointment and removal, committee structure, operations and it’s reporting to the Board. During the period under review, the Board Committee membership was as follows:

(i) Finance & Investment Committee

The Finance & Investments Committee has the responsibility to oversee and advise the Board on:

a. the investment strategy framework of the Company’s investment portfolios;

b. the current global investment portfolio allocations, including asset type and geographical location, and ensure these remain consistent with the Company’s current strategy, risk framework and risk appetite;

c. recommendation for major investment and divestiture proposals;

d. the operational framework of the global investment portfolios of the Company, including the use of both internal and external fund management resources;

e. the performance generated by the investment assets of the Company, both in absolute terms and relative to benchmark targets;

f. proposed changes in investment strategy that would lead to the disposition of the Company’s investment portfolios that were outside the limits established by the Risk Committee; and

g. financing mechanisms and vehicles of the investment portfolios of the Company.

The Committee meets at least four (4) times a year or at such other times as the Chairman of the Committee shall require.During the period under review the Members of the Committee were:

1. Mr. James Mworia (Chairman)

2. Mr. Skander Oueslati

3. Mr. James Muguiyi

4. Ms. Susan Omanga

5. Mr. Davinder Sikand

6. Mr. Dominic Kiarie

Corporate Governance Report for the Financial Year Ended 31 December 2014



(ii) Audit Committee

The delegated role of the Committee is to assist the Board in the oversight of:

a. The integrity of the financial statements.

b. The auditor’s qualifications and independence.

c. The performance of the Groups internal audit function and the external auditors.

d. The compliance by the Group with legal and regulatory requirements.

e. The effective management by the Group of financial and non-financial risks.

f. Review the adequacy and effectiveness of UAP’s internal control, financial controls and risk management systems;

g. Coordination with the Risk and Governance Committee of the Board in relation to the governance of risk.

The Committee meets at least four times a year or at such other times as the Chairman of the Committee shall require. During the period under review the Members of the Committee were:

1. Mr. George Odo (Chairman)

2. Mr. Kamau Kuria

3. Mr. Lotfi Baccouche

4. Ms. Susan Omanga

(iii) Risk and Governance Committee

The Terms of Reference of the Committee are to oversee and advise the Board on: a. the Company’s overall risk appetite, tolerance, limits, and their alignment with the Company’s strategy;

b. identification and measurement of material risks requirements inherent in the Company’s strategy;

c. systems of risk management, internal control and compliance and their adequacy to identify assess, mitigate and reports risks;

d. reviewing reports on any material breaches of risk limits and the adequacy of proposed action;

e. reviewing the Company’s risk culture and management initiatives to strengthen it;

f. reviewing annually the Company’s Corporate Governance practices and policies, submitting a report to the Board on its findings which may include proposals for amendments;

g. considering possible conflicts of interest between the Company’s Directors and UAP, including Directors’ related party transactions with UAP Group companies, and make relevant proposals to the Board.

The Committee meets at least four times a year or at such other times as the Chairman of the Committee shall require. During the period under review the Members of the Committee were:

1. Mr. Lotfi Baccouche (Chairman)

2. Mr. Peter Njoka

3. Mr. George Odo

4. Mr. Philip Coulson

5. Mr. James Wambugu

6. Ms. Zipporah Mungai


(iv) Nominations, Remuneration and Human Resource Committee

The delegated role of the Committee is to:

a. The regular review of the structure, size and composition (including the skills, knowledge, experience and diversity) of the Board, making recommendations to the Board with regard to any changes.

b. The review of the leadership needs of the organisation, both executive and non-executive, with a view to ensuring the continued ability of the organisation to compete effectively in the marketplace.

c. The regular review of the structure, size and composition of subsidiary boards, assessing the optimum mix of skills, knowledge, experience, diversity as well as local regulatory requirements.

d. Determining the high level policy for succession planning within UAP Group, ensuring that UAP executives possess necessary skills and experience required to enable UAP to complete effectively in the market and deliver its strategic plan.

e. Overseeing development and implementation of UAP’s strategy for being regarded as ethnically and gender inclusive and consider setting specific targets in terms of numbers, grades and gender in fulfilment of this objective.

f. Approving the training and human capital development strategy for UAP Group.

g. Approving the UAP Policy on remuneration, benefits and end of service payments for employees below the grade of senior management.




The Committee meets at least four (4) times a year or at such other times as the Chairman of the Committee shall require. During the period under review the Members of the Committee were:

1. Ms. Susan Githuku (Chairman)

2. Dr. J. B Wanjui CBS

3. Mr. James Muguiyi

4. Mr. Peter Njoka

5. Mr. Jonas Armtoft


7. Mr. George Odo

Board Meetings and Information to DirectorsThe Board meets at least once every quarter but the business may warrant the convening of special meetings from time to time. All Board meetings are scheduled in advance of the respective year through an Annual Calendar of Board Meetings including a rolling calendar, which facilitates planning and availability of the members. Board Committee meetings are scheduled in advance of the Board Meeting so that all technical matters are appropriately addressed and reported to the Board for ratification or approval.

The directors are given appropriate and timely information on key activities of the business regularly and on request in order to carry out their roles. Specifically the directors are provided with all available information in respect of items to be discussed at a meeting of the Board or Committee prior to the meeting. They may also seek independent professional advice, at the Company’s expense, concerning the affairs of the Group in consultation with the Group Managing Director and the Group Company Secretary.

Board AttendanceDuring the Financial Year seven (7) Board Meetings and thirty one (31) Committee Meetings were held. A review of attendance to meetings by individual members during the period under review indicates that all members gave sufficient time and attention to the affairs of the Board. The highest level of individual attendance was 100% of eligible board meetings and the lowest level of attendance was 25% of eligible meetings, with an average of 67.35% attendance across the membership.

The Board members gave prior notice of inability to attend and gave meaningful input on the agenda items as appropriate.

Board Oversight The Board is responsible for the formulation, implementation and monitoring of the Group’s Strategic Plan thus providing appropriate strategic direction for the Group. In the same vein, the Board defines the Vision, Mission and Core Values to enable realisation of the set strategic plan.

The Board has delegated the day to day operations of the Group to the Management which is headed by the Group Managing Director. The Group’s business is therefore conducted in accordance with a carefully formulated strategy, annual business plans and budgets which set out clear objectives. Roles and responsibilities have been clearly defined with approved authority being delegated. Performance against the objectives is reviewed and discussed monthly and quarterly by the management teams in the Group.

The Managing Directors/General Managers and their respective Management teams prepare annual business review report which is presented to the Group Board during its annual retreat for consideration and approval. Each subsidiary board is expected to monitor the performance of each subsidiary. Consolidation of the financial position is undertaken on a quarterly basis and presented to the Board. This way performance trends, forecasts as well as actual performance against budgets and prior periods are closely monitored.

The Board ensures that the Group espouses proper corporate governance practices by confirming that the requisite codes of conduct, procedures and practices are existent, relevant and adhered to. The Board also achieves this by ensuring that the Group complies with all the statutory requirements.

The Board is responsible for managing the Group’s risks and the Board and Management have been trained on risk management. The Board recognises and honours its responsibility to its stakeholder and in this case Board Members are fully aware of their responsibility to discharge their function in good faith, with prudence, diligence and due care.

Performance and Evaluation The Board has put in place a performance evaluation system to enable it set its objectives and review its performance annually against these objectives. An evaluation exercise was conducted on Friday, 28th November 2014. The evaluation was conducted by an independent evaluator and the results communicated to the Board through the approved process.





Board Development Board development programmes were carried out during the period under review in accordance with the needs identified and/or analysed for each Member and for the Board as a whole. The Board was developed in accordance with the Board induction and development plan to address areas of improvement for individual members and to provide up to date information on new areas of business and risk for the group including:- corporate governance training, risk management training as well as actuarial and solvency computation training.

Board Remuneration The Board is remunerated in accordance with the approved Board Remuneration Policy which encompasses Directors Fees, Sitting Allowance and Directors’ Medical Cover.

Statement of Compliance The Board is satisfied that the Group has, to the best of their knowledge, complied with all applicable laws and conducted its business affairs in accordance within the law. To the knowledge of the Board no director, employee or agent of the Group acted or committed any indictable offence under the Anti-Corruption laws in conducting the business of the Group nor been involved or been used as a conduit for money laundering or any other activity incompatible with the relevant laws.

The Board continues to abide by its Charter, the internal codes of conduct, the Memorandum and Amended Articles of Association of the Company and the Terms of Reference of Board Committees. The Group continues to comply with all the statutory requirements relevant to its operation as a body corporate and complies with relevant regulatory guidelines as issued from time to time.

Group Company SecretaryThe Group Company Secretary co-ordinates the Board activities and ensures, in conjunction with the Chairman and Group Managing Director, that the Board meetings are held procedurally. The Group Company Secretary links flow of information between the Management and the Board as well as ensures the Board receives adequate and timely information and that Management receives feedback in a similar manner.

All Board Members have direct access to the Group Company Secretary who is also responsible for implementing and monitoring good corporate governance practices at the Board. The Secretary ensures that the business of the Board meets all statutory requirements, keeps all legal and regulatory requirements under review and briefs the Board accordingly about these developments.

In the year under review, the Group Company Secretary assisted by the Deputy Group Company Secretary performed this function.




ShareholdingAt 31 December 2014, the top ten shareholders in the Company were:

No. of shares Holdings %1 BAWAN LTD 43,258,299 20.46%2 AFRICINVEST FUND II LLC 29,660,547 14.03%3 CENTUM INVESTMENT COMPANY LTD 29,070,637 13.75%4 AUREOS AFRICA FUND LLC 28,796,810 13.62%5 KIRUBI CHRISTOPHER JOHN 20,261,808 9.58%6 SWEDFUND INTERNATIONAL 14,901,179 7.05%7 MUGUIYI JAMES NGATIA 12,611,247 5.97%8 AFRICINVEST FINANCIAL SECTOR FUND LIMITED 5,561,353 2.63%9 ESTATE OF THE LATE WILLIAM KIMUTAI MARTIN 3,495,480 1.65%10 SMITH ANDREW STEPHEN GRAY 1,789,189 0.85%

The shareholders profile as at 31 December 2014 was as follows:

No. of share No. of holders shares Holdings %Shares Range 001 to 100,000 946 6,475,940 3.06%100,001 to 1,000,000 36 11,317,481 5.35%Above 1,000,000 13 193,626,468 91.58% 995 211,419,889 100%

No. of share No. of holder shares Holdings %Individual investors Kenyan 816 50,614,007 23.94%East African 40 256,000 0.12%Foreign 14 90,400 0.04% 870 50,960,407 24.10%Corporate investors Kenyan 119 81,490,393 38.54%East African 2 49,200 0.02%Foreign 4 78,919,889 37.33% 125 160,459,482 75.90%

The directors’ direct and indirect interest in the ordinary share capital of the Company on 31 December 2014 was as follows:

No. of shares Holdings %1 Dr JB Wanjui CBS 43,258,299 20.46%2 Centum Investment Company Limited 29,660,547 14.03%3 Dr. CJ Kirubi EBS 25,778,670 12.19%4 JN Muguiyi 12,611,247 5.97%5 Dominic Kiarie 112,500 0.05%



Annual General Meeting

NOTICE IS HEREBY GIVEN that the Seventh Annual General Meeting of the shareholders of UAP Holdings Limited will be held on Friday, 19th June 2015 at 10.00 a.m. at the Sarova Panafric Hotel, Nairobi to transact the following business:

Ordinary Business1. The Secretary to read the notice convening the meeting, table

the proxies and to confirm the presence of quorum.

2. Confirmation of Minutes To confirm the minutes of the Sixth Annual General Meeting held on 13th June 2014.

3. Consideration of Reports To receive, consider and if thought fit, adopt the audited Financial Statements for the year ended 31st December 2014 and the Reports of the Chairman, Directors’ and Auditors’ thereon.

4. Declaration of Dividend To consider and if thought fit, adopt the recommendation to pay a final dividend of Kes 1.70/= for each ordinary share of Kes 5/= on the issued share capital of the Company in respect of the year ended 31st December 2014.

5. Remuneration Report To approve the directors’ remuneration for the year ended 31st December 2014 as provided for in the Financial Statements.

6. Election of Directors

(a) In accordance with Article 101 of the Company’s Articles of Association and Section 186 (2) of the Companies Act (Cap 486):-

(i) Mr. Peter Gichuru Njoka, retires by rotation at the dissolution of the meeting and being eligible, offers himself for re-election in accordance with Article 103 of the Company’s Articles of Association.

(ii) Mr. Skander Khalil Oueslati, retires by rotation at the dissolution of the meeting and being eligible, offers himself for re-election in accordance with Article 103 of the Company’s Articles of Association.

(iii) Mr. Lotfi Baccouche, retires by rotation at the dissolution of the meeting and being eligible, offers himself for re-election in accordance with Article 103 of the Company’s Articles of Association.

(b) In accordance with Article 99 of the Company’s Articles of Association Mr. James Wambugu, appointed as a director to fill a casual vacancy, retires by rotation at the dissolution of the meeting and being eligible, offers himself for re-election.

Special Business7. Appointment of External Auditor To consider the following Special Notice having been received under sections 142, 159 and 160 of the Companies’ Act (Cap. 486 of the Laws of Kenya) and pass with or without modification the following as an ordinary resolution:

“RESOLVED that KPMG East Africa Limited be appointed Auditors of the Company, in place of the retiring Auditors Messrs. PricewaterhouseCoopers, to hold office until the next Annual General Meeting, and that the Directors are hereby authorized to fix their remuneration.”

8. To transact any other business which may be properly transacted at an annual general meeting and for which a valid notice has been issued in accordance with the Articles of Association of the Company.

By order of the Board

Nkirote Mworia NjiruSecretary20th May 2015

Note:In accordance with Section 136(2) of the Companies Act (Cap. 486) every member entitled to vote at the above meeting is entitled to appoint a proxy to attend and vote on his/her behalf. A proxy need not be a member of the Company.

A form of proxy is enclosed and should be returned to the Company Secretary, P.O. Box 43013 – 00100, Nairobi, to arrive no later than 48 hours before the meeting or any adjournment thereof.




We engage with key stakeholders for

business success



Directors’ report The directors submit their report together with the audited financial statements for the year ended 31 December 2014 which disclose the state of affairs of the Company and the Group.

Principal activitiesThe Group is engaged in the business of insurance, premium financing, investment management, insurance brokerage, property and stock broking services. These activities are carried out through the Group’s subsidiaries in Kenya, Uganda, Tanzania, Southern Sudan, Rwanda and Democratic Republic of Congo. These activities are briefly described below:

Insurance business:- The Group has seven subsidiary undertakings that underwrite all classes of life and non-life insurance risks as defined by the Kenyan Insurance Act, other than industrial life insurance. They also issue investment contracts to provide their customers with asset management solutions for their savings and retirement needs, and provide premium financing services. These operations are carried out in Kenya, Uganda South Sudan and Rwanda.

The Group also operates an insurance brokerage business in the Democratic Republic of Congo.

Premium Financing: - One of the Group’s subsidiaries, UAP Credit Services Limited, provides insurance premium financing services to the customers of the Group’s Kenyan insurance subsidiaries.

Stock broking: - The Group has a subsidiary - UAP Financial Services Limited, a Ugandan based Company that provides stock broking services. Property: - The Group holds investment in three property companies based In Kenya, Uganda and South Sudan. 2014 2013 Kshs ’000 Kshs ’000Profit for the year 1,667,187 1,810,401 Profit attributable to shareholders of the company 1,485,976 1,657,576

During the year, no interim dividend was paid (2013: Nil). The directors recommend the payment of a final dividend of Kshs 359 million (2013: Kshs 359 million).

DirectorsThe directors of the Company, who held office to the date of this report, are:-

Dr. JB Wanjui CBS Chairman

Mr.Dominic Kiarie Group Managing Director

Dr. CJ Kirubi EBS – Resigned on 26 January 2015

Sir. G Wavamunno – Resigned on 11 July 2014

Mr.JN Muguiyi

Mr.James Mworia – Resigned on 26 January 2015

Mr.Lotfi Baccoucche

Mrs.Susan Omanga

Mrs.Susan Wakhungu Githuku

Mr.Jonas Armtoft

Mr.Peter Gichuru Njoka (Alternate Davinder Sikand)

Mr.Skander Oueslati (Alternate George Odo)

Mr.James Wambungu – Appointed on 28 August 2014

Auditor

The Company’s auditor, PricewaterhouseCoopers, has expressed willingness to continue in office in accordance with Section 159(2) of the Companies Act.

By order of the Board

…………………………Nkirote MworiaSecretary27 March 2015



The Kenyan Companies Act requires the directors to prepare financial statements for each financial year that give a true and fair view of the state of affairs of the group and company as at the end of the financial year and of the group’s profit. It also requires the directors to ensure that the company maintains proper accounting records that disclose, with reasonable accuracy, the financial position of the group. The directors are also responsible for safeguarding the assets of the group.

The directors accept responsibility for the preparation and fair presentation of financial statements that are free from material misstatements whether due to fraud or error. They also accept responsibility for: (i) Designing, implementing and maintaining internal control as they determine necessary to enable the preparation of financial statements that are free from material misstatements, whether due to fraud or error.

(ii) Selecting and applying appropriate accounting policies; (iii) Making accounting estimates and judgments that are reasonable in the circumstances.

The directors are of the opinion that the financial statements give a true and fair view of the financial position of the group and company at 31 December 2014 and of the group and company’s financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards and the requirements of the Kenyan Companies Act.

Nothing has come to the attention of the directors to indicate that the Company and its subsidiaries will not remain a going concern for at least twelve months from the date of this statement.

