Econet Wireless Zimbabwe 2015 annual report

Sustainability through InnovationEconet’s innovations are inspiring and life changing. We believe that technology that does not change and

improve lives is irrelevant, hence we continuously search for transforming technologies to facilitate social

transformation in existing and new markets. With the most extensive coverage in Zimbabwe, Econet

commands market leadership, delivering value and inspiring transformation across the country.

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Contents

The Year in Perspective 3

Corporate and Leadership 12

Administration 119

People and Community 39

Financial Reporting 46

Governance 28

Performance Highlights 3Shareholder Value Delivery Report 4Share price movement from February 2009 to February 2015 5Six-year Trading History 8New Products and Services 9

Our Business 12Corporate Profile 13Chairman’s Statement to Shareholders 15Chief Executive Officer’s Operations Review 20Board of Directors 23From the Directors 25

Governance Statement 28Risk Report 32

Corporate Social Investment 39Our People and our Community 42Econet Coverage Map- February 2015 45

Certificate by the Group Company Secretary 47Directors’ Responsibility for Financial Reporting 48Independent Auditor’s Report 49Consolidated Statement of Financial Position 50Consolidated Statement of Comprehensive Income 51Consolidated Statement of Changes in Equity 52Consolidated Statement of Cash Flows 53Notes to the Consolidated Financial Statements 54Policy Notes to the Consolidated Financial Statements 96

Administration 119Our Strategic Business Partnerships 120Shareholder Analysis 121Corporate and Advisory Information 122Financial Diary 123Notice to Members 124

Innovation, Infrastructure

& Social Responsibility

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The Year in Perspective

Performance Highlights

1 Earnings before interest, taxation, depreciation, impairment and amortisation (EBITDA). EBITDA for 2012 excludes once-off profit on disposal of investments. EBITDA includes share of profit/(loss) of associate.

2 Profit after taxation3 Average revenue per user per month4 Capital expenditure

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Shareholder Value Delivery Report

The Group continues to maintain shareholder value as illustrated by the metrics above. Since dollarisation, through the authority of the shareholders, the Group has made a number of prudent share buy-backs in an effort to retain value.

The Group has also declared a total dividend of US 0.92 cents per share, for the year ended 28 February 2015, to reward our valued shareholders. Over the period (2009-2015), the Group made significant efforts to grow shareholder value, which mainly included the following:

Investment in infrastructure and resourcesThe Group continues to invest in network infrastructure development aimed at increasing network coverage and improving network quality. As at year end, the Group’s total assets reached US$1.25 billion representing the Group’s aggregate investment in technology into the Zimbabwean economy to date. The Group’s subscriber base has also increased from 1.2 million in 2009 to 9.2 million subscribers in 2015. Investment in various systems that are aimed at improving operational efficiencies and containing costs continues to be made. Furthermore, in the current year, the Group has started to replace the network infrastructure with completion expected in the next financial year.

The focus on customer experienceThe Group continues to abide by its Customer Service Charter launched in the prior year. This Charter is aimed at instilling customer-centric values within the organisation. Continuing efforts are made to improve our customers’ experience through consistent provision of highly innovative services and products and to satisfying their needs. This will ensure that we are able to sustain and grow our revenues.

Growing Overlay ServicesOverlay services refer to services that use the existing mobile network operator technology platforms to provide additional services beyond the existing traditional telecommunications offerings of Voice, SMS and Data. The Group continues to pursue Mobile Financial Services (“MFS”) as an area of potential significant growth, given the low level of conventional banking penetration in Zimbabwe. As a network operator we are able to provide convenience to our customers by creating innovative financial products that use the mobile phone as the delivery channel. The group is also continuing to focus on other overlay services so as to diversify revenue sources away from voice. Overlay services such as EcoHealth, ConnectedCar, Ecofarmer and Ecosure are expected to add more revenue to the current mix.

Associates and subsidiariesThe Group has associates and subsidiaries in diverse industry sectors which compliment the overall Group strategy. These include subsidiaries and associates in financial services, fibre optic transmission delivery, financial transaction processing and switching. The acquisition of a bank and subsequent launch of EcoCash, a mobile financial services product, has been one of our major initiatives of recent years. The bank provides the licensing and regulatory framework for us to provide mobile financial services and to launch certain savings and credit products. Significant progress has been made in restructuring the bank’s balance sheet and right-sizing the business. The restoration of profitability of the bank via the development of new income streams is now key to delivering shareholder value. Liquid Zimbabwe, which is accounted for as an associate of the Group, provides us with fibre transmission and backhaul infrastructure. This investment is now contributing profitably to the Group. Its continued network expansion and the stable platform that it provides are critical as the Group continues to grow its data and voice traffic.

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5


Share price movement from February 2009 to February 2015

*The Industrial Index and Econet Share price have been indexed to 28 February 2009 as a base year.

Our share price has increased from 28 February 2009 as we create and retain shareholder value in an unstable and uncertain economic environment.

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Infrastructure

SUSTAINABILITY THROUGH INNOVATION

New call center management system which connects via social sites, email & sms

New investments in Wi-Fi Offload in

major cities

7

Ou

r Perform

ance

New Platinum lounge suite opened in Borrowdale

6000 independent shop outlets that offer Econet products and services

Retail footprint of Green Kiosks now over 1200

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2015 2014 2013 2012 2011 2010

Summarised income statement (US$ 000)

Revenue 746,183 752,678 695,791 611,116 493,491 362,776

EBITDA 285,645 332,174 302,413 290,894 242,746 179,285

Finance charges (37,076) (37,037) (28,600) (10,202) (8,061) (4,903)

Profit before tax 123,345 194,009 204,903 239,130 196,471 148,122

Taxation (53,136) (74,612) (64,965) (73,389) (55,502) (34,912)

Net profit for the year 70,209 119,397 139,938 165,741 140,969 113,210

Summarised statement of financial position (US$ 000)

Non-current assets 1,013,154 963,367 739,952 644,763 536,439 296,875

Current assets 243,337 210,297 275,158 167,664 101,073 95,794

Equity and reserves 665,295 603,719 492,883 382,793 290,477 165,486

Non-current liabilities 286,216 244,690 288,293 174,005 244,038 127,460

Current liabilities 304,980 325,255 233,934 255,629 102,997 99,723

Debt (excluding overdrafts) 242,450 227,895 264,571 249,138 248,392 138,707

Capital expenditure 118,545 139,718 147,044 216,010 270,034 160,148

Number of shares in issue (millions) 1,640 1,640 1,640 1,716 1,673 1,673

Performance per ordinary share (cents)

Basic earnings per share 4.4 8.0 9.0 10.0 8.3 6.6

Headline and diluted earnings per share 4.4 8.0 9.0 10.0 8.3 6.6

Net asset value per share 41 37 30 22 17 10

Profitability and returns (%)

EBITDA margin 38% 44% 43% 45% 49% 49%

Operating profit margin 21% 31% 20% 27% 29% 31%

Net profit margin 9% 16% 20% 27% 29% 31%

2012: EBITDA margin excludes once off profit on disposal of investments.