Approved by the board of directors on 27 March 2015 and signed on its behalf by:

Statement of Directors’ Responsibilities

………………………… …………………………Dr JB Wanjui CBS Dominic KiarieChairman Group Managing Director



Report of The Independent Auditor to The Members of UAP Holdings LimitedReport on the financial statementsWe have audited the accompanying consolidated financial statements of UAP Holdings Limited (the ‘Company’) and its subsidiaries (together, the ‘Group’) set out on pages 46 to 113. These financial statements comprise the consolidated statement of financial position at 31 December 2014 and the consolidated statement of profit or loss, consolidated statements of other comprehensive income, changes in equity and cash flows for the year then ended, together with the statement of financial position of the company standing alone at 31 December 2014, the statement of changes in equity of the company for the year then ended and a summary of significant accounting policies and other explanatory notes.

Directors’ responsibility for the financial statementsThe directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and with the requirements of the Companies Act and for such internal control, as the directors determine necessary to enable the preparation of financial statements that are free from material misstatements, whether due to fraud or error.

Auditor’s responsibilityOur responsibility is to express an opinion on the 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 our audit to obtain reasonable assurance that the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit 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 the directors, 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 opinion.

OpinionIn our opinion the accompanying financial statements give a true and fair view of the state of financial affairs of the group and of the company at 31 December 2014 and of the financial performance and cash flows of the group for the year then ended in accordance with International Financial Reporting Standards and the Kenyan Companies Act.

Report on other legal requirements As required by the Kenyan Companies Act, we report to you based on our audit, that:i) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;ii) in our opinion proper books of account have been kept by the company, so far as appears from our examination of those books;iii) the company’s statement of financial position and statement of profit or loss are in agreement with the books of account.

The engagement partner responsible for the audit resulting in this independent auditor’s report is FCPA Richard Njoroge – P/No 1244.

Certified Public Accountants2nd April, 2015 Nairobi

PricewaterhouseCoopers CPA. PwC Tower, Waiyaki Way/Chiromo Road, Westlands P O Box 43963 – 00100 Nairobi, Kenya • T: +254 (20)285 5000 F: +254 (20)285 5001 • www.pwc.com/kePartners: A Eriksson • K Muchiru • M Mugasa • F Muriu • P Ngahu • A Njeru • R Njoroge • B Okundi • K Saiti • R Shah



2014 2013

Notes Kshs’000 Kshs’000

Gross written premium 5 (b) 14,832,735 12,737,286

Gross earned premium 5 (b) 14,158,444 11,559,860

Reinsurance ceded (2,894,911) (2,545,478)

Net earned premium 11,263,533 9,014,382

Investment income 6 4,603,772 2,863,255

Commissions earned 790,499 793,121

Other income 7 30,199 70,578

Total Income 16,688,003 12,741,336

Claims and policy owners’ benefits payable 8 (9,071,155) (6,628,059)

Less: Amount recoverable from reinsurers 996,361 873,248

Net claims payable (8,074,794) (5,754,811)

Operating and other expenses 9 (4,375,071) (3,259,358)

Commissions payable (1,648,599) (1,454,086)

Total expenses & commissions (6,023,670) (4,713,444)

Finance costs 36 (a) (293,310) (61,341)

Profit before tax 2,296,229 2,211,740

Income tax expense 11 (629,042) (401,339)

Profit for the year (of which Kshs 905,142,000 (2013: Kshs 341,080,000)

has been dealt with in the accounts of the company) 1,667,187 1,810,401

Profit attributable to:

Owners of the parent 1,485,976 1,657,576

Non-controlling interest 181,211 152,825

Profit for the year 1,667,187 1,810,401

Basic and diluted EPS 12 7.03 7.84

The notes on pages 54 to 113 are an integral part of these financial statements.

Consolidated Statement of Profit or Loss for the year ended 31 December



Consolidated Statement of Other Comprehensive Income for the year ended 31 December 2014 2013


Profit for the year 1,667,187 1,810,401

Other comprehensive income

Items that will be recycled to profit or loss

Exchange differences on translating foreign operations (35,418) 56,970

Total items that will be recycled to profit or loss (35,418) 56,970

Items that will not be recycled to profit or loss

Gains on revaluation of equity investments:

Listed ordinary shares 24 1,111,897 1,752,990

Unlisted ordinary shares 24 1,337 (304)

Remeasurement of retirement benefit obligations 50,809 (78,701)

Total items that will not be recycled to profit or loss 1,164,043 1,673,985

Total other comprehensive income for the year, net of tax 1,128,625 1,730,955

Total comprehensive income for the year 2,795,812 3,541,356

Total comprehensive income attributable to:

Owners of the parent 2,640,935 3,357,627

Non-controlling interests 154,877 183,729

Total 2,795,812 3,541,356




2014 2013CAPITAL EMPLOYED Notes Kshs’000 Kshs’000 Share capital 13 1,057,099 1,057,099Share premium 13 4,612,626 4,612,626Fair value reserve for equity investments 14 2,254,205 3,061,717Retained earnings 15 7,646,416 4,646,298Proposed dividend 16 359,414 359,414Translation reserve (132,272) (127,088)Statutory reserve 17 346,011 294,392Shareholders’ funds 16,143,499 13,904,458Non-controlling Interest 1,054,549 857,192Total equity 17,198,048 14,761,650REPRESENTED BY: Assets Goodwill 18 240,030 240,030Property and equipment 19 (a) 436,361 358,455Intangible assets 20 (a) 112,987 179,592Investment properties 21 (a) 15,122,307 11,412,346Deferred income tax asset 22 83,640 133,202Retirement benefit asset 23 285,918 184,927Equity investment at fair value through other comprehensive income 24 (a) 3,734,740 4,140,484Equity investment at fair value through profit or loss 24 (b) 2,353,888 1,366,024Mortgage loans receivable 26 255,437 228,307Current income tax recoverable 11 113,477 27,614Reinsurers’ share of insurance liabilities 27 2,509,829 2,230,060Deferred acquisition cost 28 428,748 323,527Receivables arising out of direct insurance arrangements 2,486,192 2,317,694Receivables arising out of reinsurance arrangements 706,371 472,759Other receivables 29 (a) 1,550,187 1,165,599Corporate bonds 1,588,613 449,025Government securities 30 5,875,753 4,566,442Deposits with financial institutions 31 3,173,707 1,972,751Cash and bank balances 31 1,025,540 1,341,151Total assets 42,083,725 33,109,989Liabilities Deferred income tax liability 22 720,786 380,015Insurance contract liabilities 32 7,720,435 5,267,880Payable under deposit administration contracts 33 3,633,021 2,812,089Unit-linked investment contracts 34 1,040,828 923,296Borrowings 36 (a) 3,981,001 2,079,719Provision for unearned premium 37 5,364,573 4,775,498Current income tax payable 11 42,063 75,777Creditors arising from reinsurance arrangements 884,799 1,079,659Other payables 38 (a) 1,498,171 954,406Total liabilities 24,885,677 18,348,339 Net Assets 17,198,048 14,761,650

The notes on pages 54 to 113 are an integral part of these financial statements.The financial statements on pages 46 to 113 were approved for issue by the board of directors on 27 March 2015 and signed on its behalf by:

Dr JB Wanjui CBS (Chairman) Dominic Kiarie (Group Managing Director)

Consolidated Statement of Financial Position as at 31 December



Notes 2014 2013 Kshs’000 Kshs’000 CAPITAL EMPLOYED Share capital 13 1,057,099 1,057,099Share premium 13 4,612,626 4,612,626Retained earnings 756,137 210,409Proposed Dividend 16 359,414 359,414Total equity 6,785,276 6,239,548 REPRESENTED BY: Assets Property and equipment 19 (b) 91,423 79,684Intangible assets 20 (b) 61,936 131,087Investment properties 21 (b) 3,635,242 2,275,274Investment in subsidiaries 25 3,199,099 2,912,417Amounts due from subsidiaries 43 2,186,511 1,617,577Other receivables 29 (b) 696,711 275,887Deposits with financial institutions 1,248,062 703,325Cash and bank balances 16,862 5,219Total assets 11,135,846 8,000,470 Liabilities Borrowings 36 (b) 2,078,647 - Amounts due to subsidiaries 43 1,991,496 1,608,870Other payables 38 (b) 280,427 152,052 Total liabilities 4,350,570 1,760,922 Net Assets 6,785,276 6,239,548


Company Statement of Financial Position as at 31 December

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Share

Capital &

Share Retained Proposed

premium Earnings Dividends Total

Notes Kshs’000 Kshs’000 Kshs’000 Kshs’000

Balance at 1 January 2013 5,669,725 228,743 317,130 6,215,598

Profit for the year - 341,080 - 341,080

Other comprehensive income - - - -

Total comprehensive income for the year - 341,080 - 341,080

Transactions with owners

2012 Dividend paid 16 - - (317,130) (317,130)

2013 Final dividend proposed 16 - (359,414) 359,414 -

Total transactions with owners - (359,414) 42,284 (317,130)

Balance at 31 December 2013 5,669,725 210,409 359,414 6,239,548

Balance at 1 January 2014 5,669,725 210,409 359,414 6,239,548

Profit for the year - 905,142 - 905,142

Other comprehensive income - - - -

Total comprehensive income for the year - 905,142 - 905,142

Transactions with owners

2013 Dividend paid 16 - - (359,414) (359,414)

2014 Final dividend proposed 16 - (359,414) 359,414 -

Total transactions with owners - (359,414) - (359,414)

Balance at 31 December 2014 5,669,725 756,137 359,414 6,785,276


Company Statement of Changes in Equity for the year ended 31 December 2014



Consolidated Statement of Cash Flows for the year ended 31 December

2014 2013


Cash flow from operating activities

Cash generated from operations 39 1,290,811 1,879,697

Tax paid 11 (371,270) (253,611)

Net cash generated from operating activities 919,541 1,626,086

Cash flow from investing activities

Purchase of property and equipment 19 (a) (212,763) (271,639)

Purchase of intangible assets 20 (a) (49,066) (73,816)

Net purchase of government securities (1,176,179) (1,747,121)

Purchase of equity investments 24 (2,138,982) (430,626)

Net purchase of corporate bonds (1,084,377) (26,250)

Additions to investment properties 21 (1,350,067) (1,949,069)

Mortgage loans advanced 26 (110,784) (94,929)

Mortgage loans repaid 26 85,236 14,036

Proceeds from sale of equity investments 24 3,036,057 648,943

Rent, interest and dividends received 1,714,173 1,250,039

Net cash used in investing activities (1,286,752) (2,680,432)

Cash flow from financing activities

Dividends paid 16 (359,414) (317,130)

Proceeds from borrowings 36 (a) 1,938,326 1,095,767

Repayments on loan and interest costs on borrowings 36 (a) (301,231) (254,114)

Net cash generated from / (used in) financing activities 1,277,681 524,523

Increase in cash and cash equivalents 910,470 (529,823)

Movement in cash and cash equivalents

At 1 January 3,386,123 3,915,946

Increase during the year 910,470 (529,823)

At 31 December 31 4,296,593 3,386,123




1 General information The Company is incorporated in Kenya under the Companies

Act as a limited liability company, and is domiciled in Kenya. The address of its registered office is Bishops Garden Towers, Bishops Road, P.O. Box 43013 - 00100 Nairobi.

The Company has seven subsidiary companies that operate as insurance companies and one subsidiary company, UAP Credit Services Limited that provides insurance premiums financing services. The Company also holds investments in three property holding Companies in Kenya, Uganda and South Sudan. Four of the Company’s insurance subsidiaries are short term (“general”) insurance companies, two are long term (“life”) insurance companies and one is a composite insurance company selling both general and life insurance. Long term business comprises life assurance business, deposit administration business and investment contracts. Life assurance business relates to the underwriting of risks relating to death of an insured person, and includes contracts subject to the payment of premiums for a term dependent on the termination or continuance of the life of an insured person. Short term (general) insurance business relates to all other categories of short term insurance business, analysed into several sub-classes of business based on the nature of the assumed risks. UAP Credit Services Limited provides premium financing services to policyholders of the Group’s Kenyan insurance companies. The Group also holds an investment in UAP Financial Services Limited, a Ugandan based Company that provides stock broking services. UAP Properties (Kenya) Limited; UAP Properties (Uganda) Limited and UAP Properties (South Sudan) Limited are property holding companies for UAP Tower, Nakawa Business Park and Equatoria Towers which are located in Nairobi, Kampala and South Sudan respectively.

2 Summary of significant accounting policies The principal accounting policies adopted in the preparation

of these financial statements are set out below. These policies have been consistently applied to all years presented, unless otherwise stated.

(a) Basis of preparation The financial statements are prepared in compliance with

International Financial Reporting Standards (IFRS).

(a) Basis of measurement

The measurement basis used is the historical cost basis except where otherwise stated in the accounting policies below.

For those assets and liabilities measured at fair value, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market

participants at the measurement date. When measuring the fair value of an asset or a liability, the

company uses market observable data as far as possible. If the fair value of an asset or a liability is not directly observable, it is estimated by the company using valuation techniques that maximise the use of relevant observable inputs and minimise the use of unobservable inputs (e.g. by use of the market comparable approach that reflects recent transaction prices for similar items or discounted cash flow analysis). Inputs used are consistent with the characteristics of the asset / liability that market participants would take into account.

Fair values are categorised into three levels of fair value hieracrchy based on the degree to which the inputs to the measurements are observable and the significance of the inputs to the fair value measurement in its entirety.

See note 4 (e).

(b) Use of estimates

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 3.

Changes to standards and new interpretations effective in 2014

New and amended standards adopted by the Group

The standards overleaf have been adopted by the Group for the first time for the financial year beginning on 1 January 2014 and none has a material impact on the Group.

Amendment to IAS 32, ‘Financial instruments: Presentation’

on offsetting financial assets and financial liabilities. This amendment clarifies that the right of set-off must not be contingent on a future event. It must also be legally enforceable for all counterparties in the normal course of business, as well as in the event of default, insolvency or bankruptcy. The amendment also considers settlement mechanisms. The amendment does not have a significant effect on the Group’s financial statements.

Amendments to IAS 36, ‘Impairment of assets’, on the recoverable amount disclosures for non-financial assets. This amendment removed certain disclosures of the recoverable amount of CGUs which had been included in IAS 36 by the issue of IFRS 13.

Notes to The Financial Statements



Notes to The Financial Statements (Continued)

2 Summary of significant accounting policies (continued)

(a) Basis of preparation (continued)

New and amended standards adopted by the Group (continued)

Amendment to IAS 39, ‘Financial instruments: Recognition and measurement’ on the novation of derivatives and the continuation of hedge accounting. This amendment considers legislative changes to ‘over-the-counter’ derivatives and the establishment of central counterparties. Under IAS 39 novation of derivatives to central counterparties would result in discontinuance of hedge accounting. The amendment provides relief from discontinuing hedge accounting when novation of a hedging instrument meets specified criteria. The amendment has no significant impact on the Group’s financial statements as a result.

IFRIC 21, ‘Levies’ , sets out the accounting for an obligation to pay a levy if that liability is within the scope of IAS 37 ‘Provisions’ . The interpretation addresses what the obligating event is that gives rise to pay a levy and when a liability should be recognised. The Group is not currently subjected to significant levies so the impact on the Group is not material.

Other standards, amendments and interpretations which are effective for the financial year beginning on 1 January 2014 are not material to the Group.

New standards and interpretations not yet adopted

A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after 1 January 2014, and have not been applied in preparing these financial statements. None of these is expected to have a significant effect on the financial statements of the Group except the following set out below:

IFRS 9, ‘Financial instruments’, addresses the classification, measurement and recognition of financial assets and financial liabilities. The complete version of IFRS 9 was issued in July 2014. It replaces the guidance in IAS 39 that relates to the classification and measurement of financial instruments. IFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets: amortised cost, fair value through OCI and fair value through P/L. The basis of classification depends on the entity’s business model and the contractual cash flow characteristics of the financial asset. Investments in equity instruments are required to be measured at fair value through profit or loss with the irrevocable option at inception to

present changes in fair value in OCI not recycling. There is now a new expected credit losses model that replaces the incurred loss impairment model used in IAS 39. For financial liabilities there were no changes to classification and measurement except for the recognition of changes in own credit risk in other comprehensive income, for liabilities designated at fair value through profit or loss. IFRS 9 relaxes the requirements for hedge effectiveness by replacing the bright line hedge effectiveness tests. It requires an economic relationship between the hedged item and hedging instrument and for the ‘hedged ratio’ to be the same as the one management actually use for risk management purposes. Contemporaneous documentation is still required but is different to that currently prepared under IAS 39. The standard is effective for accounting periods beginning on or after 1 January 2018. Early adoption is permitted. In 2009, the Group early adopted IFRS 9 provisions relating to the classification and measurement of financial assets. In 2010, IFRS 9 provisions relating to the classification and measurement of financial liabilities were released and early adopted by the Group. The Group has not yet adopted the full version issued in 2014.

There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Group.

(b) Insurance contracts

Classification

The Group issues contracts that transfer insurance risk. Insurance contracts are those contracts that transfer significant insurance risk. As a general guideline, the group defines as significant insurance risk, the possibility of having to pay benefits on the occurrence of an insured event that are at least 10% more than the benefits payable if the insured event did not occur.

Insurance contracts are classified into two main categories, depending on the duration of risk and as per the provisions of the Insurance Act: long term insurance business and short term insurance business.

i Long term insurance business

Includes business of all or any of the following classes, namely; group life business, ordinary life business, deposit administration business and unit linked business.




(b) Insurance contracts (continued)

i Long term insurance business (continued)

Life insurance business means the business of, or in relation to, the issuing of, or the undertaking of liability to pay money on death (not being death by accident or in specified sickness only) or on the happening of any contingency dependent on the termination or continuance of human life (either with or without provision for a benefit under a continuous disability insurance contract), and include a contract which is subject to the payment of premiums for term dependent on the termination or continuance of human life and any contract securing the grant of an annuity for a term dependent upon human life.