Six-year Trading History

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During the year, the Group successfully launched a number of products and services that are diversified and aimed at adding value to our subscribers. Notable among these new innovations are the following;

BuddieTwitter on USSD - A service that allows customers to get twitter updates via USSD with no internet connection Daily SMS Bundles - Allows customers to get daily unlimited SMSes for a minimum subscription of 15 centsMobile Job Alerts - Service that facilitates customers to get unlimited updates on the latest job openings for a weekly or monthly subscriptionMobile News Alerts - Service that allows customers to get the latest news headlines and stories in brief. This is in partnership with the local news publishing houses

BroadbandOpera Mini Surf bundles - These are bundles that allow subscribers to surf the internet unlimited for a period of time. They however do not include downloading, uploading and streaming mediaEconet Wifi Zone - These zones allow subscribers to move seamlessly between their 3G connection to WiFiFree Twitter - This allowed subscribers to tweet for freeFree BiNU - This is a free content management system for feature phones

Econet PremiumPremium - Provides subscribers with the best of both the contract and recharge worldsPremium Plus - Offers subscribers access to a variety of top-of-the-range devicesPremium Unlimited - Is an open ended package that is tailored to complement any lifestyle perfectly

EcoCashEcoCash Loans - An emergency facility which allows EcoCashSave customers to borrow money from their phone from anywhere anytimeEcoCash Diaspora - In partnership with World Remit & Western Union, links the Zimbabwean remitter in the diaspora to beneficiaries at home in a cost-effective and efficient way. Consequently, EcoCash customers have the liberty of receiving money sent from World Remit and Western Union straight into their EcoCash walletsDebit Card - Issued to any EcoCash customer, the card allows customers to perform local and international withdrawals at ATMs as well as payments on POS devices and onlineATM Cashout - A service which allows EcoCash customers to perform cashless withdrawals at any Steward Bank ATM using their phone

EcoSure EcoSure Funeral Cover - A micro-insurance product launched in December 2014. This revolutionary micro-insurance product enables all Econet customers to access the most affordable funeral cover in Zimbabwe on their mobile phonesEconet Health - Leverages on the mobile phone platform to deliver innovative mobile health solutions that transform lives of communities. EcoHealth tips avails health information to the customer via the phone in their language, while Dial-a-Doc enables callers to speak to a doctor anytime of the day to obtain health informationEconet ConnectedCar - Gives Econet customers the power to manage and maintain their vehicles right from

their tablet, smartphone, any web portal or through the Econet ConnectedCar Mobile Application

New Products and Services

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Eco School Econet Zero - Targets the 5 million Econet Broadband subscribers enabling zero-rated access to 50 plus education websites including Coursera, EdX, Wikipedia, Codecademy and others; a global first for any Mobile Network Operator in scaleEcoSchool Academy - Is accessible to all 9 million plus Econet subscribers, offering an interactive mobile learning environment, which provides 50 short courses covering a range of topics from professional development to language learning

Steward Bank Customers that have been saving money in their EcoCashSave accounts for at least 3 months

are able to instantly access micro loans between US$15 and US$500 using their mobile phone This is a suite of products for Zimbabweans living abroad. They are able to access their

account either using the online banking platform or their roaming Econet line. This gives them the ability to make Real Time Gross Settlement (RTGS) payments, pay local bills, buy groceries and transfer money to local recipients

This is a partnership with Econet to offer solar lanterns on creditThe Online Banking service allows customers to conduct financial transactions on a secure

website from anywhere, at any time using their phone, smart device or laptopThe Steward Bank Debit card allows customers to transact from

any ATM or Point Of Sale (POS) machine with the Steward Bank or ZimSwitch sign. The MasterCard credit card was offered to Econet High Value Customers with a credit limit of US$500

A new banking service that brings financial services to the consumer’s doorstep. Agent Banking is in line with the bank’s vision and agenda to improve financial inclusion by providing banking services to every Zimbabwean, in their areas of residence

Customers are able to collect money sent from abroad through World Remit at any one of our Steward Bank Branches

New Products and Services (continued)

Corporate and Leadership

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Econet Broadband connections and services continue to

grow steadily attaining an estimated market leadership

share of 81%, buoyed by low cost smart phones and

customer centric innovative services that are highly-valued

by our customers such as Econet Wi-Fi Zone, WhatsApp

Bundles and Opera Mini Surf bundles.

Broadband

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Our Business

Our VisionTo provide world-class telecommunications to all the people of Zimbabwe.

Our MissionTo serve Zimbabwe by pioneering, developing and sustaining reliable, efficient and high-quality telecommunications of uncompromising world-class standards and ethics.

Our ValuesThe values we hold in common are:

Pioneering

We are a company committed to finding the best way forward in the fast-moving and highly competitive technology field.

To remain leader in the field, we shall relentlessly pursue innovative solutions and constantly grow our knowledge base,

with an uncompromising passion for excellence.

Professionalism

In everything we do, both within Econet and in the community, we always work in a customer and objective-oriented

manner with clearly defined goals, in terms of quality of service. In all our professional areas and at all levels we carry out

our duties skilfully and diligently.

Personal

Internally we always remember that we are a company made up of individuals. These people are the Company. Each

one is an intrinsically valuable member of the organisation irrespective of their gender, race or position. We will always

show concern for each other in an atmosphere that is open and stimulates personal development, job satisfaction and a

sense of responsibility. We believe in working in teams, in effective and confident co-operation, in environments where

honesty, praise, constructive criticism and fair reward have their place.

Who we are inside the Company reflects who we are externally. Our relationship with our customers enthuses with

warmth and a genuine desire to meet their needs. We reach out to customers in a holistic way that makes them true

stakeholders and willing participants in Econet Wireless.


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Corporate Profile

ENTERPRISE BUSINESS

CORE BUSINESS

ECONET WIRELESS

ZIMBABWE LIMITED

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ECONET WIRELESS ZIMBABWE LIMITED (EWZL) - ZIMBABWE HOLDING COMPANY

This Integrated Annual Report incorporates the results of all the subsidiaries and associates of EWZL. EWZL is the holding company of businesses involved in various sectors of the economy as detailed below. EWZL, which is listed on the Zimbabwe Stock Exchange (ZSE), is Zimbabwe’s leading technology company.

SUBSIDIARY COMPANIES

Econet Wireless (Private) LimitedEconet Wireless (Private) Limited is EWZL’s cellular network operator.

EW Capital Holdings (Private) LimitedEW Capital Holdings (Private) Limited is EWZL’s investment vehicle through which the Group holds a variety of investments carefully selected with the twin objectives of growing earnings and preserving value for shareholders.

Transaction Payment Solutions (Private) LimitedThe company is a leading provider of financial transaction, switching, point-of-sale and overlay services that benefits from the convergence of banking, information technology and telecommunications. The company provides local and international financial institutions and telecommunications operators access to cutting-edge technology to enhance customer service, in partnership with one of the world’s leading manufacturers of smart card-based point-of-sale systems.

Steward Bank LimitedSteward Bank Limited offers commercial banking services in Zimbabwe. It plays a pivotal role in the Group, especially for EcoCash, which the bank holds the banking licence necessary for money transfer services.

Pentamed Investments (Private) LimitedEWZL, through wholly-owned Pentamed Investments (Private) Limited, holds 63% of the ordinary shares of Mutare Bottling Company (Private) Limited. It also holds 6% in the form of convertible instruments.

Mutare Bottling Company (Private) LimitedMutare Bottling Company operates the Coca Cola Company’s bottling franchise in the eastern region of Zimbabwe.

ASSOCIATE COMPANY

Data Control And Systems (1996) (Private) Limited T/A Liquid Telecom ZimbabweLiquid Zimbabwe is the leading provider of fibre optic infrastructure in Zimbabwe and to date has laid over 7,000 km of fibre optic cable. An extensive fibre network which has linkages within the major cities and towns as well as long distance links to the EASSy and Seacom cables has been established. The fibre network has been developed to provide alternative routes for connection to allow easy recovery in failure events which makes it a robust network. This fibre is used to provide backhaul infrastructure for the mobile network operator’s base stations and acts as a link to the outside world by providing a reliable transmission for internet traffic outside Zimbabwe. Liquid Zimbabwe is accounted for as an associate because it is operated by Liquid Telecommunications Operations Limited, domiciled in Mauritius, under a management contract.

Corporate Profile (continued)


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Chairman’s Statement to Shareholders

DR J. MYERS | Chairman of the Board

INTRODUCTIONThe telecommunications industry by its very nature is constantly experiencing dramatic technological changes that transform the way customers demand and consume the services of telecom operators. As a business, we have established a strong capacity to anticipate these changes and we have responded appropriately with strong innovations. We have established clear strategies to thrive in the face of new technological developments. However, in the period under review, the business has been affected by factors outside our control, principally the impact of economic deflation and certain regulatory directives.

ECONOMIC ENVIRONMENT REVIEWThe Zimbabwean economy is now in a sustained period of deflation. This economic phenomenon is the opposite of hyperinflation which we experienced a few years ago. All the manifestations of deflation are now fully evident. These include liquidity constraints, company failures, increasing levels of informal employment, and low consumer demand, even as prices fall.

We continue to respond positively to initiatives taken by policy makers to address this worsening situation. The situation now calls for urgent concerted efforts from all economic actors including other employers, workers and Government.

REGULATORY REVIEWThe introduction of a 5% excise duty on airtime sales, a 25% duty on handsets, and a 5 cents levy per transaction on mobile money transfers, compounded by a 35% voice tariff reduction has negatively affected the viability of the telecommunication sector, which has hitherto been a mainstay of investment, economic vitality and employment creation in our country.

The Company has had to reduce capital expenditure and stop further employment creation for the first time since it began operations. Econet is one of the largest employers in the country, both directly and indirectly, and is concerned about the job losses that now look to be inevitable.

NON PAYMENT OF INTERCONNECT DEBTS BY NETONE AND TELONETelecoms operators throughout the world pay each other interconnect fees for traffic terminating on each other’s networks. This is governed by agreements entered into between the operators. Econet has Interconnect agreements with TelOne, NetOne and Telecel and other interconnection partners. A disturbing trend has emerged over the last five years in which NetOne and TelOne have been increasingly unable or unwilling to settle their debts. During the period under review the two operators accumulated new debts amounting to about US$ 26.3 million.

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With assistance from the Government of Zimbabwe and the Reserve Bank of Zimbabwe, we have had to come up with innovative solutions to address this worsening problem and prevent the disconnection of the defaulting networks from our network. If unchecked, the rate at which NetOne and TelOne have continued to default on their contractual obligations will threaten the viability of the entire telecommunications sector.

CONTRIBUTIONS TO THE FISCUSThe Company has surpassed US$1 billion in its contribution to the fiscus through taxes, fees, and other levies since the dollarisation of the economy in 2009. This contribution, and that of others in the sector, reflects the importance of the sector in contributing to economic development. Through supportive policies, the sector has immense potential to continue to contribute significantly to national development and to complement Government’s efforts in economic development. INVESTMENT REVIEWNetwork investment of US$125.4 million was made during the year under review. This continued investment, was due to the need to invest constantly to remain relevant in the context of technological advances. Increased data capacity and faster data download speeds are amongst the many benefits for the customer that have resulted from this investment. Econet Wireless has invested over US$1.2 billion, in the last five years. This investment enables communications for more than 9 million of our customers, on a day to day basis. As a result of this investment, we now have the capacity to carry an additional 2 million users.

In addition, this investment sustains the jobs of over 2,000 direct employees, and over 35,000 indirect jobs. More than 20,000 small businesses across the country, particularly in rural areas, receive regular income from selling airtime, and also transacting for EcoCash. OPERATIONS REVIEW

Econet servicesDespite the changes, challenges and increasing complexity of the operating environment, the business continues to introduce new innovations that address the needs of its customers, whilst also diversifying its sources of revenue.

During the period under review, the company intensified its efforts to diversify its revenue base to other sectors of the economy whilst leveraging its core assets. New innovations include the following:

EcoCash (financial transactions).EcoSure (insurance services).EcoHealth (mobile health).EcoFarmer (agricultural sector).Connected Car (vehicle tracking).

This diversification strategy takes time to yield the desired returns. However, early results have been encouraging. These services contributed US$72.7 million to revenue during the period under review. This growth of 64.9% on the last financial year went a long way to mitigating the impact of the worsening operating environment.

BroadbandEconet was the first operator in the country, and one of the first in Africa, to anticipate that customer communications would shift significantly from voice to data. We understood that we would have to invest heavily in infrastructure to carry Data, at high speed.

Our associate, Liquid Telecom Zimbabwe (a specialist fibre operator), has built more than 7,000 km of fibre optic network in Zimbabwe. This is an open network, which is available for use by any operator or customer that is willing to pay for such services. The fibre optic network allows us to move data between our base stations, and also to and from smart phones and tablets. It is generally considered to be the most extensive fibre optic network of any country in the region, including South Africa.

We have the widest and most extensive 3G network in the country. We were the second operator in SADC and one of the first in Africa to start rolling out 4G/LTE. Since 2013, when we rolled out the first 4G/LTE service in Victoria Falls, we have been extending our network nationwide. The Company has also rolled out the most extensive Wi-Fi system throughout the country. Many of these Wi-Fi sites have the unique capability for seamless transition from mobile broadband.

During the period under review, income from broadband services rose by 42.3%, to US$103.0 million.

Chairman’s Statement to Shareholders (continued)


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FINANCIAL PERFORMANCENotwithstanding the impact of economic deflation and the prevailing regulatory environment, the company managed to use its innovations, and revenue diversification strategy, to mitigate some of the negative impact on its revenue. Revenue for the period under review was US$746.2 million, representing a fall on last year of less than 1%. The new revenue lines arrested revenue losses resulting from the worsening operating environment. Earnings Before Interest, Taxation, Depreciation and Amortisation (EBITDA) closed at US$285.6 million, compared to US$332.2 million for the previous year. The EBITDA margin eased by 5.8 percentage points, to 38.3%. Depreciation and amortisation increased by 24.1% to US$126.3 million. One of the key factors in this increase was the introduction of amortisation on the US$137.5 million Operating License fees.

For the period under review, profit after taxation decreased from US$119.4 million to US$70.2 million. Whilst we have been able to mitigate against some revenue losses through new innovations and revenue diversifications into areas like financial services, these areas carry lower margins, and cannot mitigate against charges such as amortisation and depreciation. The business will continue to execute measures aimed at improving its profitability.

The debt to equity ratio has continued to improve from 38% in the previous year to 36%. The business increased its debt repayments to US$97.8 million from US$75.4 million, an increase of 29.7%. The Company has remained on course with its debt repayment programme, which will see the business paying off most of its debt within the next 3 years.

CORPORATE SOCIAL INVESTMENTThrough Capernaum Trust, Econet has assisted over 75,000 deserving and orphaned children across the country since its formation. Over 20 learning centres have been developed nationwide and these are resourced with various e-learning platforms. Through the Joshua Nkomo Scholarship Fund (JNSF), Econet currently invests in secondary and tertiary education of Zimbabwe’s most academically talented youths and has assisted over 900 students, under this program.