Superannuation business means life assurance business, being business of, or in relation to, the issuing of or the undertaking of the liability under superannuation, group life and permanent health insurance policy.

ii Short term insurance business

Means insurance business of any class or classes not being long term insurance business. Classes of general insurance include aviation insurance, engineering insurance, fire insurance - domestic risks, fire insurance - industrial and commercial risks, liability insurance, marine insurance, motor insurance-private vehicles, motor insurance - commercial vehicles, personal accident insurance, theft insurance, workmen’s compensation and employer’s liability insurance and miscellaneous insurance (i.e. class of business not included under those listed above)

Motor insurance business means the business of affecting and carrying out contracts of insurance against loss of, or damage to, or arising out of or in connection with the use of, motor vehicles, inclusive of third party risks but exclusive of transit risks.

Personal accident insurance business means the business of affecting and carrying out contracts of insurance against risks of the persons insured sustaining injury as the result of an accident or of an accident of a specified class or dying as the result of an accident or of an accident of a specified class or becoming incapacitated in consequence of disease or of disease of a specified class.

Fire insurance business means the business of affecting and carrying out contracts of insurance, otherwise than incidental

to some other class of insurance business against loss or damage to property due to fire, explosion, storm and other occurrences customarily included among the risks insured against in the fire insurance business.

Recognition and measurement

i Premium income

For long term insurance business, premiums are recognised as revenue when they become payable by the contract holder. Premiums are shown before deduction of commission.

For short term insurance business, premium income is recognised on assumption of risks, and includes estimates of premiums due but not yet received less unearned premium. Unearned premiums represent the proportion of the premiums written in periods up to the accounting date that relates to the unexpired terms of policies in force at the financial reporting date, and is computed using the 365ths method. Premiums are shown before deduction of commission and are gross of any taxes or duties levied on premiums.

ii Claims

For long term insurance business, benefits are recorded as an expense when they are incurred. Claims arising on maturing policies are recognised when the claim becomes due for payment. Death claims are accounted for on notification. Surrenders are accounted for on payment.

For short term insurance business, claims incurred comprise claims paid in the year and changes in the provision for outstanding claims. Claims paid represent all payments made during the year, whether arising from events during that or earlier years. Outstanding claims represent the estimated ultimate cost of settling all claims arising from incidents occurring prior to the financial reporting date, but not settled at that date. Outstanding claims are computed on the basis of the best information available at the time the records for the year are closed, and include provisions for claims incurred but not reported (“IBNR”). Outstanding claims are not discounted.

iii Commissions payable and deferred acquisition costs (“DAC”)

Commissions payable are based on the premium written and are recorded as an expense in the period in which they are incurred.

A proportion of commissions payable is deferred and amortised over the period in which the related premium is earned. Deferred acquisition costs represent a proportion of acquisition costs that relate to policies that are in force at the period end.






(b) Insurance contracts (continued)

Recognition and measurement (continued)

iv Liability adequacy test

At each financial reporting date, liability adequacy tests are performed to ensure the adequacy of the insurance contract liabilities net of related DAC. In performing these tests, current best estimates of future contractual cash flows and claims handling and administration expenses, as well as investment income from the assets backing such liabilities, are used. Any deficiency is immediately charged to profit or loss.

v Reinsurance contracts held

Contracts entered into by the Group with reinsurers under which the Group is compensated for losses on one or more contracts issued by the Group and that meet the classification requirements for insurance contracts are classified as reinsurance contracts held. Contracts that do not meet these classification requirements are classified as financial assets. Insurance contracts entered into by the Group under which the contract holder is another insurer (inwards reinsurance) are included with insurance contracts.

The benefits to which the Group is entitled under its reinsurance contracts held are recognised as reinsurance assets. These assets consist of short-term balances due from reinsurers, as well as longer term receivables that are dependent on the expected claims and benefits arising under the related reinsured insurance contracts. Amounts recoverable from or due to reinsurers are measured consistently with the amounts associated with the reinsured insurance contracts and in accordance with the terms of each reinsurance contract. Reinsurance liabilities are primarily premiums payable for reinsurance contracts and are recognised as an expense when due.

The Group assesses its reinsurance assets for impairment on a quarterly basis. If there is objective evidence that the reinsurance asset is impaired, the Group reduces the carrying amount of the reinsurance asset to its recoverable amount and recognises that impairment loss in profit or loss. The Group gathers the objective evidence that a reinsurance asset is impaired using the same process adopted for financial assets held at amortised cost. The impairment loss is also calculated following the same method used for these financial assets. These processes are set out under Note 2(j)

vi Receivables and payables related to insurance contracts and investment contracts

Receivables and payables are recognised when due. These include amounts due to and from agents, brokers and insurance contract holders.

If there is objective evidence that the insurance receivable is impaired, the Group reduces the carrying amount of the insurance receivable accordingly and recognises that impairment loss in the income statement. The Group gathers the objective evidence that an insurance receivable is impaired using the same process adopted for financial assets classified at amortised cost. The impairment loss is also calculated under the same method used for these financial assets. These processes are described under Note 2 (j).

vii Salvage and subrogation reimbursements

Some insurance contracts permit the Group to sell (usually damaged) property acquired in settling a claim (for example, salvage). The Group may also have the right to pursue third parties for payment of some or all costs (for example, subrogation). Estimates of salvage recoveries are included as an allowance in the measurement of the insurance liability for claims, and salvage property is recognised in other assets when the liability is settled. The allowance is the amount that can reasonably be recovered from the disposal of the property.

Subrogation reimbursements are also considered as an allowance in the measurement of the insurance liability for claims and are recognised in other assets when the liability is settled. The allowance is the assessment of the amount that can be recovered from the action against the liable third party.

(c) Revenue recognition

i Insurance premium revenue

The revenue recognition policy relating to insurance contracts is set out under note 2 (b) above.

ii Commissions

Commissions receivable are recognised as income in the period in which they are earned.

iii Interest income

Interest income is recognised on a time proportion basis that takes into account the effective yield on the asset. When a receivable is impaired, the Group reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income.




(c) Revenue recognition (continued)

iv Dividend income

Dividends are recognised as income in the period in which the right to receive payment is established.

v Rental income

Rental income is recognised as income in the period in which it is earned. All investment income is stated net of investment expenses.

vi Fee income

Fee income consists primarily of administration fees arising from services rendered in relation to the issue and management of deposit administration and investment contracts. Fees are recognised in the accounting period in which the services are rendered and are presented in the income statement within ‘other income’.

(d) Investment contracts The Group issues investment contracts without fixed

terms (unit-linked) and investment contracts with fixed and guaranteed terms (fixed interest rate). The investment contracts include funds administered for a number of retirement benefit schemes.

Investment contracts without fixed terms are financial liabilities whose fair value is dependent on the fair value of underlying financial assets, and are designated at inception as at fair value through profit or loss. The Group designates these investment contracts to be measured at fair value through profit or loss because it eliminates or significantly reduces a measurement or recognition inconsistency (sometimes referred to as ‘an accounting mismatch’) that would otherwise arise from measuring assets or liabilities or recognising the gains and losses on them on different bases.

The best evidence of the fair value of these financial liabilities at initial recognition is the transaction price (i.e. the fair value received) unless the fair value of that instrument is evidenced by comparison with other observable current market transactions in the same instrument or based on a valuation technique whose variables include only data from observable markets. When such evidence exists, the Group recognises profit at inception.

The fair value of financial liabilities for investment contracts without fixed terms is determined using the current unit values in which the contractual benefits are denominated. These unit values reflect the fair values of the financial assets contained within the Group’s unitised investment funds linked to the financial liability. The fair value of the financial liabilities is obtained by multiplying the number of units attributed to each contract holder at the financial reporting date by the unit value for the same date.

For investment contracts with fixed and guaranteed terms, the amortised cost basis is used. In this case, the liability is initially measured at its fair value less transaction costs that are incremental and directly attributable to the acquisition or issue of the contract.

Subsequent measurement of investment contracts at amortised cost uses the effective interest method. This method requires the determination of an interest rate (the effective interest rate) that exactly discounts to the net carrying amount of the financial liability, the estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate, a shorter period if the holder has the option to redeem the instrument earlier than maturity.

The Group re-estimates at each reporting date the expected future cash flows and recalculates the carrying amount of the financial liability by computing the present value of estimated future cash flows using the financial liability’s original effective interest rate. Any adjustment is immediately recognised as income or expense in the income statement.

(e) Property and equipment All categories of property and equipment are initially

recorded at cost and subsequently stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance costs are charged to the income statement during the financial period in which they are incurred.





(e) Property and equipment (continued) Depreciation is calculated using the straight line method

to write down their cost to their residual values over their estimated useful lives, as follows:

- Motor vehicles – 5 years - Computers & computer equipment – 3 years - Office equipment – 5 years - Furniture & fittings – 8 years

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each financial reporting date.

An asset’s carrying amount is written down immediately to its estimated recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposal of property and equipment are determined by comparing proceeds with carrying amount and are included in the income statement.

(f) Investment properties Buildings, or part of a building, (freehold or held under a

finance lease) and land (freehold or held under an operating lease) held for long term rental yields and/or capital appreciation and are not occupied by the Group are classified as investment property under non-current assets. Investment property is carried at fair value, representing open market value determined annually by external valuers. Properties under construction and development sites with projected use as Investment properties are valued at projected fair values taking into account current market conditions, outstanding investment costs and a risk loading according to the progress of the project. Changes in fair values are included in investment income in the income statement.

(g) Intangible assets The Group’s intangible assets relate to computer software and

goodwill (note 2(r)).

Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortised over their estimated useful lives of three years.

Development costs that are directly associated with the production of identifiable and unique software products controlled by the Group, and that will probably generate economic benefits exceeding costs beyond one year, are recognised as intangible assets if:-

- It is technically feasible to complete the software product so that it will be available for use;

- Management intends to complete the software product and use or sell it;

- There is an ability to use or sell the software product; - It can be demonstrated how the software product will

generate probable future economic benefits; - Adequate technical, financial and other resources to

complete the development and use or sell it are available; and, - The expenditure attributable to the software product

during its development can be reliably measured. Direct costs include the software development, employee

costs and an appropriate portion of relevant overheads. Other development expediture that do not meet these criteria are recognised as an expense as incurred. Development costs that have been expensed are not recognised as an asset in a subsequent period.

Computer software development costs recognised as assets are amortised over their estimated useful lives (not exceeding three years). Costs associated with maintaining computer software programmes are recognised as an expense as incurred.

(h) Impairment of non-financial assets Assets that have an indefinite useful life are not subject to

amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

(i) Financial assets

Classification and measurement

The Group classifies its financial assets as subsequently measured at either amortised cost or fair value on the basis of both the Group’s business model for managing the financial assets and the contractual cash flow characteristics of the financial asset. A financial asset is measured at amortised cost if both of the following conditions are met:





(i) Financial assets (continued)

Classification and measurement (continued)

a. the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows.

b. the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

The Group’s corporate bonds, government securities, receivables, mortgage loans, cash at bank and deposits with financial institutions are classified at amortised cost. The carrying values of various categories of Financial asset and Financial liabilities are shown in note 42.

All financial assets that do not meet the above criteria are measured at fair value. Equity investments for life business are classified at fair value through profit or loss. Equity investment for non life business are classified at fair value through other comprehensive income (note 24).

Recognition and de-recognition

Financial assets are recognised when the Group becomes a party to the contractual provisions of the asset. Initial recognition of financial asset is at fair value plus, for all financial assets except those carried at fair value through profit or loss, transaction costs. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or where the Group has transferred substantially all risks and rewards of ownership.

Equity investments are carried at fair value. Gains and losses arising from changes in the fair value of equity investments are recognised in other comprehensive income. When equity investments are derecognised, the cumulative gain or loss previously recognised in other comprehensive income are transferred to retained earnings. Dividends on equity instruments are recognised in the income statement when the Group’s right to receive payment is established.

Fair values of quoted investments in active markets are based on current bid prices. Fair values for unlisted equity securities are estimated using valuation techniques. These include the use of recent arm’s length transactions, discounted cash flow analysis and other valuation techniques commonly used by market participants.

(j) Impairment of financial assets

Assets carried at amortised cost:

The Group assesses at each financial reporting date whether there is objective evidence that a financial asset or a group of financial assets measured at amortised cost is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

Objective evidence that a financial asset or group of assets is impaired includes observable data that comes to the attention of the Group about the following loss events:

a. significant financial difficulty of the borrower;

b. a breach of contract, such as default or delinquency in interest or principal repayments;

c. the Group granting to the borrower, for economic or legal reasons relating to the borrower’s financial difficulty, a concession that the Group would not otherwise consider;

d. it becoming probable that the borrower will enter bankruptcy or other financial reorganisation;

e. the disappearance of an active market for that financial asset because of financial difficulties; or

f. observable data indicating that there is a measurable decrease in the estimated future cash flows from a group of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the Group, including:

- adverse changes in the payment status of borrowers in the Group; or - national or local economic conditions that correlate with defaults on the assets in the Group

The estimated period between a loss occurring and its identification is determined by management for each identified portfolio.

The Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, and individually or collectively for





(j) Impairment of financial assets (continued)

financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them 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 there is objective evidence that an impairment loss on financial assets 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 instrument’s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in the income statement. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the Group may measure impairment on the basis of an instrument’s fair value using an observable market price.

The calculation of the present value of the estimated future cash flows of a collateralised financial asset reflects the cash flows that may result from foreclosure less costs for obtaining and selling the collateral, whether or not foreclosure is probable.

For the purposes of a collective evaluation of impairment, financial assets are grouped on the basis of similar credit risk characteristics (i.e. on the basis of the Group’s grading process that considers asset type, industry, geographical location, collateral type, past-due status and other relevant factors). Those characteristics are relevant to the estimation of future cash flows for groups of such assets by being indicative of the debtors’ ability to pay all amounts due according to the contractual terms of the assets being evaluated.

Future cash flows in a group of financial assets that are collectively evaluated for impairment are estimated on the basis of the contractual cash flows of the assets in the Group and historical loss experience for assets with credit risk characteristics similar to those in the Group. Historical loss

experience is adjusted on the basis of current observable data to reflect the effects of current conditions that did not affect the period on which the historical loss experience is based and to remove the effects of conditions in the historical period that do not exist currently.

When a loan is uncollectible, it is written off against the related provision for loan impairment. Such loans are written off after all the necessary procedures have been completed and the amount of the loss has been determined. Subsequent recoveries of amounts previously written off decrease the amount of the provision for loan impairment in the income statement.

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 (such as an improvement in the debtor’s credit rating), the previously recognised impairment loss is reversed by adjusting the allowance account. The amount of the reversal is recognised in the income statement.

Loans that are either subject to collective impairment assessment or individually significant and whose terms have been renegotiated are no longer considered to be past due but are treated as new loans. In subsequent years, the renegotiated terms apply in determining whether the asset is considered to be past due.

(k) Accounting for leases Leases of property and equipment where the Group assumes

substantially all the risks and rewards of ownership are classified as finance leases.

Assets acquired under finance leases are capitalised at the inception of the lease at the lower of their fair value and the estimated present value of the underlying lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in non-current liabilities. The interest element of the finance charge is charged to the income statement over the lease period. Property and equipment acquired under finance leases is depreciated over the estimated useful life of the asset.

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the income statement on a straight-line basis over the period of the lease.





(l) Cash and cash equivalents Cash and cash equivalents includes cash in hand, deposits held

at call with banks, other short term highly liquid investments with original maturities of three months or less, and bank overdrafts.

(m) Employee benefits

i Retirement benefit obligations

The Group operates a defined benefit scheme for employees. A defined benefit plan is a pension plan that defines an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such

i Retirement benefit obligations (continued)

as age, years of service and compensation d an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.

The liability recognised in the statement of financial position in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of government bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension obligation.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise. Past-service costs are recognised immediately in income.

ii Other entitlements

Employee entitlements to long service awards are recognised when they accrue to employees. A provision is made for the estimated liability for such entitlements as a result of services rendered by employees up to the financial reporting date.

The estimated monetary liability for employees’ accrued annual leave entitlement at the financial reporting date is recognised as an expense accrual.

(n) Current and deferred income tax The tax expense for the period comprises current and

deferred income tax. Tax is recognised in the profit or loss except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

The current income tax charge is calculated on the basis of the tax enacted or substantively enacted at the reporting date. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying values in the financial statements. However, if the deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill; deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates and laws that have been enacted or substantively enacted at the reporting date and are expected to apply when the related deferred income tax liability is settled.

Deferred income tax assets are recognised only to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except

where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.





(o) Functional currency and translation of foreign currencies

i Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in ‘Kenyan Shillings (Kshs), which is the Group’s presentation currency.

ii Transactions and balances

Foreign currency transactions are translated into the functional currency using exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.

Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in profit or loss within ‘finance income or cost’. All other foreign exchange gains and losses are presented in profit or loss within ‘other income’ or ‘other expenses’.

Translation differences related to changes in amortised cost are recognised in profit or loss, and other changes in carrying amount are recognised in other comprehensive income.

Translation differences on non-monetary financial assets and liabilities, such as equities held at fair value through profit or loss, are recognised in profit or loss as part of the fair value gain or loss. Translation differences on non-monetary financial assets, such as equities classified as available-for-sale financial assets, are included in other comprehensive income.

iii Group balances

The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

(i) assets and liabilities for each statement of financial position presented are translated at the closing rate at the end of the reporting period;

(ii) income and expenses for each income statement amount are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and

(iii) all resulting exchange differences are recognised in other comprehensive income.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. Exchange differences arising are recognised in equity.

(p) Dividends Dividends payable to the Group’s shareholders are charged

to equity in the period in which they are declared. Proposed dividends are shown as a separate component of equity until declared.

(q) Consolidation

(i) Subsidiaries

Subsidiaries are all entities (including structured entities) over which the group has control. The group controls an entity when the group is exposed to, or has rights to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the date that control ceases.

The group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the group.

The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets.