The company is also a major contributor of school fees in the country, helping to not only support the needy but also to sustain the public education sector.

Following the outbreak of the Ebola Virus in West Africa, Econet, through one of its trusts, the National Healthcare Trust Zimbabwe, and in collaboration with the Ministry of Health, supported the training of healthcare professionals, health support staff and several communities on how to prevent Ebola and how to manage Ebola cases. It also procured medications and personal protective equipment for healthcare workers.

DIVIDEND ANNOUNCEMENTI am pleased to announce that the Directors declared a final dividend of 0.31 US cents per share for the year ended 28 February 2015 which amounts to a total of US$ 5 million. The dividend will be payable to shareholders registered in the books of the Company at the close of business on Friday 17 July 2015. The share transfer books and the register of members will be closed from the close of business on Friday 17 July 2015 to 19 July 2015, both dates inclusive.

Payment of the dividend will be effected on, or about 24 July 2015.

Withholding tax will be deducted at the rate of 10% where applicable.

OUTLOOKThe business will continue to leverage on its robust business model, diverse product portfolio, and on the strength of its brand to retain and grow the volume and quality of its subscriber base. Whilst revenue enhancement will remain a key priority, the business has intensified its cost optimisation efforts in order to remain viable in a deflationary economic environment. In order to retain value in the local telecommunications industry, supportive policies will be required to allow local companies to grow their capacity. APPRECIATIONI would like to thank our shareholders and our regulators for the continuous engagements that we have had to support the business. The business also owes its success to its customers and business partners whose continued commitment has enabled us to deliver these commendable results, albeit in a difficult environment. I would also like to extend our appreciation to the employees of this business whose contribution, skills, perseverance and determination continue to drive the business forward. My appreciation also extends to my fellow Board members, without whose wise counsel, over the years, we would not be able to stand as strongly as we do today.

DR J MYERSCHAIRMAN OF THE BOARD29 April 2015

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Innovation

Initiation of EcoSure Funeral Cover

Econet Platinum Connect MasterCard launched


19

Ou

r Perform

ance

Econet awarded Sole distribution of Apple devices in Zimbabwe

Steward Bank launched Agent Banking services

The only bank that offers full bouquet of MasterCard cards with over 4000 POS machines countrywide

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Chief Executive Officer’s Operations Review

Introduction Innovation, customer-centricity and business efficiency continue to be the key drivers of the business. Several innovations were introduced within the broadband and overlay services categories, which were supported by a device strategy aimed at increasing broadband penetration. As voice revenues continue to decline globally due to cheaper Over-the-Top services (OTTs), the business continues to invest in innovative products and services to grow its non-voice revenues. The business became the first industry player to launch a Customer Service Charter, comprising the Service Charter and Customer Bill of Rights. This is evidence of the commitment to deliver exceptional service to customers. Besides systematically increasing business efficiencies and cost-containment internally, the business in the year under review embarked on a three year cultural service orientation program for all employees, through the Service Quality Institute (SQI), aimed at instilling a customer-centric culture across the entire organisation.

Operations ReviewDuring the period under review, the business continued to diversify its revenues through introducing innovative products and services. The business launched a convenient, subscription-based, mobile insurance product with a mass-market appeal branded “EcoSure”. The EcoCash MasterCard debit card, a ground-breaking product was launched in partnership with MasterCard and Steward Bank. The EcoCash MasterCard debit card product is a customer-centric innovation that provides customer convenience while at the same time creating an additional revenue opportunity for the business.

Mobile broadband continued to drive revenue growth, recording significant growth in usage and in revenues on the back of various creative offers and unique products, such as the Wifi Off-load service, which allows Econet mobile broadband customers to access Wifi hotspots using seamless billing capabilities. With the continued growth in smartphone penetration, spurred by our aggressive devices strategies, we see tremendous growth in the adoption and consumption of broadband products going forward.

The business was awarded the sole distributorship of Apple devices in Zimbabwe which helped support the launch of the premium packages targeted at High Value Customers. To ensure convenience to our customers, the retail footprint growth is now over 1,200 Green Kiosks and 6,000 independent shop outlets that offer Econet products and services. This has particularly enabled the business to achieve growth in devices sales particularly in data capable handsets, which has helped to grow data services.

The Call Centre, which is equipped with a Call Centre Management system that has multi–channel capability supporting interactions via Facebook, Twitter, Live Chat, Email, SMS, voice and self-care functionality continued to provide world class services. Operational efficiency is critical as margins are under pressure due to the unfavourable operating environment.

DOUGLAS MBOWENI | Chief Executive Officer


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Cost optimisation is one of the critical strategies that we have been pursuing to maintain and improve profitability. The business aims to improve efficiencies by leveraging synergies across its various units and through automation of processes.

Financial results Earnings at US$ 70.3 million and operating cash flows at US$ 227 million are a result of the significant investment made into the business of over US$ 1.2 billion over the last 6 years. The business continues to meet all its debt covenants and debt service obligations. The debt to equity ratio has improved from 38%, in the prior financial year, to 36%. We anticipate that free cash flows will continue to increase as we reduce our debt exposure and capital commitments.

Significant progress was made in restructuring the bank’s balance sheet and right-sizing the business. Various strategic initiatives have been implemented to restore profitability. As these new initiatives begin to take form, we anticipate that the bank will start to contribute positively to the Group’s profitability.

Outlook Econet Wireless as the market leader, will continue to defend its position not only from a subscriber point of view but also offering the best value for money and innovative offerings. We are excited about the prospects presented by data growth, EcoCash and other overlay services. Data growth will be spurred by major investments in low cost smartphones offered using our wide distribution network. Our commitment towards service excellence will ensure we meet and exceed customer expectations resulting in continued strengthening of our brand equity.

D. MBOWENICHIEF EXECUTIVE OFFICER

29 April 2015

Econet Premium is a revamped package that gives the customer the nostalgic feeling about being on a contract package. The new package which comes in three categories Premium Unlimited, Premium and Premium Plus is in-line with the Econet Wireless’ vision to provide world-class service to its customers. It also comes at a time when the business has invested heavily in improving its end service to the customer. Econet Premium is designed with corporates and individuals in mind as it comes with flexible plans which allow customers to access the best device deals, personalised number, international roaming, data services and telemetry packages with a convenient 30 day post-paid billing cycle.

Econet Premium

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Board of Directors

Notes

Audit CommitteeMr M. Edge*, Dr J. Myers, Mrs S. Shereni, Mr C. Fitzgerald, Mrs M. Harris.

Risk CommitteeMrs S. Shereni*, Mr M. Edge, Mr D. Mboweni.

Remuneration CommitteeDr J. Myers*, Mr C. Fitzgerald, Mrs T. P. Mpofu, Ms B. Mtetwa.

Social and Ethics CommitteeMr G. Gomwe*, Mr K. Chirairo, Mr M. Edge, Mrs T. Mpofu,Ms B. Mtetwa.

* Chairperson

Dr James MyersChairman of the Board of

DirectorsIndependent Non-executive

director

1

5

9

2

6

10

3

7

4

8

Mr Strive MasiyiwaExecutive director

Mr Craig FitzgeraldNon-executive director

Mr Douglas MboweniExecutive director -

Chief Executive Officer

Mrs Sherree ShereniIndependent Non-executive

director

Mrs Tracy MpofuNon-executive director

Mr Kris ChirairoExecutive director -

Finance director

Ms Beatrice MtetwaNon-executive director

Mr Godfrey Gomwe Independent Non-executive

director

Mr Martin EdgeIndependent Non-executive

director

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Dr James MyersChairman

Dr Myers was appointed to the board in May 2009. He was appointed as Chairman of the board in December 2012. He sits on the board of Econet Wireless Global, the parent company of Econet Wireless Zimbabwe Limited. Apart from chairmanship of the board, Dr Myers chairs the board’s Remuneration Committee.

Mr Strive MasiyiwaMr Masiyiwa is the founder of the Econet Group. His full resume can be found on the Group’s website.

Mr Craig FitzgeraldA Chartered Accountant, Mr Fitzgerald was appointed to the board in December 2003. He serves on a number of boards within the Group.

Mrs Tracy MpofuMrs Mpofu joined Econet in February 2001 as Finance Director from Coca-Cola Central Africa. She holds a Bachelor of Accountancy Degree and an MBA, both from the University of Zimbabwe. Mrs Mpofu is a Chartered Accountant (Zimbabwe) and a Chartered Management Accountant and has completed her qualification for registration as a Chartered Accountant (South Africa).

Ms Beatrice MtetwaA lawyer whose achievements in the legal field have earned her international recognition, Ms Mtetwa was appointed to the board in October 2010.

Mrs Sherree ShereniMrs Shereni joined the board in May 2013. She holds a senior position at Coca-Cola Sabco with oversight on the Group’s corporate affairs function and has significant accomplishments notably in stakeholder management in its markets across Africa. She chairs the board’s Risk Committee. The Company has, in the past year, benefitted from Mrs Shereni’s experience and expertise in stakeholder engagement and management, and she continues to play a crucial role in assisting the Company’s management in this regard.

Mr Godfrey GomweMr Gomwe was appointed to the board in May 2013. He is Chairman of the board’s Social and Ethics Committee. He is a Chartered Accountant and sits on a number of other boards.

Mr Martin EdgeMr Edge is a UK CA and an Oxford MBA, who joined the board in June 2013.

In his chosen field of corporate finance and M&A, he has been a corporate finance advisor to many institutions in Europe and Africa over some 30 years, as well as spending some time as a CFO. He has advised on some of the most important transactions in Africa’s telecoms sector.

Mr Edge chairs the board’s Audit Committee.

Mr Douglas MboweniMr Mboweni is the Chief Executive Officer of Econet Wireless Zimbabwe Limited. He has been with the Group since 1996 and was appointed to the board in December 2003.

Mr Krison ChirairoMr Chirairo joined the Group in 1998. He was appointed to the board in February 2007. He is currently the Company’s Finance Director and also heads some of the Company’s subsidiaries.

Board of Directors


25

From the DirectorsThe Directors present their report and audited financial statements for the year ended 28 February 2015. In the report, “Group” refers to Econet Wireless Zimbabwe Limited and its subsidiary companies.

Principal Activities and Operations ReviewDuring the year, the Group continued to focus on its core activities, these being; the provision of cellular services, provision of internet access services, transaction processing services and mobile banking services. A number of new products were introduced during the year. These were Econet Premium, EcoSure, Econet Health, Econet Connected Car and various other overlay services such as Daily SMS bundles, Twitter on USSD, Opera Mini surf bundles, Mobile Jobs alerts, Mobile News Alerts, Econet Wifi Zones among others. The overall review of the Group’s operations, results and principal activities during the year and the likely future developments and the expected results of those developments, are given in the Chairman’s Report and the Chief Executive Officer’s Operations Review.

The contributions of the Group’s active segments are given in Note 1 to the financial statements.

Human CapitalThe Group continues to focus on, and uphold, the core values of accountability, teamwork and integrity. One of the Board’s objectives has been to instill in the Group’s employees a spirit of dedication and commitment to the Group’s values. Through this move, the Board ensured that the employees’ performance grew value for both customers and shareholders and also enabled them to respond to any challenges arising within the Group.

Consolidated ResultsThe Group’s financial results during the year are fully covered in the Chairman’s report and the Chief Executive Officer’s Review.

DividendsDuring the year the Board declared two dividends. The first dividend, amounting to US cents 0.61 per share, was declaredon 14 October 2014 in respect of the half year ended 31 August 2014.

The second and final dividend of US cents 0.31 per share, was declared on 29 April 2015 in respect of the year ended 28 February 2015.

Share CapitalNote 25 to the financial statements gives details of the Group’s share capital. There were no changes in both the authorised and issued share capital during the year.

Directors The names of the directors who served during the year are shown in the Board of Directors section. Directors are not required to hold any shares in the company by way of qualification.

There were no changes to the Board during the year. The Board consisted of three executive and seven non-executive directors.

In accordance with Article 81 of the Company’s Articles of Association, at least one third of the directors must retire and seek re-election at each Annual General Meeting. The following directors retire by rotation and being eligible, offer themselves for re-election: Dr J Myers, Mr M Edge and Mrs T Mpofu.

At the Annual General Meeting, shareholders will be asked to approve payment of the directors’ fees and the re-appointment of the retiring directors.

Capital commitmentsDetails of the Group’s capital commitments are set out in Note 41 to the financial statements.

Directors’ InterestsDetails of directors’ interests in the share capital of the Company are shown on Note 26 of the financial statements.

26

Register of MembersThe register of members of the Company is open for inspection to members and the public, during business hours, at the offices of the Company’s transfer secretaries, First Transfer Secretaries (Private) Limited.

Borrowing PowersThe details of the Group’s borrowing powers are set out in Note 40 to the financial statements.

Pension FundThe Group’s pension fund scheme is administered by a Board of Trustees. The Trustees manage the assets of the pension fund, which are held separately from those of the Group. The assets and funds of the scheme are administered in accordance with the rules of the pension fund.

An audit of the fund established that the fund was significantly undercapitalised. During the year the Board authorised various initiatives to recapitalise the fund. Subsequently a capital injection of US$ 3 million was made into the pension fund.

Corporate Social InvestmentThe Group continues to recognise the need for it to play a role in developing societies in the country. Through various initiatives and activities the Group engages with, and supports communities in various projects aimed at improving the welfare of these communities. Underlying this commitment is the Group’s own policy of observing and upholding Christian values and principles.

Donations to Political PartiesAs a matter of policy, the Group does not make donations for political purposes.

AuditorsErnst & Young continued in office as the Group’s auditors during the year. At the Annual General Meeting, shareholders will be requested to approve the remuneration of the auditors for the year ended 28 February 2015 and to appoint Deloitte & Touche as auditors of the Group for the financial year 2016.

By order of the Board

Dr J MyersCHAIRMAN

D MboweniCHIEF EXECUTIVE OFFICER

C A BandaGROUP COMPANY SECRETARY

29 April 2015

From the Directors (continued)


27

Buddie, as the leading prepaid brand in the country, has revolutionary products and services that have changed the standard of telecommunications in Zimbabwe. It offers more customer convenience, more exciting discounts, more promotions, more fun and more entertainment. Buddie is committed to offering more value through outstanding competitive offers.