(q) Consolidation (continued)

(i) Subsidiaries (continued)

If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in the acquiree is re-measured to fair value at the acquisition date; any gains or losses arising from such re-measurement are recognised in profit or loss.

Any contingent consideration to be transferred by the group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with IAS 39 either in profit or loss or as a change to other comprehensive income. Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for within equity.

The excess of the consideration transferred the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recorded as goodwill. If the total of consideration transferred, non-controlling interest recognised and eviously held interest measured is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in the income statement.

Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated. When necessary amounts reported by subsidiaries have been adjusted to conform with the group’s accounting policies.

(ii) Changes in ownership interests in subsidiaries without change of control

Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions – that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.

(iii) Disposal of subsidiaries

When the group ceases to have control any retained interest in the entity is remeasured to its fair value at the date when control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

(iv) Associates

Associates are all entities over which the group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting. Under the equity method, the investment is initially recognised at cost, and the carrying amount is increased or decreased to recognise the investor’s share of the profit or loss of the investee after the date of acquisition. The group’s investment in associates includes goodwill identified on acquisition.

If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income is reclassified to profit or loss where appropriate. The group’s share of post-acquisition profit or loss is recognised in the income statement, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income with a corresponding adjustment to the carrying amount of the investment. When the group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

The group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount adjacent to ‘share of profit/(loss) of associates in the income statement Profits and losses resulting from upstream and downstream transactions between the group and its associate are recognised in the group’s financial statements only to the extent of unrelated investor’s interests in the associates.





(q) Consolidation (continued)

(iv) Associates (continued)

Unrealised losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the group.Dilution gains and losses arising in investments in associates are recognised in the income statement.

(r) Goodwill Goodwill arises on the acquisition of subsidiaries, associates and

joint ventures and represents the excess of the consideration transferred over the Company’s interest in net fair value of the net identifiable assets, liabilities and contingent liabilities of the acquiree and the fair value of the non-controlling interest in the acquiree.

For the purpose of impairment testing, goodwill acquired

in a business combination is allocated to each of the CGUs, or groups of CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level.

Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs to sell. Any impairment is recognised immediately as an expense and is not subsequently reversed.

(s) Segmental reporting Operating segments are reported in a manner consistent

with the internal reporting provided to the chief operating decision- maker (CODM). The CODM is the person or group that allocates resources to and assesses the performance of the operating segments of an entity. The group has determined the UAP Holdings Board of Directors to be its CODM. This function is executed through the Board’s Finance and Investment Committee (FIC)

All transactions between business segments are conducted on an arm’s length basis, with intra-segment revenue and costs being eliminated in head office. Income and expenses directly associated with each segment are included in determining business segment performance.

3 Critical accounting estimates and judgments in applying accounting policies The Group makes estimates and assumptions that affect the

reported amounts of assets and liabilities within the next financial year. Estimates and judgements are continually evaluated and based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

i Future benefit payments from long-term insurance contracts

The estimation of future benefit payments from long-term insurance contracts is one of the Group’s most critical accounting estimates. There are several sources of uncertainty that need to be considered in the estimate of the liability that the Group will ultimately pay for such claims. Note 32 contains further details on this process.

The determination of the liabilities under long-term insurance contracts is dependent on estimates made by the Group. Estimates are made as to the expected number of deaths for each of the years in which the Group is exposed to risk. The Group bases these estimates on standard mortality tables that reflect historical mortality experience. The estimated number of deaths determines the value of the benefit payments and the value of the valuation premiums. The main source of uncertainty is that epidemics such as AIDS could result in future mortality being significantly worse than in the past for the age groups in which the Group has significant exposure to mortality risk.

However, continuing improvements in medical care and social conditions could result in improvements in longevity in excess of those allowed for in the estimates used to determine the liability for contracts where the Group is exposed to longevity risk. For contracts without fixed terms and with discretionary participation in profits, it is assumed that the Group will be able to increase mortality risk charges in future years in line with emerging mortality experience. Estimates are also made as to future investment income arising from the assets backing long-term insurance contracts. These estimates are based on current market returns as well as expectations about future economic and financial developments. The average estimated rate of investment return is 12.25% p.a.(2013:13.5% p.a.).




3 Critical accounting estimates and judgments in applying accounting policies (continued) ii Claims reserving and determination of IBNR

The estimation of future contractual cash flows in relation to reported losses and losses incurred but not reported is a key accounting estimate. There are several sources of uncertainty that need to be considered in the estimate of the liability that the Group will ultimately pay for such claims. Case estimates are computed on the basis of the best information available

at the time the records for the year are closed. Further details on the process used to estimate claims incurred but not reported and amounts recorded as liabilities at the end of the current and previous year are set out in note 32 of the financial statements.

iii Fair value of financial assets

Fair values of certain financial assets recognised in the financial statements are determined using valuation techniques based on assumptions that are not supported by prices from current market transactions or observable market data.

The fair values of financial instruments that are not quoted in active markets are determined by using valuation techniques. Where valuation techniques (for example models) are used to determine fair values, they are validated and periodically independently reviewed by qualified senior personnel.

iii Fair value of financial assets (continued)

All models are certified before they are used, and models are calibrated to ensure that outputs reflect actual data and comparative market prices. To the extent practical, models use observable data, however, areas such as credit risk (both own and counterparty), volatilities and correlations require management to make estimates.

iv Recoverable amount of receivables

Critical estimates are made by the directors in determining the recoverable amount of impaired receivables. This process is set out in note 2(j). The carrying amounts of receivables are shown on note 4(b).

v. Goodwill impairment

Critical estimates have been made by directors in determining whether the goodwill is impaired. These assumptions are disclosed on note 18.

4 Risk Governance and Risk Management System

Risk management objectives

Risk management is a central part of the Group’s strategic management process hence we continuously seek to enhance the risk management capabilities of the Group. It is anticipated that our risk management practices will increase the probability of success, and reduce both the potential of failure and the uncertainty associated with achieving the group’s overall objectives.

The objectives of the Group’s risk management activities are

to achieve sustained competitive advantage via a rigorous, group wide risk management system that is fully aligned to the Group values, strategic business initiatives and processes. At a strategic level, our risk management objectives are to:

• Identify the Group’s significant risks in relation to the corporate strategies pursued;

• Formulate the Group’s risk appetite and ensure that business profile and plans are consistent with it;

• Optimise risk/return decisions by taking them as closely as possible to the business, while establishing strong and independent review and challenge structures;

• Ensure that business growth plans are properly supported by effective risk infrastructure;

• Manage risk profile to ensure that specific financial deliverables remain possible under a range of adverse business conditions; and

• Help executives improve the control and co-ordination of risk taking across the business.

Our risk management strategy defines the extent of the risks we are prepared to incur for our clients and shareholders. The development of our risk strategy is embedded in the annual planning cycle and hence in our business strategy. That is, Integrating Strategy, Risk and Performance management takes place at strategy setting, first with a full Executive management consensus on clearly defined business objectives. Once Executive management have defined the objectives, they then identify the key risks that may present an opportunity to pursue those business objectives, or impede their ability to achieve them.




4 Risk Governance and Risk Management System (continued)

Organisational structure

To ensure that our risk management operates efficiently and effectively, we have established a specific risk management function within UAP Global Services as a Shared Service for the entire Group. Our Risk Management supervises risk management Group-wide with the support of decentralised structures in all units of the Group. It is headed by the Group Risk and Compliance Manager (GCRM), who is supported by interdisciplinary teams of highly qualified staff. The Group’s activities expose it to a variety of risks, including insurance risk and financial risk.

The Group’s overall risk management programme focuses on the identification and management of risks and seeks to minimise potential adverse effects on its financial performance, by use of underwriting guidelines and capacity limits, reinsurance planning, credit policy governing the acceptance of clients, and defined criteria for the approval of intermediaries and reinsurers. Investment policies are in place which help manage liquidity, and seek to maximise return within an acceptable level of interest rate risk. Management Framework ensure that staff in our risk management structure and the Group as a whole are kept informed of our risk strategy, organisation and processes, enabling the risks incurred to be actively controlled.

Risk Management Framework

In order to achieve its mission and objectives, the Group has developed an Enterprise Risk management framework to provide a guide within which key risks affecting the group are identified, measured and managed.

This risk management framework also provides management with proven risk management guidelines that support their decision-making responsibilities and processes, together with managing the risks that impact on the objectives of the Group.

At the heart of the risk management framework is a governance process with clear responsibilities for taking, managing, monitoring and reporting risks. The Group articulates the roles and responsibilities for risk management throughout the organization, from the Board of Directors and the Chief Executive Officer (CEO) to its businesses and functional areas, thus embedding risk management in the business

The UAP Risk Management Framework is the Group’s main risk governance document; it specifies the Group’s Target Risk Management Operating Model including Risk management

authorities and responsibilities, procedures and reporting requirements. The risk management framework also classifies the risks the Group faces into broad risk categories. The Group regularly enhances the ERM Framework to reflect new insights and changes in the Group’s environment.

One of the key elements of the Group’s risk management framework is to foster risk transparency by establishing risk reporting standards throughout the Group. The Group regularly reports on its risk profile, current risk issues, adherence to its risk policies and improvement actions both at a local and on a Group level. The Group has procedures in place for the timely referral of risk issues to senior management and the Board of Directors.

The implementation of the framework is driven by a risk management culture and awareness that permeates throughout the Group and is supported by a set of policies and procedures; Tools; and A robust reporting mechanisms The Group continues to consciously take risks for which it expects an adequate return. This approach requires sound judgment and an acceptance that certain risks can and will materialize in the future.

Significant risks

According to our classification, significant risks are risks that could have a long-term adverse effect on the Group’s assets, financial situation or profitability. We have applied this definition consistently to the individual business units and legal entities, taking account of their individual risk tolerance. The section below summarises the significant risks faced by the group and how they are managed.

(a) Insurance risk The risk under any one insurance contract is the possibility that

the insured event occurs and the uncertainty of the amount of the resulting claim. By the very nature of an insurance contract, this risk is random and therefore unpredictable. For a portfolio of insurance contracts where the theory of probability is applied to pricing and provisioning, the principal risk that the Group faces under its insurance contracts is that the actual claims and benefit payments exceed the carrying amount of the insurance liabilities.

This could occur because the frequency or severity of claims and benefits are greater than estimated. Insurance events are random and the actual number and amount of claims and benefits will vary from year to year from the level established using statistical techniques. Experience shows that the larger the portfolio of similar insurance contracts, the smaller the relative variability about the expected outcome will be.




4 Risk Governance and Risk Management System (continued) (a) Insurance risk (continued)

In addition, a more diversified portfolio is less likely to be affected by a change in any subset of the portfolio.

The group has developed its insurance underwriting strategy to diversify the type of insurance risks accepted and within each of these categories to achieve a sufficiently large population of risks to reduce the variability of the expected outcome. Factors that aggravate insurance risk include lack of risk diversification in terms of type and amount of risk, geographical location and type of industry covered.

The following tables disclose the concentration of insurance risk by the class of business in which the contract holder operates and by the maximum insured loss limit included in the terms of the policy. The amounts are the maximum insured loss limit of the insurance liabilities (gross and net of reinsurance) arising from insurance contracts.

Year ended 31 December 2014 Class of business

Maximum insured loss Total

Kshs Kshs Kshs Kshs’

(Amounts presented in Kshs ‘000) 0-15m 15-250m 250-1000m 000

General insurance business

Motor Gross 4,408,647 9,706,147 29,801,063 43,915,857

Net 3,008,472 4,338,726 1,401,268 8,748,466

Fire Gross 1,953,844 22,035,557 465,136,394 489,125,795

Net 1,941,969 12,926,165 424,428,386 439,296,520

Accident Gross 3,416,087 18,279,058 136,641,696 158,336,841

Net 2,986,386 12,114,477 12,714,023 27,814,886

Other Gross 1,729,969 18,428,253 280,998,139 301,156,361

Net 1,546,671 5,266,738 159,691,031 166,504,440

Life assurance business

Ordinary life Gross 5,480,030 76,472 - 5,556,502

Net 5,480,030 76,472 - 5,556,502

Group life Gross 156,624,959 289,952,470 1,573,376,035 2,019,953,464

Net 144,927,847 140,592,989 166,487,878 452,008,714

Total Gross 173,613,536 358,477,957 2,485,953,327 3,018,044,820

Net 159,891,375 175,315,567 764,722,586 1,099,929,528




4 Risk Governance and Risk Management System (continued) (a) Insurance risk (continued)

Year ended 31 December 2013

Class of business

Maximum insured loss Total

Kshs Kshs Kshs Kshs’

(Amounts presented in Kshs ‘000) 0-15m 15-250m 250-1000m 000

General insurance business

Motor Gross 168,476,154 42,999,496 27,657,719 239,133,369

Net 71,202,059 24,288,847 24,088,914 119,579,820

Fire Gross 50,865,749 181,956,950 1,878,497,428 2,111,320,127

Net 48,277,183 149,503,666 524,052,869 721,833,718

Accident Gross 57,480,314 121,019,174 131,355,729 309,855,217

Net 42,617,920 73,100,208 100,927,152 216,645,280

Othe Gross 44,516,137 104,901,481 364,827,237 514,244,855

Net 35,480,283 54,091,446 22,825,828 112,397,557

Life assurance business

Ordinary life Gross 3,495,236 41,472 - 3,536,708

Net 3,495,236 41,472 - 3,536,708

Group life Gross 103,763 6,014,209 23,434,506 29,552,478

Net 99,717 5,320,810 15,951,543 21,372,070

Total Gross 324,937,353 456,932,782 2,425,772,619 3,207,642,754

Net 201,172,398 306,346,449 687,846,306 1,195,365,153

The concentration by sector or maximum insured loss at the end of the year is broadly consistent with the prior year.

(b) Financial risk

The Group is exposed to financial risk through its financial assets, financial liabilities (investment contracts and borrowings), reinsurance assets and insurance liabilities. In particular the key financial risk is that the proceeds from its financial assets are not sufficient to fund the obligations arising from its insurance and investment contracts. The most important types of risk are credit risk, liquidity risk and market risk. Market risk includes currency risk, interest rate risk, equity price risk and other price risks.

These risks arise from open positions in interest rate, currency and equity prices, all of which are exposed to general and specific market movements. The risks that the Group primarily faces due to the nature of its investments and liabilities are liquidity rate risk and equity price risk.

The Group manages these risks through policies set out by the Finance and Investment Committee of the Board (FIC). These policies have been developed to achieve long-term investment returns in excess of the Group’s obligations under insurance and investment contracts. The principal technique is to match assets to the liabilities arising from insurance and investment contracts by reference to the type of benefits payable to contract holders. For each distinct category of liabilities, a separate portfolio of assets is maintained.




4 Management of insurance and financial risk (Continued)

(b) Financial risk (continued)

Market risk

i Foreign exchange risk

The group underwrites some short term insurance policies contracted in US dollars and maintains foreign currency denominated current accounts with local banks. Additionally, the group invests in offshore stock exchange markets and places deposits in local financial institutions denominated in foreign currencies. This exposes the group to onward foreign exchange risk arising from the various currency exposures, primarily with respect to the Uganda shillings, US dollar, Euro and Sterling Pound. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities.

At 31 December 2014, if the Shilling had weakened/strengthened by 10% against the US dollar with all other variables held constant, the post-tax profit for the year would have been Kshs 39 million (31 December 2013: Kshs 53.3 million) higher/lower, mainly as a result of US dollar bank balances. At 31 December 2014, and 31 December 2013, the group had no significant exposure with respect to Uganda Shillings, Euro and the Sterling Pound.

ii Price risk

The group is exposed to equity securities price risk because of investments in quoted and unquoted shares classified either as fair value through profit or loss or other comprehensive income. The group is not exposed to commodity price risk. To manage its price risk arising from investments in equity securities, the group diversifies its portfolio. Diversification of the portfolio is done in accordance with policies set out by the Finance & Investment committee of Board. All quoted shares held by the group are traded on the Nairobi Securities Exchange (NSE) and Uganda Stock Exchange (USE).

At 31 December 2014, if the NSE Index had increased/decreased by 10% with all other variables held constant and all the Group’s equity instruments moved according to the historical correlation to the index, equity would have been Kshs 597 million higher/ lower (31 December 2013: Kshs 544 million). Movement in the USE would not have had a material impact on the Group’s equity 31 December 2014 and 31 December 2013 as investments in the USE Index are not material.

Investment in shares of Centum Investment Company Limited at 31 December 2014 comprised of 32% (31 December 2013: 22%) respectively of the Group’s total equity portfolio. There was no other concentration of price risk.

iii Interest rate risk

Fixed interest rate financial instruments expose the Company and Group to fair value interest rate risk. Variable interest rate financial instruments expose the company to cash flow interest rate risk. The Group’s fixed interest rate financial instruments are government securities, deposits with financial institutions and borrowings. The Company’s variable interest rate financial instruments are quoted corporate bonds, which are always the treasury bills rate plus some basis points. No limits are placed on the ratio of variable rate financial instruments to fixed rate financial instruments.

Investment contracts with fixed and guaranteed terms, government securities and deposits with financial institutions held to maturity are accounted for at amortised cost and their carrying amounts are not sensitive to changes in the level of interest rates. At 31 December 2014, if interest rates on quoted corporate bonds had been 2% higher/lower with all other variables held constant, post-tax profit for the year would have been Kshs 29 milion (31 December 2013: Kshs 6.3 million) lower/higher, mainly as a result of higher/lower interest income on floating rate quoted corporate bonds.

Credit risk The Group has exposure to credit risk, which is the risk that a

counterparty will be unable to pay amounts in full when due. Key areas where the Group is exposed to credit risk are:

• Receivables arising out of direct insurance arrangements; • Receivables arising out of reinsurance arrangements; • Reinsurers’ share of insurance liabilities; • Corporate bonds; • Government securities; and • Mortgage loans receivable.