Buddie

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Compliance with good corporate governance continued to remain a key ingredient in the values of the Group. Behind this is recognition by the Group that good corporate governance is a key deliverable, in the sense that it gives assurance to shareholders, stakeholders and regulators that the business is being properly run and managed. The Group observes generally accepted best practice standards of transparency and accountability; it complies with the widely accepted principles enunciated in the King Codes and, at the local level, with the regulatory obligations applying to listed companies in Zimbabwe, among these being the ZSE Listing Rules and the recently adopted Zimbabwe National Code on Corporate Governance. The Group is also subject to government regulations affecting various areas of its operations. The Group makes it a policy to comply with these regulations.

THE BOARD OF DIRECTORS

Composition and appointmentThe Board’s composition has not changed and currently has ten members, made up of three executive directors and seven non-executive directors. A non-executive director chairs the Board. The offices of the Chairman and Chief Executive Officer are separate. The Group recognizes how it is essential to separate the two offices. Apart from the good corporate governance aspect, the separation ensures that the Chief Executive Officer and the executive directors focus on operational issues while the Chairman and the non-executive directors concentrate on the oversight role. In particular this clear division of responsibilities enables the board Chairman to exercise effective leadership of the board.

The non-executive directors are drawn from a wide range of fields, bringing broadly based business knowledge and experience to the deliberations of the Board, the objective being to effectively serve the current and future needs of the business. The election to the Board of non-executive directors is subject to confirmation by shareholders.

In terms of the Company’s Articles of Association and the Companies Act (Chapter 24:03) at least one third of the directors must retire at every Annual General Meeting and, if eligible, can stand for re-election. At the last Annual General Meeting, held on 1 August 2014, the following directors were re-elected: Messrs D Mboweni and G Gomwe, and Mrs S Shereni. Accountability and delegated functionsThe Board’s role is to set the Group’s strategic objectives and to ensure the growth of the business. To achieve these goals the Board focuses on the following key areas:

provide stewardship of the Group by keeping itself fully informed of major developments in the Group and monitoring the performance of management in meeting agreed goals and objectivesreviewing and approving the Group’s capital allocation and expenditurereviewing and approving of the Group’s major investments and acquisitions, and safeguarding the Group’s assetsthrough its various committees monitoring and ensuring observance of high standards of governance in the Groupreviewing financial, operational and compliance controlsreviewing risk management and ensuring prudent management thereofreviewing and approving the Group’s budget and maintaining proper accounting recordsreviewing the integrity of the Group’s financial statements and all notices to shareholders and stakeholders

The Board is ultimately accountable to shareholders for the performance of the business. Directors are responsible for the preparation of financial statements for each financial period that give a true and fair view of the state of affairs of the Group as at the end of the financial period. To achieve this the directors make it a point of monitoring management’s performance and also that prudent and effective controls are in place all the time. In particular, the Board ensures that financial managers conduct themselves with integrity and honesty and in accordance with the ethical standards of their profession.

The Board appreciates the importance of interacting with the investment community in order to give investors an informed understanding of the Group’s performance. To this end the Board has delegated to the Chief Executive Officer, the Financial Director and the Chairman the responsibility of communicating with the investment community. Regular briefing meetings with analysts, institutional investors and the media are held, at which investors are updated on the Group’s performance as well as the Group’s plans going forward. The outcome of these meetings is communicated to the Board, enabling the Board to become conversant with shareholders’ and investors’ opinions and perceptions of the Group.

RightsAll directors have full and unfettered access to management and the Group Company Secretary for information required to discharge their responsibilities fully and effectively. In addition certain members of senior management are standing invitees to board meetings at which they brief the Board on the performance of the Group’s main business units. Whenever they deem it necessary, the directors are entitled at the Group’s expense, to engage independent advisers for expert or independent professional advice in the furtherance of their duties.

Directors’ NamesThe following are the directors who served during the year:Dr J Myers (Chairman), Mr S T Masiyiwa, Mr K V Chirairo, Mr M Edge, Mr C Fitzgerald, Mr G Gomwe, Mr D Mboweni, Mrs T P Mpofu, Ms B Mtetwa and Mrs S Shereni.

Governance Statement

29

Governance

Directors’ interestsIn compliance with good corporate governance, directors are required each year to declare in writing whether they have any material interest in any contract of significance with the Group or any of its subsidiaries, which could give rise to a related conflict of interest. At board meetings directors are also requested to disclose their other business interests. None of the directors had a material interest in any contract of significance to which the Group was a party during the year, other than their service contracts.

BOARD COMMITTEES

During the year the Board established, in addition to the existing board committees, a Social and Ethics Committee after recognizing the need for such a committee. The Board now has four committees: Audit Committee, Risk Committee, Remuneration Committee and Social & Ethics Committee. Each committee is chaired by an independent non-executive director.

The committees assist the Board by dealing with specific matters delegated to them by the Board. Each committee conducts its business in accordance with its terms of reference.

Audit CommitteeThe Committee’s primary function is to review the integrity of the Group’s financial reporting, risk management and internal controls. Review of the Group’s financial issues remains the key role for the Committee. The Committee identifies any major issues and brings these to the attention of the Board, together with recommendations to the Board on how best to address the issues. The Committee also reviews the Group’s budget prior to this being submitted to the Board for approval.

The Committee also takes note of new legislation and new International Financial Reporting Standards (IFRS) and ensures that these are adopted by the business.

The Committee oversees the Group’s risk management policies and procedures and ensures these are fully implemented and observed. The Committee meets regularly with the Group’s external and internal auditors to consider risk assessment, review accounting principles in relation to preparation of financial statements, review financial controls and putting in place the audit planning process.

The external auditors and the head of internal audit have unrestricted access to the Committee and its chairman and attend audit committee meetings. The Committee considers reports from the external auditors by way of assessing and evaluating the effectiveness of the Group’s internal controls over financial reporting and disclosures.

The following constituted the committee during the year: Mr M Edge (Chairman), Dr J Myers (Member), Mrs S Shereni (Member), Mr C Fitzgerald (Member), Mrs M Harris (External Member), Mrs T Mpofu (Attendee) and Messrs D Mboweni, K Chirairo and P J Campbell (Attendees). The full members of the Committee are all independent non-executive directors.

The Committee met seven times during the year, three times more than the scheduled four meetings.

Risk CommitteeThe Committee is responsible, on behalf of the Board, for driving the Group’s risk strategy. It identifies and assesses areas of risk in the Group as well as reviews the effectiveness of management policies and procedures relating to risk.

Upon identification of the risks, the Committee reviews the risks and their potential impact on the Group and brings this to the attention of the Board, together with recommendations on the required remedial measures. In this process the Committee achieves its ultimate objective, which is to play its role in the building and growth of a long-term sustainable business.

Members of the Committee are; Mrs S Shereni (Chairperson), Mr M Edge (Member), Mr D Mboweni (Member) and Mr P J Campbell (Attendee).

The Committee met four times during the year. The Chief Risk Officer attends the meetings and presents reports outlining the Group’s risk profile and progress in addressing the identified risks. The Committee Chairperson in turn reports to and updates the Board on the risk issues.

30

Remuneration CommitteeThe Committee’s role is to assist the Board to ensure that remuneration policies and reward practices are fair and in accordance with the Group’s and individual performance. The Committee defines remuneration structure and policies and ensures their implementation within the Group.

During the year the Committee oversaw the successful implementation of the performance management system whose overall objective is to ensure attainment of defined targets by individuals. The attainment of defined targets translates into significant contributions by individual employees to the Group’s strategic goals.