The Group has no significant concentrations of credit risk. The Group structures the levels of credit risk it accepts by placing limits on its exposure to a single counterparty, or groups of counterparty, and to geographical and industry segments. Such risks are subject to an annual or more frequent review.

Limits on the level of credit risk by category and territory are approved quarterly by the Board of Directors.

Reinsurance is used to manage insurance risk. This does not, however, discharge the Group’s liability as primary insurer.






Credit risk (Continued) If a reinsurer fails to pay a claim for any reason, the Group remains liable for the payment to the policyholder. The creditworthiness of

reinsurers is considered on an annual basis by reviewing their financial strength prior to finalisation of any contract.

The exposure to individual counterparties is also managed by other mechanisms, such as the right of offset where counterparties are both debtors and creditors of the Group. Management information reported to the Group includes details of provisions for impairment on loans and receivables and subsequent write-offs. Finance and Investment committee of the Group Board makes regular reviews to assess the degree of compliance with the Group procedures on credit. Exposures to individual policyholders and groups of policyholders are collected within the ongoing monitoring by the management credit committee.

The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings if available or historical information about counterparty default rates. None of the group’s credit risk counter parties are rated except the Government of Kenya, the issuer of the Group’s government securities which has B+ rating. The Company classifies counterparties without an external credit rating as below:

Group 1 - new customers/related parties. Group 2 - existing customers/related parties with no defaults in the past. Group 3 - existing customers/related parties with some defaults in the past. All defaults were fully recovered.

Maximum exposure to credit risk before collateral held - Group 31-Dec 31-Dec Credit rating/ 2014 2013 Classification Kshs ’000 Kshs ’000Receivables arising out of reinsurance arrangements Group 2 706,371 472,759Receivables arising out of direct insurance arrangements Group 2 2,486,192 2,317,694Reinsurers’ share of insurance liabilities Group 2 2,509,829 2,230,060Other receivables Group 2 1,550,187 1,165,599Government securities Group 2 5,875,753 4,566,442Corporate bonds Group 2 1,588,613 449,025Mortgage loans receivable Group 2 255,437 228,307Deposits with financial institutions Group 2 3,173,707 1,972,751Cash at bank Group 2 1,025,540 1,341,151Total 19,171,629 14,743,788

Maximum exposure to credit risk before collateral held - Company

31-Dec 31-Dec Credit rating/ 2014 2013 Classification Kshs ’000 Kshs ’000Cash at bank Group 2 16,862 5,219Deposits with financial institutions Group 2 1,248,062 703,325Amount due from subsidiaries Group 2 2,186,511 1,617,577Other receivables Group 2 696,711 275,887Total 4,148,146 2,602,008

No collateral is held for any of the above assets other than for staff mortgage loans and car loans included under other receivables. Properties in relation to staff mortgage loans and motor vehicles in relation to staff car loans are charged to the group as collateral.






Credit risk (continued) The fair value of this collateral was Kshs 226 million (2013: Kshs 216 million) and no collateral had been repossessed at as the end of the year. All receivables that are neither past due or impaired are within their approved credit limits, and no receivables have had their terms

renegotiated. All receivables are classified in group 2.

None of the above assets are either past due or impaired except for the following amounts in the Group’s receivables under direct insurance and reinsurance arrangements.

Credit rating / Receivables arising from direct Receivables arising from

classification insurance arrangements re-insurance arrangements

31-Dec 31-Dec 31-Dec 31-Dec

2014 2013 2014 2013

Kshs ’000 Kshs ’000 Kshs ’000 Kshs ’000

Past due but not impaired:

- by up to 30 days Group2 1,079,359 395,889 159,657 13,217

- by 31 to 60 days Group2 306,514 400,283 8,496 84,783

- by 61 to 150 days Group2 573,732 675,380 424,403 308,302

- by 151 to 360 days Group2 526,587 846,142 113,815 66,457

Total past due but not impaired 2,486,192 2,317,694 706,371 472,759

Receivables individually

determined to be impaired:

Carrying amount before

provision for impairment

820,011 800,817 - -

Provision for impairment loss (820,011) (800,817) - -

Net carrying amount 2,486,192 2,317,694 706,371 472,759

No collateral is held in respect of the receivables that are past due but not impaired. Movements on the provision for impairment of receivables arising on direct insurance arrangements are as follows:

31-Dec 31-Dec

2014 2013

Kshs ’000 Kshs ’000

At start of year 800,817 624,898

Provision in the year 19,194 175,919

At end of year 820,011 800,817

All receivables past due by more than 365 days are considered to be impaired, and are carried at their estimated recoverable value.






Credit risk (Continued) The individually impaired receivables mainly relate to receivables arising out of direct insurance arrangements, the following amounts

have been individually assessed: Direct insurance arrangements

31-Dec-14 31-Dec-13


Individually assessed impaired receivables

Brokers 204,965 143,856

Agents 231,113 198,991

Insurance companies 156,095 120,145

Direct clients 227,838 337,825

At end of year 820,011 800,817 Liquidity risk Liquidity risk is the risk that the Group is unable to meet its payment obligations associated with its financial liabilities as they fall due and

to replace funds when they are withdrawn.

The Group is exposed to daily calls on available cash resources for claims settlement and other administration expenses. The Group does not maintain cash resources to meet all of these needs as experience shows that a minimum level of reinvestment of maturing funds can be predicted with a high level of certainty. The Finance and Investment Committee sets limits on the minimum level of cash balances.

The table below presents the cash flows payable by the Group under financial liabilities by remaining contractual maturities (other than insurance contract liabilities which are based on expected maturities) at the financial reporting date.

Up to 1 1 to 3 3 to 12 1 to 5 Over 5 month month month years years Total

As at 31 December 2014 Kshs ’000 Kshs ’000 Kshs ’000 Kshs ’000 Kshs ’000 Kshs ’000

Liabilities

Insurance contract liabilities 2,034,163 1,274,855 1,602,524 2,486,621 322,272 7,720,435

Creditors arising from r

einsurance arrangements 474,025 77,156 194,569 139,049 - 884,799

Payable under deposit

administration contracts 3,542,067 820 9,331 79,165 1,638 3,633,021

Unit-linked

investment contracts 1,001,699 - 4,268 34,861 - 1,040,828

Other payables 9,386 107,885 1,165,161 215,739 - 1,498,171

Borrowings 3,480 44,351 31,323 3,901,847 - 3,981,001

Total financial liabilities 7,064,820 1,505,067 3,007,176 6,857,282 323,910 18,758,255




4 Management of insurance and financial risk (continued)


Liquidity risk (continued)

Up to 1 1 to 3 3 to 12 1 to 5 Over 5 month month month years years Total

As at 31 December 2013 Kshs ’000 Kshs ’000 Kshs ’000 Kshs ’000 Kshs ’000 Kshs ’000

Liabilities

Insurance contract liabilities 925,793 872,426 886,428 1,062,158 1,521,075 5,267,880

Creditors arising from

reinsurance arrangements 418,032 208,754 426,612 26,261 - 1,079,659

Payable under deposit

administration contracts 2,812,089 - - - - 2,812,089

Unit-linked

investment contracts 8,490 6,520 39,918 301,309 567,059 923,296

Other payables 71,752 121,226 733,937 27,491 - 954,406

Borrowings 7,988 20,039 40,893 55,996 1,954,803 2,079,719

Total financial liabilities 4,244,144 1,228,965 2,127,788 1,473,215 4,042,937 13,117,049

Investment contracts and deposit administration contracts can be surrendered before maturity for a cash surrender value specified in the contractual terms and conditions. Prudent liquidity risk management includes maintaining sufficient cash balances to cover anticipated surrenders before the contractual maturity dates. In addition, the Group invests only a limited proportion of its assets in investments that are not actively traded. The Group’s listed securities are considered readily realisable, as they are actively traded on the Nairobi Securities Exchange and Uganda Stock Exchange.

The table below presents the cash flows payable by the company under financial liabilities by remaining contractual maturities at the financial reporting date.

Less Greater

than 1 year than 1 year


At 31 December 2014:

Amounts due to subsidiaries (Note 43(iv)) 1,991,496 -

Other payables 280,427 -

Borrowings 252,898 1,825,749

2,524,821 1,825,749

At 31 December 2013:

Amounts due to subsidiaries (Note 43(iv)) 1,608,870 -

Other payables 152,052 -

1,760,922 -





(c) Capital management

The Group’s objectives when managing capital, which is a broader concept than the ‘equity’ on the statement of financial position, are: • to comply with the capital requirements as set out in the regulations of the jurisdictions in which the Group entities operate in; • to comply with regulatory solvency requirements as set out in legislation in the jurisdictions in which the Group entities operate in;. • to safeguard the Group’s ability to continue as a going concern, so that it can continue to provide returns to shareholders and benefits for other stake holders; and • to provide an adequate return to shareholders by pricing insurance and investment contracts commensurately with the level of risk.

The Group’s paid up capital comprises share capital as disclosed on note 13. The Group manages the minimum paid up capital and regulatory Capital (solvency) held in each subsidiary as capital. Capital adequacy and solvency margin are monitored regularly by the Board of Directors. The required information is filed with the respective authorities.

During the year, the Group held the minimum paid up share capital required. The Group entities also met the solvency margins required in the jurisdictions in which they operate, except for the Life Assurance (Kenya) and General Insurance (Rwanda and Tanzania) subsidiaries. Appropriate measures, including capital injection and business turn-around initiatives, have been instituted to resolve the solvency gaps in these entities.

The table below summarises the capital requirements of the Group’s entities in the various jurisdictions in which the Group operates and the amount of capital held.

31-Dec-14 Kenya Uganda General Life General Life insurance Assurance Sudan insurance Insurance Rwanda Tanzania

Kshs ’000 Kshs ’000 Kshs ’000 Kshs ’000 Kshs ’000 Kshs ’000 Kshs ’000

Regulatory capital

requirements 300,000 150,000 341,190 70,006 100,000 - -

Amount of paid

up capital 600,000 644,093 342,710 241,950 199,780 393,567 328,569

Required

solvency margin 8,046,000 400,000 389,000 293,000 424,000 64,000 171,000

Solvency margin

by Company 12,322,000 287,000 1,184,000 387,000 503,000 (18,000) (316,000)

Surplus/(deficit) over

required margin 4,276,000 (113,000) 795,000 94,000 79,000 (82,000) (487,000)





(c) Capital management (continued) 31-Dec-13 Kenya General Life insurance Assurance Sudan Uganda Rwanda Tanzania Kshs ’000 Kshs ’000 Kshs ’000 Kshs ’000 Kshs ’000 Kshs ’000Regulatory capital

requirements 300,000 150,000 341,190 70,006 -

Amount of paid

up capital 600,000 644,093 342,710 241,950 169,486 328,569

Required

solvency margin 7,389,394 282,993 - 220,472 64,516 828,997

Solvency margin

by Company 9,399,945 572,490 596,546 579,527 42,366 593,396

Surplus over required margin 2,010,551 289,497 596,546 359,055 (22,150) (235,601)

(d) Fair values of financial assets and liabilities The fair value of government securities at 31 December 2014 is estimated at Kshs 2,959 million (2013: Shs 3,705 million) compared to the

carrying value Kshs 5, 875 million (2013: Shs 4,566 million). The fair values of the Group’s other financial assets and liabilities approximate the respective carrying amounts, due to the generally short periods to contractual repricing or maturity dates as set out above. Fair values are based on discounted cash flows using a discount rate based upon the borrowing rate that the directors expect would be available to the Group at the financial reporting date.

(e) Fair values estimation

IFRS 7 and IFRS 13 require disclosure of fair value measurements by the following levels of hierarchy for financial instruments that are measured in the statement of financial position at fair value:

• Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1). • Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2). • Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).

The following table presents the Group’s assets that are measured at fair value at the end of the year.

Year ended 31 December 2014 Total Level 1 Level 2 Level 3 balance Kshs ’000 Kshs ’000 Kshs ’000 Kshs ’000Assets Equity investments 5,998,957 - 89,671 6,088,628Government securities 742,791 - - 742,791Total 6,741,748 - 89,671 6,831,419 Year ended 31 December 2013 Total Level 1 Level 2 Level 3 balance Kshs ’000 Kshs ’000 Kshs ’000 Kshs ’000Assets Equity investments 5,444,107 - 62,401 5,506,508Government securities 705,091 - - 705,091Total 6,149,198 - 62,401 6,211,599





(e) Fair values estimation (continued) The fair value of financial instruments traded in active markets

is based on quoted market prices at the end of each reporting period. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The quoted market price used for financial assets held by the company is the current bid price. These instruments are included in level 1. Instruments included in level 1 comprise of primarily equity investments quoted at Nairobi Securities Exchange and Uganda Stock Exchange.

Financial instruments measured at fair value that are not traded in active markets relate to Group’s investment in the holding company for an investment property. Fair value estimate is based on the Group’s share of the net asset of the investee company. As the investment property of the investee company is measured at their fair value, the net asset value of the investee company approximates its fair value. This estimate is classified as level 3. There were no transfers into or out of level 3 during the year (2013: Nil)

5 (a) Segmental information Management has determined the operating segments based

on the reports reviewed by the Group’s Board of Directors through its Finance and Investment Committee (FIC) that are used to make strategic decisions.

The Group reviews its operating segments (business units) by type of business and by geography. Based on this, the group’s operating segments comprise of General Insurance, Life Assurance, Property, Investment management and related Financial Services. The group currently has operations in six countries namely Kenya, Uganda, South Sudan, Rwanda, Tanzania and Democratic Republic of Congo (DRC).

The reportable operating segments derive their revenue

primarily from the underwriting of classes and non-life risks as defined by the Insurance Act and investment property.

Other services offered by the Group that are included within the Kenya and Uganda segments include stock brokerage, investment management and related financial advisory services. The results of these operations are included in the all other segments column as they are not material to the Group.

The Group Board of Directors assesses the performance of the reporting segments based on a measure of revenue and profitability.


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7,

405,

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0,63

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ear

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453,

211

143,

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01

24,9

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3

8,67

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0,67

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253

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5 (b) Gross earned premium The premium income of the Group can be analysed between the main classes of business as shown below:-

Gross Written Premium Gross Earned Premium

2014 2013 2014 2013

Kshs’000 Kshs’000 Kshs’000 Kshs’000

Short term insurance business

Engineering 793,243 576,189 569,681 473,670

Fire 1,407,321 1,607,940 1,554,979 1,442,785

Liability 296,944 334,962 295,855 293,139

Marine 247,183 301,233 255,828 281,797

Motor 3,569,014 3,295,959 3,483,676 3,016,792

Workmen’s Compensation 407,971 330,418 379,967 332,435

Personal Accident and medical 408,268 281,512 339,672 269,887

Theft 626,785 477,240 580,687 477,267

Medical 4,513,218 3,883,917 4,253,805 3,427,923

Others 445,513 228,955 460,963 209,560

Total 12,715,460 11,318,325 12,175,113 10,225,255

Long term business

Ordinary life 1,169,172 716,093 1,169,172 716,093

Group life 948,103 702,868 814,159 618,512

Total 2,117,275 1,418,961 1,983,331 1,334,605

Total 14,832,735 12,737,286 14,158,444 11,559,860

Gross written premium represents the total premiums receivable by the Group before adjusting for the unearned proportion of the premiums. It is reported in the income statement for information purposes only. Revenue comprises gross earned premiums.

All revenue is earned from external customers.




6 Investment income 2014 2013


Interest from government securities 690,049 520,790

Bank deposit interest 282,077 343,917

Loan interest receivable 57,588 25,515

Rental income from investment properties 422,007 271,048

Miscellaneous income 51,133 5,310

Gain/(loss) in foreign exchange 81,025 (43,298)

Profit/(loss) on sale of equities (11,592) 116,621

Fair value gains on investment properties (note 21) 2,493,175 1,140,556

Fair value gains on equity assets at fair value through profit or loss (note 24(b)) 368,005 469,722

Dividends receivable from equity investments 134,418 147,706

Fair value gains on government securities assets at fair value through profit or loss 35,887 11,455

Investment fees - (146,087)

Total 4,603,772 2,863,255

7 Other income 2014 2013


Fee income 26,656 22,991

Others 3,543 47,587

Total 30,199 70,578

Fee income relates to administration fees arising from services rendered in relation to the issue and management of deposit administration

and other investment contracts. There are no individually significant items included in other category.




8 Claims and policyholder benefits payable

i) Short term insurance business

2014 2013


Engineering 98,461 28,109

Fire 419,961 397,211

Liability 153,066 -10,139

Marine 126,666 105,572

Motor 2,241,260 1,633,706

Workmen’s compensation 204,651 118,108

Personal accident 116,608 67,070

Theft 116,218 207,238

Medical 2,933,862 2,478,555

Others 208,139 240,642

Total 6,618,892 5,266,072

ii) Long term insurance business

2014 2013


Death, maturity and benefits payable 516,515 599,466

Increase in policy owners’ liabilities 1,736,854 689,141

Interest payable on deposit administration and unit linked investments contracts 198,894 73,380

Total 2,452,263 1,361,987

Total 9,071,155 6,628,059




9 Operating and other expenses 2014 2013


Staff costs (Note 10) 1,497,541 1,291,191

Auditor’s remuneration 10,773 10,003

Depreciation (Note 19) 132,943 89,117

Amortisation of intangible assets (Note 20) 117,124 108,848

Impairment charge on receivables arising out of direct insurance arrangements (Note 4) 19,194 175,919

Operating lease rentals 234,934 179,215

Repairs and maintenance 156,015 167,694

Travelling costs 117,685 58,171

Directors’ expenses 96,262 35,817

Professional fees 147,904 81,995

Software maintenance and printing costs 142,485 232,632

Marketing and branding 299,516 138,747

Communication costs 89,767 48,313

Insurance related expenses 196,493 116,434

Other expenses 1,116,435 525,262

Total 4,375,071 3,259,358

There are no individually significant items included in other category.

10 Staff costs 2014 2013


Salaries and wages 1,333,137 1,200,432

Social security benefits costs 36,461 21,192

Retirement benefit costs:

Defined benefits scheme (Note 23) 63,875 18,705

Defined contribution scheme 64,068 50,862

Total 1,497,541 1,291,191




11 Income tax expense 2014 2013


Current income tax 251,693 343,446

Deferred tax (Note 22) 377,349 57,893

Total 629,042 401,339 The tax on the Group’s profit before income tax differs from the theoretical amount that would arise using the statutory income tax rate as follows:

2014 2013



Tax calculated at a tax rate of 30% (2013: 30%); (15% (2013:15%) for UAP South-Sudan) 926,744 653,888

Less: tax effect of income not subject to tax (588,257) (260,509)

Add: tax effect of expenses not deductible for tax purposes 290,555 7,960

Total 629,042 401,339

Movement in the tax (payable) / recoverable account is as follows:

2014 2013


At the beginning of the year (48,163) 41,672

Taxation charge (251,693) (343,446)

Taxation paid 371,270 253,611

At end of the year 71,414 (48,163)

Disclosed as follows;

31-Dec 31-Dec

2014 2013


Current income tax recoverable 113,477 27,614

Current income tax payable (42,063) (75,777)

Total 71,414 (48,163)




12 Earnings per share Basic earnings per share are calculated by dividing the profit attributable to equity holders of the Company by the weighted average

number of ordinary shares outstanding during the year.

2014 2013

Kshs’000 Kshs’000

Profit attributable to equity holders of the company 1,485,976 1,657,576

Number of shares in issue 211,420 211,420

Basic earnings per share 7.03 7.84

Diluted earnings per share 7.03 7.84 There were no potentially dilutive shares outstanding at 31 December 2014 or 31 December 2013. Diluted earnings per share are therefore

the same as basic earnings per share. There was no change in number of shares during the year ended 31 December 2014. There were no shares issued in 2014 thus no weighting done.

13 Share capital The total authorised number of ordinary shares is 220 million (2013: 220 million) with a par value of Kshs 5 per share. At 31 December 2014,

211 million ordinary shares were in issue and were fully paid.

Number Ordinary Share

of shares shares premium

Kshs ’000 Kshs ’000 Kshs ’000

Balance at 1 January 2013, 1 January 2014 and

31 December 2014 211,420 1,057,099 4,612,626

14 Fair value reserve for equity investments The fair value reserves relate to unrealised gains or losses on the Group’s equity investments that are carried at fair value through other

comprehensive income. This reserve is not distributable.

15 Retained earnings The retained earnings balance represents the amount available for dividend distribution to the shareholders of the Company, except for

cumulative fair value gains on the investment properties of Kshs 6,703 million (31 December 2013:Kshs 4,210 million) whose distribution is subject to restrictions imposed by regulation.

16 Dividends During the year, no interim dividend (2013: Nil) was paid to shareholders in the company register. The Directors recommend the payment

of a final dividend of Kshs 1.7 per share (2013; Kshs 1.7 per share) amounting to Kshs. 359 million (2013: Kshs 359 million). Payment of dividends is subject to withholding tax at a rate of either 5% or 10% depending on the residence of the respective shareholders.

17 Statutory reserve The statutory reserve represents amounts set up in the Group’s Ugandan subsidiary in accordance with the Ugandan Insurance Act, which

requires the following amounts to be appropriated from earnings:

• a contingency reserve calculated at the higher of 2% of gross premium and 15% of net profits of UAP Uganda. • a capital reserve, calculated at 5% of net profits of UAP Insurance Uganda Limited.

The reserve is available for distribution to the extent that the minimum amounts required by the Uganda Insurance Act are maintained.




18 Goodwill The goodwill arose from acquisition of UAP Century Tanzania in 2013 and UAP Insurance Uganda Limited in 2004 and is therefore all

allocated to the Tanzania and Uganda Cash Generating Units (CGUs) for the purposes of impairment assessment.

31-Dec 31-Dec

2014 2013


At start of year: 240,030 65,667

Arising from acquisition of UAP Insurance Tanzania - 174,363

Total 240,030 240,030

The recoverable amount of a CGU is determined based on value-in-use calculations. These calculations use cash flow projections based on financial budgets approved by management covering a 5 year period. The growth rates do not exceed the long-term average growth rates for the respective businesses in which CGUs operate.

The key assumptions used for the value in use calculations are:

31 31

December December

2014 2013

Growth rate % 22 22

Discount rate % 13 13

Management determined budgeted profit from operating activities based on past performance and its expectations for the market developments. The weighted average growth rates used are consistent with the forecasts included in industry reports. The discount rates

used are pre-tax and reflect specific risks relating to the Tanzania and Uganda segment.

Goodwill is classified as a non-current asset.




19 Property and equipment

(a) Group Office Capital furniture and Computer Motor work-in Telephone equipment equipment Vehicles progress equipment Total Kshs’000 Kshs’000 Kshs’000 Kshs’000 Kshs’000 Kshs’000


Cost

At 1 January 2014 364,390 333,306 102,223 13,698 70,413 884,030

Additions 66,595 66,569 13,935 58,939 6,725 212,763

Capitalised 9,566 1,564 - (11,130) - -

Disposals (5,864) (63) (13,450) - - (19,377)

Translation difference 1,038 (1,322) 1,868 (1,295) 58 347

At 31 December 2014 435,725 400,054 104,576 60,212 77,196 1,077,763

Depreciation

At 1 January 2014 210,090 248,593 40,758 - 26,134 525,575

Charge for the year 41,181 48,169 26,080 - 17,513 132,943

Accumulated depreciation

on disposals (3,164) (55) (13,149) - - (16,368)

Translation difference (12) (1,280) 389 - 155 (748)

At 31 December 2014 248,095 295,427 54,078 - 43,802 641,402

Net book amount

At 31 December 2014 187,630 104,627 50,498 60,212 33,394 436,361


Cost

At 1 January 2013 260,055 243,323 46,531 - 68,326 618,235

Additions 102,231 87,510 66,401 13,698 1,799 271,639

Disposals - (117) (10,989) - - (11,106)

Translation difference 2,104 2,590 280 - 288 5,262

At 31 December 2013 364,390 333,306 102,223 13,698 70,413 884,030

Depreciation

At 1 January 2013 179,647 215,097 32,771 - 14,657 442,172

Charge for the year 28,374 30,823 18,446 - 11,474 89,117

Accumulated depreciation

on disposals - (20) (10,772) - - (10,792)

Translation difference 2,069 2,693 313 - 3 5,078

At 31 December 2013 210,090 248,593 40,758 - 26,134 525,575

Net book amount 154,300 84,713 61,465 13,698 44,279 358,455




19 Property and equipment

(b) Company Office

furniture and Computer Motor Telephone

equipment equipment Vehicles equipment Total

Kshs’000 Kshs’000 Kshs’000 Kshs’000 Kshs’000


Cost

At 1 January 2014 7,122 38,726 13,810 33,148 92,806

Additions 7,832 34,708 - 73 42,613

At 31 December 2014 14,954 73,434 13,810 33,221 135,419

Depreciation

At 1 January 2014 781 4,505 674 7,162 13,122

Charge for the year 1,695 20,867 3,454 4,858 30,874

At 31 December 2014 2,476 25,372 4,128 12,020 43,996

Net book amount

At 31 December 2014 12,478 48,062 9,682 21,201 91,423


Cost

At 1 January 2013 1,035 2,173 - 32,145 35,353

Additions 6,087 36,553 13,810 1,003 57,453

At 31 December 2013 7,122 38,726 13,810 33,148 92,806

At 31 December 2013

Depreciation

At 1 January 2013 265 323 - 2,376 2,964

Charge for the year 516 4,182 674 4,786 10,158

At 31 December 2013 781 4,505 674 7,162 13,122

Net book amount 6,341 34,221 13,136 25,986 79,684

Property and equipment are classified as non-current assets.




20 Intangible assets

(a) Group Computer Work in

software progress Total

Kshs ’000 Kshs ’000 Kshs ’000

Year ended 31 December 2014:

Cost

At 1 January 2014 450,939 19,031 469,970

Additions 49,066 - 49,066

Transfers 19,031 (19,031) -

Translation difference 1,453 - 1,453

At 31 December 2014 520,489 - 520,489

Depreciation

At 1 January 2014 290,378 - 290,378

Charge for the year 117,124 117,124

At 31 December 2014 407,502 - 407,502

Net book amount

At 31 December 2014 112,987 - 112,987

Year ended 31 December 2013:

Cost

At 1 January 2013 398,188 - 398,188

Additions 54,785 19,031 73,816

Transfers (2,078) - (2,078)

Transfer from work in progress 44 - 44

At 31 December 2013 450,939 19,031 469,970

Depreciation

At 1 January 2013 181,530 - 181,530

Charge for the year 108,848 - 108,848

At 31 December 2013 290,378 - 290,378

Net book amount 160,561 19,031 179,592




20 Intangible assets (continued)

(b) Company 2014 2013


Carrying value


Additions 26,531 3,161

Work in progress - Additions - 19,031

Amortisation charge for the year (95,682) (106,235)

At end of year 61,936 131,087

The intangible assets for the company relate to computer software. All intangible assets are classified as non-current assets. 21 Investment properties

(a) Group 2014 2013


At start of year 11,412,346 8,119,908

Additions 1,350,067 1,949,069

Fair value gains 2,493,175 1,140,556

Translation difference (133,281) 202,813

At end of year 15,122,307 11,412,346

(b) Company 2014 2013


At start of year 2,275,274 1,520,000

Additions 738,872 718,900

Fair value gains 621,096 36,374

At end of year 3,635,242 2,275,274

The Group’s investment properties were revalued in December 2014 and 2013 by Knight Frank Valuers, professional independent valuers

in Kenya, South Sudan and Bageine & Company in Uganda respectively on the basis of open market. The open market value of all properties was determined using recent market prices. The rental income earned by the Group from its investment properties leased out under operating leases amounted to Kshs 484 million (2013: Kshs 295 million). Direct operating expenses arising on investment properties amounted to Kshs 62 million (2013: Kshs 24 million). All investment properties are classified as non-current assets.




21 Investment properties (continued)

Details of the Group’s investment properties and information about fair value hierarchy as at 31 December 2014 are as follows:

2014 2013

Kshs ‘000 Kshs ‘000

Level 1 - -

Level 2 - -

Level 3 15,122,307 11,412,346

Fair value as at 31 December 15,122,307 11,412,346

22 Deferred income tax

Deferred tax is calculated, in full, on all temporary differences under the liability method using a principal tax rate of 30% (2013: 30%). The movement on the deferred income tax account is as follows:

31-Dec 31-Dec

2014 2013


At start of year: 246,813 195,900

Profit or loss (Note 11) 377,349 57,893

Translation difference 12,984 (6,980)

Total 637,146 246,813

Disclosed as follows;

31-Dec 31-Dec

2014 2013


Deferred tax asset (83,640) (133,202)

Deferred tax liability 720,786 380,015

Total 637,146 246,813




22 Deferred income tax (continued) Deferred tax assets and liabilities and deferred tax charge/(credit) in the income statement are attributable to the following items:

Year ended 31 December 2014 1-Jan (Charged) Translation 31-Dec

2014 / credited Reserves 2014


Property and equipment: - on historical cost basis 16,151 (100,534) 3 (84,380)

Investment property fair value gains (466,485) (411,491) (9,926) (887,902)

Other provisions 203,521 134,676 (3,061) 335,136

Net deferred tax liability (246,813) (377,349) (12,984) (637,146)

Year ended 31 December 2013 1-Jan (Charged) Translation 31-Dec

2013 / credited Reserves 2013


Property and equipment: - on historical cost basis 16,020 (1,949) 2,080 16,151

Investment property fair value gains (253,913) (231,032) 18,460 (466,485)

Other provisions 41,993 175,088 (13,560) 203,521

Net deferred tax liability (195,900) (57,893) 6,980 (246,813)

Deferred income tax liabilities are classified as non-current liabilities.




23 Retirement benefit obligation

Description of plan

The Group operates a funded defined benefit plan for all employees. The Scheme is open to new entrants. Scheme members’ contributions are a fixed percentage of pensionable pay with the Group responsible for the balance of the cost of benefits accruing. The Scheme is established under trust. The Scheme funds are invested by a fund manager in a variety of asset classes comprising government securities (Treasury bills and bonds), stocks and shares and commercial paper.

The amounts recognized in the statement of financial position are determined as follows:

2014 2013


Present value of funded obligations 651,907 609,232

Fair value of plan assets 937,825 794,159

Present value of over-funding (285,918) (184,927)

The movement in the fair value of funded obligations is as follows:

2014 2013



Current service cost 84,110 47,607

Interest cost 85,082 66,084

Remeasurements (67,475) 104,731

Benefits paid (59,042) (65,086)

At end of year 651,907 609,232

The movement in the fair value of the plan assets is as follows:

2014 2013



Interest on scheme assets 105,317 94,986

Remeasurements (16,666) 26,030

Employer contribution 73,694 58,425

Employee contribution 40,363 33,208

Benefits paid (59,042) (65,086)

At end of year 937,825 794,159




23 Retirement benefit obligation (continued)

Plan assets compromise:

2014 2013

Kshs’000 %age Kshs’000 %age

Equity instruments 277,197 29.56% 217,408 27.36%

Debt instruments 525,530 56.04% 446,631 56.23%

Other 135,098 14.40% 130,120 16.41%

At end of year 937,825 100% 794,159 100%

The amounts recognised in the income statement for the year are as follows:

2014 2013


Current service cost 84,110 47,607

Net Interest cost 86,891 (24,410)

Return on scheme assets (excluding interest) (107,126) (4,492)

Net charge for the year included in staff costs (note 10) 63,875 18,705

The principal actuarial assumptions used were as follows:

2014 2013

- discount rate 12.9% 12.8%

- expected rate of return on scheme assets 12.9% 12.8%

- future salary increases 7.0% 11.8%

- future pension increases 2.4% 4.9%

Sensitivity analysis of the above actuarial assumptions

The sensitivity of the defined benefit obligation to the financial assumptions has been assessed by increasing and decreasing the discount

rate assumption by 0.5%.

Defined benefit obligation

Discount rate 12.4% 12.9% 13.4%

Total accrued liability 656,758 651,907 648,906

Change 0.7% (0.5%)




24 Equity investmentsThe Group’s equity investments are measured at fair value with fair value changes recorded through either other comprehensive income

or income statements for different portfolios of equity investments, following early adoption of IFRS 9, as follows:

(a) Equity investments at fair value through other comprehensive income

2014 2013


At start of year 4,140,484 2,699,667

Additions 1,086,343 37,596

Disposals (2,603,431) (345,351)

Fair value gains recognised in equity 1,113,234 1,752,686

Translation difference (1,890) (4,114)

At end of the year 3,734,740 4,140,484

(b) Equity investments at fair value through profit or lossAt start of year 1,366,024 806,764

Additions 1,052,639 393,030

Disposals (432,626) (303,592)

Fair value gains charged to income statement 368,005 469,722

Translation difference (154) 100

At end of the year 2,353,888 1,366,024

Total 6,088,628 5,506,508

(c) Equity investments

2014 2013


(i) Listed securities

At start of year 5,444,107 3,452,704

Additions 2,111,630 421,441

Disposals (3,036,057) (648,943)

Fair value gains charged to other comprehensive income 1,111,897 1,752,990

Fair value gains charged to income statement (note 6) 368,005 469,722

Translation difference (625) (3,807)

At the end of year 5,998,957 5,444,107




(c) Equity investments (continued)

(ii) Unlisted securities 2014 2013



Additions 27,352 9,185

Fair value gains charged to other comprehensive income 1,337 (304)

Translation difference (1,419) (207)

At the end of year 89,671 62,401 Total 6,088,628 5,506,508

25 Investments in subsidiaries

Country of 2014 2013

Incorporation Interest held Kshs’000 Kshs’000

UAP Insurance Company Limited (Kenya) Kenya 100% 600,000 600,000

UAP Life Assurance Limited (Kenya) Kenya 100% 560,791 560,791

UAP Insurance Limited (Sudan) Sudan 100% 339,442 339,442

UAP Insurance Limited (Uganda) Uganda 53% 202,507 202,507

UAP Financial Services Limited (Kenya) Kenya 100% 10,000 10,000

UAP Financial Services Limited (Uganda) Uganda 89% 65,370 46,277

UAP Properties Limited (Uganda) Uganda 79% 488,743 488,743

UAP SPRL RDC DRC 100% 52,691 32,691

UAP Investments (Kenya) Kenya 100% 125,000 100,000

UAP Century Tanzania Tanzania 60% 275,016 275,016

UAP Rwanda Rwanda 100% 406,950 256,950

UAP Life Uganda Uganda 53% 72,589 -

Total 3,199,099 2,912,417

During the year, the company increased its investments in subsidiaries as follows:

Country of 2014 2013

Incorporation Kshs’000 Kshs’000

UAP Life Assurance Limited (Uganda) Uganda 72,589 -

UAP Financial Services Limited (Uganda) Uganda 19,093 10,000

UAP SPRL RDC DRC 20,000 28,472

UAP Investments (Kenya) Kenya 25,000 80,000

UAP Century Tanzania Tanzania - 275,016

UAP Rwanda Rwanda 150,000 256,950

Total 286,682 650,438

The investment in subsidiaries is classified as a non-current asset.




25 Investments in subsidiaries (continued)

The investments in UAP Century Tanzania, UAP SPRL RDC and UAP Rwanda have been made through UAP Africa Limited (Mauritius).

Summarised financial information on subsidiaries with material non-controlling interests

Set out below are the summarised financial information for each subsidiary that has non-controlling interests that are material to the

group.