The members of the Committee are: Dr J Myers( Chairman), Mr C Fitzgerald (Member), Mrs T P Mpofu (Member), Ms B Mtetwa (Member) and Mr D Mboweni (Attendee). All members of the Committee, including the Chairman, are non-executive directors, with two of them being independent non-executive.

The Committee met four times during the year. The Chief Human Resources Officer attends the committee meetings and provides materials on matters for the Committee’s consideration.

During the year the Committee also reviewed the Group’s pension policy. It identified a number of issues that needed to be addressed and initiated an exercise to that effect.

Social and Ethics CommitteeDuring the year the Board having realised the need for a full board committee to address the various social and ethics issues reconstituted the Related Party Transactions Sub-Committee to establish the Social and Ethics Committee. All matters previously dealt with by the Sub-Committee now fall under the new committee.

The role of the Committee is to review, advise and make recommendations to the Board on the Group’s social and ethics policy and programmes and the Group’s stakeholder governance. In pursuance of this role the Committee looks at, and advises on the following: business integrity; the business’ interaction with communities; health, safety and the environment and compliance with regulations relating thereto; bribery and corruption.

Membership of the Committee is made up of four non-executive directors (two of them, including the Chairman, are independent) and one executive director. The following are the members of the Committee: Mr G Gomwe (Chairman), Mr K Chirairo (Member), Mr M Edge (Member), Mrs T Mpofu (Member), Mrs B Mtetwa (Member) and Mr P J Campbell (Attendee). Following its establishment in mid-year the Committee held three meetings.

Investor RelationsThe Group continues to recognise the importance of communicating with the various stakeholders. To this end the Group holds analysts briefings at which investors and analysts are briefed on the Group’s performance up to the end of that period. The communication offers the Group the opportunity to highlight its plans going forward. The engagement also enables the Group to receive valuable feedback on its performance and general perception of it by the investor community.

Two meetings are held with investment analysts each year, one after the release of the Group’s half-year results and the other after the release of the full year results, at which a full briefing of the Group’s performance is given.

The Group’s Annual Report and other corporate publications are available on the corporate website www.econet.co.zw.

Employment and equity practicesThe Group has maintained its policy of retaining a culture of accountability, respect and teamwork among its employees. In line with best practice the Group has adopted as part of its culture observance by its directors and employees of the highest standards of ethical behavior. Directors and employees are expected to conduct themselves with integrity and professionalism, with a view to achieving excellence in customer satisfaction, quality of products and services and generally maintain the good name of the business. A “whistle-blowing” programme is also in place to encourage employees to report any concerns, including any suspicion of violation of the Group’s financial reporting or environmental procedures.

The Group is committed to equal opportunities. It is the Group’s policy to ensure that recruitment, promotion and all other aspects of employee management are free from discrimination, whether on the grounds of gender, disability or religious belief. All employees are accountable for adherence to equal opportunity and anti-discrimination policies.

Developing people for growth remains part of the Group’s strategic goals. Opportunities are given to employees to attend training in leadership, managerial, technical and operational skills.

A communication system is in place to keep employees informed of announcements and important developments in the Group.

Governance Statement (continued)

31

Governance

The Group also recognises its obligation to comply with health and safety legislation and through training and communication, encourages employees to create and secure a safe and healthy working environment.

Directors and Employees dealings in sharesThe Group complies with the Zimbabwe Stock Exchange listing rules in relation to transactions by directors and employees in securities issued by the Group. Directors and employees or their nominees or members of their immediate family are prohibited from dealing, either directly or indirectly, in the Group’s securities at anytime when they are in possession of unpublished, price-sensitive information regarding the Company’s business or activities.

The Group operates a closed period prior to the publication of its interim and annual results. No director or employee of the Company may deal in the securities of the Company during the closed period. In terms of policy, directors and employees who wish to transact in the shares of the Group, even outside of the Group’s “closed or blocked period”, are required to obtain the clearance of the Chairman.

Independence of AuditorsThe Group’s Audit Committee confirms the independence of the Auditors, Ernst & Young, who were engaged by the Group for audit-related services. A resolution to appoint Deloitte & Touche as auditors for the ensuing year will be proposed at the 2015 Annual General Meeting.

Going concernThe Directors have satisfied themselves that the Group is a going concern as it has adequate financial resources to continue operating for the foreseeable future.


Dr J MyersCHAIRMAN



29 April 2015

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Risk Management The business is exposed to a wide variety of risks across the range of business operations. As a consequence, the Board has put in place comprehensive risk management and internal control structures that enable the business to identify and analyse risks early on and thereby take appropriate action. The risk management and internal control system is designed to identify potential events that could negatively impact the Group and to provide reasonable assurance regarding the achievement of the Group objectives, specifically our ability to achieve our financial, operational, or strategic goals as planned.

This system comprises of multiple control mechanisms and is an important element of the corporate decision-making process. It is therefore implemented as an integral part of business processes across the entire Group. Ensuring that our global risk management efforts are effective and to enable us to aggregate risks and report on them transparently, we have adopted an integrated risk management and internal control approach.

Risk Management Policy and Framework The risk management policy issued by the Board governs how we handle risk in line with the Group’s risk appetite and defines a methodology that is applied uniformly across all parts of the Group. The policy stipulates who is responsible for conducting risk management activities and defines reporting and monitoring structures. The business routinely reviews and updates the policy as necessary.

Risk Report

The Risk Division structure is comprised of four independent and objective units namely:

The Risk Division conducts its activities in line with the recommendations of the ISO 31000 principles.

Commitment by ManagementManagement continues to demonstrate its commitment to the risk management process by investing appropriate resources to facilitate effective risk management within the group.

Internal AuditOur audit function conducts regular audits to assess the effectiveness of our risk management systems. The function assesses if the early risk identification system is adequate to identify risks that may endanger the Group’s ability to continue as a going concern.

Corporate RiskThe business has a corporate risk department whose role is to coordinate the Enterprise Risk Management (ERM) across the Group. In 2015/16, the corporate risk department intends to focus on the following key areas:

Risk culture entrenchment within the businessAutomation of the enterprise risk management systemContinued development and implementation of business processesUpdated Risk Registers

The following are some of the key risks facing the business:

Mitigation measures

Effective stakeholder management including government, legal and regulatory stakeholders

The business has embarked on a project to develop a Stakeholder management system to enable efficient and cost-effective engagement of all relevant stakeholders across the business.

Low investment in ICT infrastructure that is negatively impacting on service delivery for the Information Systems division and may compromise efficiency and effectiveness.

In house development and intelligent outsourcing for business solutions continue to be developed in order to derive maximum returns from existing available resources

There may be inherent Information Security weaknesses within the technology systems that create vulnerabilities and impact on information privacy.

A consolidated Information Security Plan has been developed to address the key risks identified from the Information Security Risk Assessment reviews

The business may face challenges in containing escalating costs at a time revenues are declining. This may negatively impact on profitability.

Cost control measures are being enforced to prevent expenditure overshooting the budget in addition to initiatives targeted at growing revenues

Absence of a tested and integrated Business Continuity Plan that may negatively impact the going concern of the business in the event of a disaster or service disruption.

The business is rolling out a Business Continuity Management System (BCMS) that is aligned to the ISO 22301 Standard

Failure to document and implement required business processes, which may lead to reduced business efficiencies and weakens the control environment.