Summarised balance sheet

UAP Insurance Uganda UAP Life Assurance Uganda UAP Insurance Tanzania

2014 2013 2014 2013 2014 2013

Kshs’000 Kshs’000 Kshs’000 Kshs’000 Kshs’000 Kshs’000

Assets 3,705,065 3,143,088 598,084 381,105 1,376,744 1,180,938

Liabilities 2,547,323 2,183,802 506,275 319,101 1,281,293 1,117,102

Net assets 1,157,741 959,285 91,809 62,004 95,451 63,836

Summarised income

statement

Revenue 2,438,419 1,894,602 331,414 178,390 1,201,910 591,325

Profit before income tax 232,153 223,097 (28,315) (14,553) 11,225 32,709

Income tax expense/income (65,226) (101,428) (41,899) 40,841 17,704 -

Post-tax profit 166,927 121,669 (70,214) 26,288 28,929 32,709

Other comprehensive income (40,425) 55,990 (796) 4,888 2,686 6,803

Total comprehensive income 126,502 177,659 (71,010) 31,176 31,615 39,512

Total comprehensive income

allocated to non-controlling

interest 59,456 83,500 (33,375) 14,653 12,646 15,805




25 Investments in subsidiaries (continued)Summarised cash flows

UAP Insurance Uganda UAP Life Assurance Uganda UAP Insurance Tanzania

2014 2013 2014 2013 2014 2013


Cash flows from operating activities

Cash generated from operations 17,110 471,145 125,370 112,687 2,715 (43,360)

Income tax paid (18,535) (49,773) - - - (786)

Net cash generated from

operating activities (1,425) 421,372 125,370 112,687 2,715 (44,146)

Net cash used in investing activities (59,986) (132,756) (122,109) (36,749) (229,701) (31,979)

Net cash used in financing activities (29,436) (29,436) 100,815 - (3,207) 258,711

Increase in cash and cash equivalents (90,847) 259,180 104,076 75,938 (230,193) 182,586

At 1 January 609,103 349,922 240,727 164,789 325,123 142,537

Increase during the year (90,847) 259,180 104,076 75,938 (230,193) 182,586

At 31 December 518,256 609,102 344,803 240,727 94,930 325,123

The information above is the amount before inter-company eliminations.

26 Mortgage loans receivable 2014 2013



Loans advanced 110,784 94,929

Loan repayments (85,236) (14,036)

Translation difference 1,582 47

At end of year 255,437 228,307

Maturity profile of loans

2014 2013


Loans maturing

Within 1 year -

In 1-5 years 29,196 32,121

In over 5 years 226,241 196,186

255,437 228,307

There is no concentration of credit risk with respect to mortgage loans. Loans maturing within 1 year are classified as current assets while

those with a maturity period of more than 1 year are classified as non-current assets.




27 Reinsurers’ share of insurance liabilities 2014 2013


Reinsurers’ share of:

Unearned premium (Note 37) 1,155,712 1,063,508

Notified claims outstanding:

- short term insurance (Note 35) 982,207 840,637

- long term insurance contract liabilities (Note 35) 248,620 161,896

Claims incurred but not reported short term insurance (Note 35) 123,290 164,019

At end of year 2,509,829 2,230,060

Amounts due from reinsurers in respect of claims already paid by the Group on contracts that are reinsured are included in receivables

arising out of reinsurance arrangements on the statement of financial position. Movements in the above reinsurance assets are shown in note 35 and 37.

Reinsurers’ share of insurance liabilities is classified as a current asset.

28 Deferred acquisition costs 2014 2013



Additions 304,718 64,281

Amortisation charge (196,256) (3,987)


At end of year 428,748 323,527

Deferred acquisition costs are classified as current assets.

29 Other receivables and prepayments

(a) Group 2014 2013


Prepayments 960,260 472,416

Accrued income 7,601 14,348

Staff debtors 106,754 104,018

Others 475,572 574,817

1,550,187 1,165,599




29 Other receivables and prepayments (continued)

(b) Company 2014 2013


Prepayments 688,065 228,297

Others 8,646 47,590

Total 696,711 275,887

Due from related party (note 43 (iv)) 2,186,511 1,617,577

There are no individually significant items under others category.

30 Government securities 2014 2013


(i) At fair value through profit or loss:

Treasury bills and bonds maturing:

After 5 years 742,791 705,091

At end of the year 742,791 705,091

(ii) At amortised cost:

Treasury bills and bonds maturing:

Within 91 days 97,346 72,221

91 days to 1 year 274,283 355,836

In 1-5 years 1,006,820 433,038

After 5 years 3,754,513 3,000,256

At end of the year 5,132,962 3,861,351

At end of the year 5,875,753 4,566,442

Government securities with a maturity period of up to 1 year are classified as current assets while those with a maturity profile of more than

1 year are classified as non-current assets.




31 Cash and cash equivalents For the purposes of the statement of cash flows, cash and cash equivalents comprise the following:

2014 2013


Cash and bank balances 1,025,540 1,341,151

Deposits with financial institutions 3,173,707 1,972,751

Treasury bills maturing within 91 days (note 30) 97,346 72,221

At end of the year 4,296,593 3,386,123

Cash and cash equivalents are classified as current assets. 32 Insurance contract liabilities

2014 2013


Short term insurance contracts

- claims reported and claims handling expenses 3,417,187 3,004,698

- claims incurred but not reported 941,485 442,210

At end of the year 4,358,672 3,446,908

Long term contracts

- claims reported and claims handling expenses 3,361,763 1,820,972

Total gross insurance liabilities 7,720,435 5,267,880

Insurance contract liabilities are classified as current liabilities. Movements in insurance liabilities and reinsurance assets are shown in Note 35.

(i) Short term insurance contracts liabilities

Gross claims reported, claims handling expenses liabilities and the liability for claims incurred but not reported are net of expected recoveries from salvage and subrogation. The expected recoveries at the end of 31 December 2014 and 31 December 2013 are not material.

The Group uses chain-ladder techniques to estimate the ultimate cost of claims and the IBNR provision. Chain ladder techniques are used as they are an appropriate technique for mature classes of business that have a relatively stable development pattern. This involves the analysis of historical claims development factors and the selection of estimated development factors based on this historical pattern. The selected development factors are then applied to cumulative claims data for each accident year that is not fully developed to produce an estimated ultimate claims cost for each accident year.

The development of insurance liabilities provides a measure of the Groups’ ability to estimate the ultimate value of claims. The table below illustrates how the Groups’ estimate of total claims outstanding for each accident year has changed at successive year ends.




32 Insurance contract liabilities (continued)

(i) Short term insurance contract liabilities (continued)


Accident year 2010 2011 2012 2013 2014 Total


Estimate of ultimate claims costs

At end of accident year 1,268,690 1,649,336 1,978,566 2,430,124 3,471,792 10,798,508

One years later 1,021,792 1,491,445 1,505,116 2,056,163 - 6,074,516

Two years later 971,169 1,164,324 1,615,601 - - 3,751,094

Three years later 980,909 1,241,655 - - - 2,222,564

Four years later 1,012,120 - - - - 1,012,120

Current estimate of

cumulative claims 1,012,120 1,241,655 1,615,601 2,056,163 3,471,792 9,397,331

Less: Cumulative payments to date (922,190) (1,046,266) (796,515) (1,664,175) (2,328,419) (6,757,565)

Liability in the statement

of financial position 89,930 195,389 819,086 391,988 1,143,373 2,639,766

Liability in respect of prior years - - - - 777,421 777,421

Incurred but not reported - 12,860 17,892 25,160 885,573 941,485

Total gross claims liability

included in the statement

of financial position 89,930 208,249 836,978 417,148 2,806,367 4,358,672 (ii) Long term business contracts

The Group determines its liabilities on long term insurance contracts based on assumptions in relation to future deaths, voluntary terminations, investment returns and administration expenses. A margin for risk and uncertainty is added to these assumptions. The liabilities are determined on the advice of the consulting actuary and actuarial valuations are carried out on an annual basis.

Actuarial valuation assumptions

The latest actuarial valuation of the Life Fund was carried out as at 31 December 2014 by QED Actuaries and Consultants, using the Net Premium Valuation method (and basis) prescribed by the Kenyan Insurance Act, 1988, as amended, and the Gross Premium Valuation (GPV) method for the universal and unit-linked policies for which it was not possible to use the NPV method. The GPV method is generally accepted in the actuarial industry as an appropriate method to place realistic value (with an appropriate allowance for margins) on the liabilities of a life Company. This method is based on a discounted cashflow approach taking into account the expected cashflows from the existing inforce business. By setting appropriate assumptions this method determines liabilities which are consistent with the value of assets included in the accounts.

The more significant valuation assumptions are summarised below. The assumptions used for the previous year-end valuation are shown in brackets:




32 Insurance contract liabilities (continued) (ii) Long term business contracts (continued) Actuarial valuation assumptions (continued)

a) Mortality – The Group used SA56-62 (2013: SA56-62) as a base table of standard mortality for the GPV valuation and KE01-03 (2013: A1949/52) for the NPV basis. Statistical methods are used to adjust the rates reflected in the table based on the Company’s experience.

An allowance for AIDS is made based on the Actuarial Society of South Africa’s 2003 AIDS tables. For contracts insuring survivorship the a(55) (2013: a(55)) life table was used as a base; no allowance is made for future mortality improvements.

b) Persistency – The Group does not have sufficient historical data to allow statistical methods to be used to determine an appropriate persistency rate. The persistency rates used in the valuation were set according to the experience observed (by the actuary) in the Group’s data.

c) Investment returns are derived with reference to the return on long term fixed interest investments available in Kenya and adjusted to reflect the actual underlying mix of assets. For the current valuation, the rate of return was 12.5% p.a. (2013: 12.25% p.a.) for the GPV basis and 4% p.a (2013: 4% p.a) for the NPV basis.

d) Expenses, tax and inflation – The current level of renewal expenses were taken to be an appropriate expense base. Expenses pertaining to business establishment and expansion were excluded from the valuation assumption. Expense inflation is assumed to

be 10% p.a. (2013:10% p.a.). It has been assumed that the current tax legislation and rates continue unaltered. Under the NPV method it is not possible to model expenses, tax and inflation explicitly.

Sensitivity analysis

The following table presents the sensitivity of the value of long term insurance liabilities to movements in key assumptions used in the estimation of liabilities. For liabilities under insurance contracts with fixed and guaranteed terms, key assumptions are unchanged for the duration of the contract. For long term insurance contracts without fixed terms and with discretionary participation in profits, the liability is set approximately equal to the value of the underlying asset of the contract. Hence, there is no sensitivity analysis for these types of contracts.

Change in Increase / Increase / variable (decrease) in (decrease) in liability 2014 liability 2013

Contracts with Fixed and Guaranteed Terms – Variable: Kshs ’000 Kshs ’000

Worsening of mortality +10% (19,913) 16,992

Lowering of investment returns p.a. -1% 197,549 58,239

Worsening of expense inflation rate +1% 8,113 13,384

Worsening of lapse rate +10% (20,638) (3,777)




33 Amounts payable under deposit administration contracts Deposit administration contracts are recorded at amortized cost. Movements in amounts payable under deposit administration contracts

during the period were as shown below. The liabilities are shown inclusive of interest accumulated to the end of the reporting period. Interest was declared and credited to the customers’ accounts at a weighted average rate of 12 % for the year (2013: 13 %).

2014 2013


At start of year 2,812,089 2,202,817

Pension fund deposits received 830,861 606,489

Surrenders and annuities paid (341,949) (277,634)

Interest payable to policyholders 346,078 287,340

Administration fees (12,121) (9,071)


At end of the year 3,633,021 2,812,089

Other movements relate to a release of excess liabilities recognised following reconciliation of the deposit administration policyholders

accounts in the year. Amounts payable under deposit administration contracts are classified as current liabilities.

34 Unit-linked investment contracts The benefits offered under these contracts are based on the return of a portfolio of equities and debt securities. The maturity value of the

financial liabilities is determined by the fair value of the linked assets. There will be no difference between the carrying amount and the maturity amount at maturity date.

2014 2013



Premium received 114,620 124,360

Interest credited 198,894 70,296

Liabilities released for payment (158,336) (94,003)

Other movements (36,030) (26,500)


At end of the year 1,040,828 923,296

Unit linked investment contracts are classified as current liabilities. Other movements relate to increase in actuarial liabilities.




35 Movements in insurance liabilities and reinsurance assets

31-Dec-14 31-Dec-13 Gross Reinsurance Net Gross Reinsurance Net Kshs ’000 Kshs ’000 Kshs ’000 Kshs ’000 Kshs ’000 Kshs ’000Short term insurance business At beginning of year

Notified claims 3,004,698 (840,637) 2,164,061 2,013,441 (580,128) 1,433,313

Incurred but not reported 442,210 (164,019) 278,191 343,390 (74,033) 269,357

Total at beginning of year 3,446,908 (1,004,656) 2,442,252 2,356,831 (654,161) 1,702,670

Cash paid for claims settled in year (2,636,889) 877,382 (1,759,507) (2,393,647) 570,020 (1,823,627)Increase in liabilities

- arising from current year claims 2,467,830 (729,378) 1,738,452 2,532,304 (653,718) 1,878,586

- arising from prior year claims 1,080,823 (248,845) 831,978 951,420 (266,797) 684,623

Total at end of year 4,358,672 (1,105,497) 3,253,175 3,446,908 (1,004,656) 2,442,252

Notified claims 3,417,187 (982,207) 2,434,980 3,004,698 (840,637) 2,164,061

Incurred but not reported 941,485 (123,290) 818,195 442,210 (164,019) 278,191

Total at end of year 4,358,672 (1,105,497) 3,253,175 3,446,908 (1,004,656) 2,442,252 Long term insurance business

At beginning of year 1,820,972 (161,896) 1,659,076 1,037,004 (171,667) 865,337

Premium received/valuation premium 1,957,069 (329,789) 1,627,280 1,110,751 (298,320) 812,431

Liabilities released for payments (416,278) 243,065 (173,213) (326,783) 308,091 (18,692)

Total at end of year 3,361,763 (248,620) 3,113,143 1,820,972 (161,896) 1,659,076

Total at end of year 7,720,435 (1,354,117) 6,366,318 5,267,880 (1,166,552) 4,101,328




36 Borrowings 2014 2013


(a) Group

At start of year 2,079,719 1,124,572

Proceeds from borrowings 1,938,326 1,095,767

Interest cost payable 293,310 61,341

Loan and Interest paid (301,231) (254,114)


At end of the year 3,981,001 2,079,719

2014 2013


(b) Company

At start of year - -

Proceeds from borrowings, net of transaction costs 1,967,524 -

Interest cost payable 111,123 -

At end of the year 2,078,647 -

Bank borrowings are repayable on demand and bear an average interest rate of equivalent to the 91-day treasury bill rate plus 1.5% -2% per annum (2013: 91-day treasury bill rate plus 1.5% -2% per annum).

Bank borrowings are classified as current liabilities. The carrying amounts of borrowings approximate to their fair value.

On 28 July 2014, the group issued Kshs 2 billion 13% Kenya Shilling medium term notes to finance its expansion programme and working capital requirements. The related transaction costs amounting to Kshs 36 million have been netted off against the proceeds and amortised over the tenure of the notes. The notes are repayable on 28 July 2019.

None of the borrowings was in default at any time during the year.

37 Unearned premium Unearned premium represents the liability for short term business contracts where the Group’s obligations are not expired at the year end.

Movements in the reserve are shown below:

31-Dec-14 31-Dec-13 Gross Reinsurance Net Gross Reinsurance Net Kshs ’000 Kshs ’000 Kshs ’000 Kshs ’000 Kshs ’000 Kshs ’000 At beginning of the year 4,775,498 (1,063,508) 3,711,990 3,378,507 (698,853) 2,679,654 Increase in the year 589,075 (92,204) 496,871 1,396,991 (364,655) 1,032,336 At end of year 5,364,573 (1,155,712) 4,208,861 4,775,498 (1,063,508) 3,711,990

Unearned premiums are classified as current liabilities.




38 Other payables

(a) Group 2014 2013


Deferred income 19,019 20,552

Accrued expenses 350,021 560,068

Accrued leave 93,118 72,797

Withheld taxes 122,752 35,107

Other liabilities 913,261 265,882

At end of the year 1,498,171 954,406

Other payables are classified as current liabilities. There are no individually significant items under other liabilities category.

(b) Company 2014 2013


Accrued expenses 66,525 131,357

Other liabilities 213,902 20,695

Total 280,427 152,052

Due to related parties (Note 43 (iv)) 1,991,496 1,608,870

There are no individually significant items under others category.




39 Cash generated from operations Reconciliation of profit before tax to cash generated from operations

2014 2013

Khs ’000 Ksh’000


Adjustments for:

Investment income (Note 6) (4,603,772) (2,863,255)

Depreciation (Note 19) 132,943 89,117

Amortisation (Note 20) 117,124 108,848

Finance costs (Note 36) 293,310 61,341

Gain on disposal of property and equipment (1,347) (2,171)

Changes in:

Insurance contract liabilities (net) 2,172,786 1,168,666

Deposit administration contracts 820,932 609,272

Unit-linked contracts 117,532 75,932

Unearned premium (net) 589,075 1,396,991

Re-insurance and other payables 348,905 196,659

Direct insurance, re-insurance and other receivables (786,694) (1,114,552)

Deferred acquisition costs (105,221) (64,664)

Retirement benefit asset (100,991) 5,773

Cash generated from operations 1,290,811 1,879,697

40 Contingent liabilities In common with the insurance industry in general, the Group’s insurance subsidiaries are subject to litigation arising in the normal course

of insurance business. The directors are of the opinion that this litigation will not have a material effect on the financial position or profits of the Group.

41 Commitments Capital expenditure committed but not contracted for at financial reporting date is as follows:

2014 2013


Capital expenditure 2,746,404 3,681,918

The capital expenditure committed but not contracted relates to three major contracts for the construction of investment properties in Kenya, Uganda and Sudan. These projects are estimated to cost approximately Kshs 7.4 billion. They are estimated to take 24 months to complete.




42 Financial instruments by category

a) Financial assets The Group’s financial assets are summarised by measurement category in the table below.

2014 2013


At amortised cost 18,428,835 14,038,697

At fair value 6,831,419 6,211,599

25,260,254 20,250,296

2014 2013


(i) Financial assets at amortised cost

Government securities 5,132,962 3,861,351

Corporate bonds 1,588,613 449,025

Receivables arising out of direct insurance arrangements 2,486,192 2,317,694

Receivables arising out of reinsurance arrangements 706,368 472,759

Reinsurers’ share of insurance liabilities 2,509,829 2,230,060

Other receivables 1,550,187 1,165,599

Deposits with financial institutions 3,173,707 1,972,751

Cash and bank balances 1,025,540 1,341,151

Mortgage loans receivable 255,437 228,307

18,428,835 14,038,697

(ii) Financial assets at fair value

Equity investments:

At fair value through other comprehensive income 3,734,740 4,140,484

At fair value through profit or loss 2,353,888 1,366,024

Government securities 742,791 705,091

6,831,419 6,211,599

b) Financial liabilities

Except for unit-linked investment contracts, which are measured at fair value, the Group’s financial liabilities are measured at amortised cost. The carrying value of the Group’s and the Company’s financial liabilities at the end of 2013 and 2014 is shown in note 4(b).




43 Related party transactions The Group is controlled by UAP Holdings Company Ltd incorporated in Kenya being the ultimate parent of the Group. There are other

companies that are related to UAP Holdings Limited through common shareholdings or common directorships The following transactions were carried out with related parties:

2014 2013

Kshs ’000 Kshs ’000 i) Administration of staff pension scheme- Group

Contributions paid 73,694 58,645

Benefits paid (59,042) (65,086)

ii) Transactions with related parties - Company

Interest paid to UAP Insurance Kenya 149,791 134,455

Interest received from UAP Properties South Sudan 15,467 12,780

Interest received from UAP Properties Uganda 30,858 17,931

Investment management fees paid to UAP Investments Kenya 78,924 -

iii) Outstanding balances with related parties - Group

Mortgage loans receivable (note 26) 255,437 228,307

Mortgages to staff are fully secured on the mortgage properties and are charged interest at 6% (2013: 6%).

iv) Outstanding balances with related parties - Company 2014 2013 Kshs ’000 Kshs ’000

Payable to related parties:

UAP Insurance Kenya 1,957,926 1,589,284

UAP Insurance Uganda 33,570 19,586

At end of year 1,991,496 1,608,870

Receivable from related parties:

UAP Insurance Kenya 170,500 170,500

UAP Life Assurance Kenya 90,650 5,859

UAP Life Assurance Uganda 85 68

UAP Insurance South Sudan 69,131 18,954

UAP Insurance Uganda 13,261 -

UAP Financial Services Uganda 949 14,798

UAP Properties Uganda 570,417 258,500

UAP Properties South Sudan 199,227 183,760

UAP Insurance Rwanda 7,160 7,157

UAP SPRL RDC 49,246 48,410

UAP Investments Kenya 9,620 19,595

UAP Global Services Mauritius 991,890 885,409

UAP Africa Mauritius 4,883 2,822

UAP Properties Limited (Mauritius) 3,516 673

UAP Insurance Tanzania 4,187 451

UAP Investments (Mauritius) 1,789 621

At end of year 2,186,511 1,617,577 The amounts payable to related parties have no specific repayment date.




43 Related party transactions (continued)

2014 2013 Kshs ’000 Kshs ’000

v) Loan to directors


Loan advanced during the year 5,077 -

Loans repayments received (3,184) (3,445)

At end of year 37,697 35,804Loans to directors are fully secured and are charged interest at 6% (2013: 6%).

vii) Key management compensation

(a) Group

Salaries (Including executive directors salaries) 445,821 399,585

Retirement benefits costs 110,462 32,764

556,283 432,349

(b) Company

Salaries (Including executive directors salaries) 105,997 106,148

Retirement benefits costs 7,327 10,403

113,324 116,551

vi) Directors’ emoluments

(a) Group

Executive salaries (included in key management compensation above) 110,135 169,962

Fees 69,155 48,470

Other remuneration 19,152 11,705

198,442 230,137

(b) Company

Executive salaries (included in key management compensation above) 50,643 73,515

Fees 10,748 10,913

Other remuneration 12,250 6,170

73,641 90,598




ContactsKENYA BISHOPS GARDEN - HEAD OFFICEUAP HOLDINGS LTD Registered Office Bishops Garden Towers, Bishops Road P.O. Box 43013 - 00100, Nairobi, Kenya Tel: + 254 20 2850000 Mobile: + 254 711 065 000 Fax: + 254 20 2719 030 E-mail: [email protected] Website: www.uap-group.com UAP INSURANCE COMPANY LTDBishops Garden Towers, Bishops Road P.O. Box 43013 - 00100, Nairobi, KENYA Tel: + 254 20 2850 000 Mobile: + 254 711 065 000 Fax: + 254 20 2719 030 E-mail: [email protected]

UAP LIFE ASSURANCE LTDBishops Garden Towers, Bishops Road P.O. Box 23842 – 00100, Nairobi, KENYA Tel: +254 20 2850 300 Mobile: +254 711 065 300 Fax: + 254 20 2719 030 E-mail: [email protected] UAP PROPERTIES KENYA LIMITED Bishops Garden Towers, Bishops Road P.O. Box 43013 - 00100, Nairobi - Kenya Tel: + 254 20 2850 000 Mobile: + 254 711 065 000 Fax: + 254 20 2719 030 E-mail: [email protected]

UAP INVESTMENTS LIMITEDI&M Building, 3rd Floor, 2nd Ngong Avenue P. O. BOX 43013 – 00100, Nairobi, Kenya Tel: + 254 20 2850 000 Mobile: + 254 711 065 000 Fax: + 254 20 2719 030 E-mail: [email protected]

QUEENSWAY Insurance Queensway Hse 3rd Floor Kaunda Street P. O. Box 43013 - 00100 Nairobi, Kenya Tel: +254 20 2228070, 2229521 Fax: +254 20 222 7659 E-mail: [email protected] WESTLANDS LifeWoodvale Place, 2nd Floor Woodvale Groove Street Tel: +254 20 4456219/20 E-mail: [email protected] MOMBASA Insurance & Life Tea House, Ground Floor, Behind Sairose Chinese Restaurant, off Nyerere Avenue, P. O. Box 81612 - 80100 Mombasa, Kenya Tel: +254 041 2223777/8 Fax: +254 41 2315888 E-mail: [email protected] E-mail: [email protected] KISUMU Insurance & LifeTivoli Centre, Ground Floor Court Road P.O. Box 3379 - 40100 Kisumu, Kenya Tel: +254 57 2020119/019 Fax: +254 57 2024488 E-mail: [email protected] E-mail: [email protected] ELDORET Insurance Imperial Court, Ground Floor, Uganda Road, P. O. Box 707 - 30100 Eldoret, Kenya Tel: +254 53 2061437/8 Fax: +254 53 2061437 E-mail: [email protected] LifeImperial Court, 1st Floor, Uganda Road, P. O. Box 707 - 30100 Eldoret, Kenya Tel: +254 53 2061437/8 Fax: +254 53 2061437 E-mail: [email protected]

NAKURU Insurance Prestige Mall P. O. Box 14116 - 20100 Nakuru, Kenya Tel: +254 51 2212910 Fax: +254 51 2214563 E-mail: [email protected]

LifeGiddo Plaza - George Morara Road P. O. Box 14116 - 20100 Nakuru, Kenya Tel: +254 711 065 175 E-mail: [email protected] THIKA Insurance Twin Oak Plaza - 1st Floor, Kwame Nkrumah Road P. O. Box 4280 - 01000, Thika, Kenya Tel: +254 67 20243/46 Fax: +254 67 20242 E-mail: [email protected] LifeZuhura Place 2nd floor, Opp Tuskys, Kenyatta Avenue Tel: +254 67 11185 E-mail: [email protected] NYERI Insurance & LifeSohan Plaza, Ground Floor P. O. Box 1231 - 10100 Nyeri, Kenya Fax: +254 61 2032941 E-mail: [email protected] E-mail: [email protected] MERUInsurance & Life Hart Towers P. O. Box 3258 - 60200 Meru, Kenya Tel: +254 064 3130089 Fax: +254 064 30094 Wireless: +254 20 2423190 E-mail: [email protected] E-mail: [email protected] KISII Insurance & Life Ouru Complex - Ground Floor P. O. Box 209 - 40200, Kisii, Kenya Tel: +254 58 2031851 E-mail: [email protected] E-mail: [email protected] MACHAKOSInsurance & LifeKCB Building, 1st floor, Machakos P. O. Box 1092 - 90100 Machakos, Kenya Tel: +254 44 2020011/21462 E-mail: [email protected] E-mail: [email protected]

SATELLITE CONTACTS NAIROBI Trojan Insurance Agency Mutisya - 0721 206 540, Florence - 0712 904 602 [email protected] Flr, Milele Centre - Kitengela Rone Insurance Agency Ndegwa - 0722 522 723,Florence - 0724 456 674 [email protected] 3rd Flr, Tyme Arcade -Ongata Rongai Sari & Silverguard Insurance Agency Kudoi - 0721 561 299, Nancy - 0720 725 943 [email protected] 2nd Flr, Jeda Plaza -Roysambu Proffer Insurance Agency Karanja - 0723 081 004 [email protected] 3rd Flr, 24/7 Building - Kiambu James Kabuu Insurance Agency James - 0722 374 241, Susan - 0724 734 419 [email protected] Above Barclays bank - Kikuyu

Jane Mureu Insurance Agency Jane - 0722 759 763, Esther - 0700 446 625 [email protected] 1st flr, Watedi Plaza - BuruburuSafecourt Insurance Agency Maina - 0722 701 999, Njeri - 0724 638 277 [email protected] 4th Flr, Central Tower - Ruiru UAP (our satelite) Joseph - 0724 459 202, Timothy - 0725 562 071, Maureen 0720 671 473 [email protected] Grd Flr Prestige Plaza - Ngong Rd

NAKURU Bomain Insurance Agency Atanas Mbogo - 0722 897 359, 065 - 32872 [email protected] 1st Flr, Rm 12 Mima Centre Nyahururu

KISUMUDaiga Insurance Agency John Chomba Wachira - 0720075263 [email protected] 3rd Flr, Ingonyera Plaza, Kisumu-Busia Rd

Elians Insurance Agency Ann Kiganya - 0721917512 [email protected] 1st Flr, Tharau Building, Kakamega ELDORET Eden Rock Insurance Brokers Ltd [email protected] Grd. Flr, Pent house - Kitale EMBU UAP (our satelite) Linet Njagi - Ext 11184 [email protected] Flr, Uchumi Supermarket – Embu

UGANDA KAMPALA UAP INSURANCE UGANDA LIMITED UAP Insurance Building Plot 1 Kimathi Avenue P.O. Box 7185, Kampala - Uganda Tel: +256 - 414 - 332 700 Fax: +256 - 414 - 256 388 Email: [email protected]

UAP FINANCIAL SERVICES LIMITED UAP Nakawa Business Park Tower 1, 6th Floor Plot 3-5 New Portbell Road, P.O. Box 1610, Kampala - Uganda Tel +256 414 332 700 Fax: +256 414 256 388 Email: [email protected] UAP PROPERTIES LIMITED UAP Nakawa Business Park Block C, Lower Ground Floor Plot 3-5 New Portbell Road, P.O. Box 7185, Kampala - Uganda Tel +256 414 332 700 Fax: +256 414 256 388 E-mail: [email protected]

UAP LIFE ASSURANCE UGANDA LTD UAP Nakawa Business Park Tower 1, 6th Floor Plot 3-5 New Portbell Road, P.O Box 1610, Kampala - Uganda Telephone: +256 - 414 – 332722 Email: [email protected] MBARARAInsurance & LifePlot 23, High Street, P.O Box 1171, Mbarara. Telephone: +256 - 4854 - 21422 Email: [email protected] MBALEInsurance & LifePlot 58, Republic Street, P.O Box 423, Mbale. Telephone: +256 - 454 - 34568 Email: [email protected] JINJA Insurance & LifePlot 32/34, Main Street, P.O Box 1747, Jinja. Telephone: +256 - 434 – 120047 Email: [email protected] ARUA Insurance & Life Plot 47 Adumi Road Mobile: +256 - 772 - 903 – 442 Email: [email protected] NAKAWA Insurance & Life Soliz House, Lumumba Avenue - Ground Floor Telephone: +256 - 414 - 332740. Email: [email protected]

GULUInsurance & Life Plot 16, Awich Road, Gulu Telephone: +256 - 471 – 432017 Email: [email protected]

SOUTH SUDAN JUBA UAP INSURANCE SOUTH SUDAN LIMITED UAP Plaza, Hai Cinema Opposite Al-Sabah Children Hospital P.O. Box 201 Juba, South Sudan Tel: +211 959 000000 / 977 296555 E-mail: [email protected] WAU Insurance & Life Suk Wau, Opposite Ivory Bank Tel: +211 959 000002 South Sudan E-mail: [email protected] YAMBIO Insurance & Life Opposite Yambio FM, Next to MTN Antena Tel: +211 959 000001, South Sudan E-mail: [email protected] RUMBEK Insurance & Life Opposite freedom square, Next to Traffic police station Tel: +211 959 100051, South Sudan Email: [email protected] BENTIU Insurance & Life West of Kalibelek Market Tel: ++211 959 000003, South Sudan E-mail: [email protected] NIMULE Insurance & Life Opposite Rock city parking yard, Nimule customs along Nimule Juba High way Tel: +211 959 100052, South SudanE-mail: [email protected] TORIT Insurance & Life Opposite Old Market Behind New Life Medical Care Tel: +211 959 100054, South Sudan E-mail: [email protected] MALAKAL Insurance & Life Opposite Malakal County Offices, Near Suk Sebit Tel: +211 959 100053, South Sudan E-mail: [email protected] BORInsurance & Life Marol Market, Next to Equity Bank Tel: +211 959 100050, South Sudan Email: [email protected] AWEIL Insurance & Life Hai Ayuong, Next to Catholic Church, Opposite Aweil Central Hotel Tel: +211959 100090, South Sudan Email: [email protected]

KUAJOK Insurance & Life Opposite Freedom square, Next to KCB Tel: +211 959 100091, South Sudan Email: [email protected]

RWANDA KIGALI UAP INSURANCE RWANDA LTD Grand Pension Plaza - 7th Floor, Avenue de la Paix B.P 6644 Kigali, Rwanda, Tel: +250 25 2500905-7 Fax: +250 25 2500908 Email: [email protected] Insurance Customer Service Center Grand Pension Plaza - Lower Ground Floor Avenue de la Paix B.P 6644 KIGALI- RWANDA Tel +250 25 2500905-7, Fax +250 25 2500908 Email: [email protected]

MUSANZE Northern Province Insurance Musanze Branch - OM Building Tel +250 788 306 563 Northern Province Email: [email protected] Muhanga - Southern Province Insurance Muhanga Branch - BK Building Tel +250 788 426 661 Southern Province Email: [email protected] KIGALI Insurance Nyabugogo Satellite Cooperative INKUNDAMAHORO Building Tel +250 788 492 042 City of Kigali Email: [email protected]

KIGALI Insurance Remera Satellite YYUSSA PLAZA Building Tel +250 788 304 577 City of Kigali Email: [email protected]

DR CONGOKINSHASA UAP INSURANCE RDCUAP RDC, Sarl - courtier d’Assurances/Insurance brokers Bureau n° 3-0-B12, Kavali Center, n° 10/13 Croisement des Av. Mutombo Katshi et Equateur Kinshasa/Gombe, RDC Tel +243 975 33 88 33 Email: [email protected]

TANZANIADAR ES SALAAM UAP INSURANCE TANZANIA LTD Barclays House, 4th Floor, Ohio Street P.O. Box 71009 Dar Es Salaam, Tanzania. Tel: +255 22 213 7324 / 5 Fax: +255 22 213 7308 Email: [email protected]

ARUSHA Insurance NSSF Mafao House, 4th Floor, Old Moshi Road P.O.Box 13123, Arusha, Tanzania Tel: +255 (027) 252 0133 Fax: +255 (027) 252 0134 E-mail: [email protected]

DODOMA Insurance Plot No. 47, Block 6, Nyerere Road Opp. Nyerere Square P.O.Box 753, Dodoma, Tanzania Tel: +255 (026) 232 0999 Fax: +255 (026) 232 1998 E-mail: [email protected] MWANZA Insurance AICT Building, Uhuru/Ushirika Road P.O.Box 644, Mwanza Tel: +255 (028) 254 2423 E-mail: [email protected]

MTWARA Insurance Mahakama Road P.O Box 983 Mtwara Tel.: +255 23 23 34 750 Fax.: +255 23 23 34 751 E-mail: [email protected]

MBEYA Insurance Opposite General Post Office P.O Box 6155 Mbeya Tel: +255 25 250 4144 Fax: +255 25 250 4164 E-mail: [email protected]



FORM OF PROXY

I/WE

being a member / members* of UAP Holdings Limited hereby appoint:

of P.O. Box

and failing him / her the Chairman of the meeting to be my / our proxy, to vote for me /us atthe Annual General Meeting of the Company to be held on Friday 19 June 2015 at SarovaPanafric Hotel, Valley Road, Nairobi, at 10:00am or at any adjournment thereof. Aswitness my/ our hand/ hands this day of: 2015

Signed:

Note:The Completed Proxy Form by member must be lodged at the office of the Group Company Secretary, 8 Floor, Bishops Garden Towers, Bishops Road, P.O.Box 43013 - 00100 Nairobi, so as to reach the Company not later than 48 hours before the meeting.

th

th




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Annual Reports 2014

Documents

Transcript of Annual Reports 2014