The business has documented most of its processes and is currently embarking on full scale implementation of these processes

33

Governance

Mitigation measuresExposure to fraud, corruption and bribery risk within the business that may lead to financial prejudice.

The business continues to raise staff awareness on fraud through targeted trainingIn addition to internal channels available to report unethical conduct, Econet subscribes to an externally administered whistleblower program that is accessible to all stakeholders

The threat posed by new entrants and use of alternative technologies may result in loss of market share and reduced profitability.

The business continues to pursue other revenue growth initiatives through introducing new overlay services to mitigate revenue loss

Failure to attract and retain critical skills within the technical functions of the business.

The business continuously reviews its remuneration structure and incentive schemes to ensure that it attracts and retains the required talent

Business Continuity Management ProgramThe Business is rolling out a Business Continuity Management System (BCMS) that is aligned to the ISO 22301 Standard to pursue certification by end of 2015. Major benefits of this programme will be business resilience, mitigating impact of disruptions and prioritisation of processes during recovery from a disruption. A massive BCM awareness campaign was done for all staff members and is now entering a second phase where staff will be trained in Crisis Management. Some staff members were also trained on Fire Fighting and Prevention and first aid as part of our business continuity management in dealing with emergencies. Evacuation drills for key sites are also being carried out regularly to ensure that staff members are prepared for site “denial of access” emergencies. Safety Health and EnvironmentThe business is committed to the protection of the environment and social resources through Safety, Health and Environmental Management systems. ISO 14001 Environmental Management System, OHSAS 18001 Occupational Health and Safety Management, ISO 26000 Social Responsibility, ISO 22301 Business Continuity Management and IFC Performance standards are the reference guidelines for the Risk Division systems.

The focus projects for the year were Stakeholder Engagement, Business Continuity Management, Carbon Footprint establishment and Environmental, Health and Safety Management initiatives.

Environmental and Social Programs The business has continued to invest in environmental and social initiatives with the bulk of the expenditure going towards the following programs:

Carbon Footprint Reporting The thrust of the project was to establish the emission levels of greenhouse gases to facilitate the implementation of initiatives for energy consumption reduction in line with the business efficiency strategic pillar. With regards to the market leadership pillar the organisation is amongst the first ICT companies in Zimbabwe to report on carbon footprint.

2014 Carbon Footprint Assessment Results: Scope 1 + 2 (t CO2e)

Scope 1 emissions (direct emissions from the combustion of fuel in basestation sites, buildings and company vehicles and the use of refrigerants) account for 41% of Econet’s total Scope 1 and 2 emissions for full year 2013 /2014.Scope 2 emissions (indirect emissions associated with the use of purchased electricity at Econet controlled premises) account for the 59% of Econet’s Scope 1 and 2 emissions for full year 2013 /2014.

Results for Scope 1 and 2 Emissions (t CO2e) by Business Category

Scope 1 and 2 emissions present the greatest opportunity for improvement and this will be the improvement focus going forward.

Stakeholder Management Initiative The business is committed to ensuring that stakeholder values and interests are integrated in the decision making and operational processes for sustainable business growth. The business has identified and prioritized the stakeholders to facilitate the development of effective stakeholder engagement plans. The aim of this project is to ensure efficient and cost-effective engagement of stakeholders across the business, which will result in continual coordination, monitoring and effective dialogue for business relationships. The stakeholder’s engagement plans will be implemented going forward.

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The broad stakeholder classes for the business are detailed in the table below:

Table : Business Stakeholders categories

Why We Engage

Government country and as a client

operations

Regulators

Lendersprinciples

People /Staff

Customers/ Consumers

services needs

services

Industry / Business Partners

Communities and Local Authorities

issues; e.g. Higher Life Foundation Energise The Chain

Media

Suppliers

Risk Report (continued)

35

Governance

Employee Wellness ProgramEconet Wireless (Private) Limited launched an Employee Wellness Program in October 2014 at a family fun-day. The family fun-day was held in all the major business centers across the country. During the launch, wellness service providers offered wellness counselling and medical advice to staff members and their families. The objective of the Employee Wellness Program is to promote wellness among staff by ensuring that they make informed choices about their health hence reducing health risks.

Environmental and Social Management Systems The business continued to strengthen the Safety, Health and Environmental (SHE) systems within the Group through capacity development for implementation of systems. The following initiatives were implemented:

Steward Bank; SHE training and risk assessment were conducted. Implementation of the SHE system is currently in progress Mutare Bottling Company; Implementation of ISO 14001 EMS and OSHAS 18001 systems in preparation for ISO Certification by South African Bureau of Standards (SABS).

Environmental and Social Performance Management of environmental and social performance remains key to the business. Initiatives for proactive risk assessment and thorough accident investigation in risk management continues to be reviewed and strengthened going forward.

Accidents Statistic 2014There was continual monitoring and improvement on the systems for reporting and recording of incidents and

accidents. The figure below provides a summary of the accident statistics for the year.

Investigations and implementation of corrective actions continue to enhance improvements.

Strategic Focus Areas 2015/16 Our environmental and social management strategic focus for the coming financial year will target the following areas;

environmental management systems within the group

stakeholder management programme

management and green business initiatives

management systems

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Overlay services

EcoHealth leverages on the mobile phone platform to deliver innovative mobile health solutions that transform lives of communities. EcoHealth Tips avails health information via the phone.

EcoSure Funeral Cover, a micro-insurance product, was launched in December 2014. This revolutionary micro-insurance product enables all Econet customers’ access to the most affordable funeral cover in Zimbabwe on their mobile phones.


37

Ou

r Perform

ance

The Econet ConnectedCar which was launched in October 2014 gives Econet customers the power to manage and maintain their vehicles right from their tablet, smartphone, any web portal or through the Econet ConnectedCar mobile application. Econet ConnectedCar offers Fleet Management Service and Personal Vehicle Management making it the perfect affordable vehicle tracking solution for both corporates and individuals who want to be in control of their vehicles.

In keeping with the pioneering spirit, the business launched EcoFarmer as a pilot project. The business seeks to serve over 67% of Zimbabwe’s population who reside in the rural areas and mostly depend on agriculture, through offering products which improve access to information, market and financial services. Projects and initiatives are at various stages of implementation.

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EcoCash experienced phenomenal growth with over one million new subscribers previously financially excluded but now included. The focus for the year was to deploy the relevant innovations aimed at extending financial inclusion to the next level. The year saw introduction of a one of its kind savings product EcoCashSave, where the customer can save as little as one US Dollar at a time.

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People and comm

unity

39

Corporate Social InvestmentWith a vision that is aimed at changing lives, keeping our subscribers connected, and creating new possibilities, we believe our technology can be used for the benefit of humanity, to help solve social problems.

We’re also determined to bring about lasting changes in the Education and Health sectors by developing innovative Information Communication Technology (ICT) programmes and mobile innovations to fast track change. Our EcoSchool programme is one of our latest innovations that has provided thousands of school children with access to world-class digital content via the EcoSchool tablet.

Econet’s community work has significantly touched the communities we operate in over the past years.

1. CAPERNAUM TRUSTCapernaum Trust, the biggest of the Higher Life Foundation Trusts supported by Econet, continued to create empowerment opportunities for thousands of orphaned and vulnerable children in Zimbabwe through education and material support. The Trust, which was established in 1996, has since inception provided educational support to over 75,000 children.

Access to educationDuring the year under review, Capernaum Trust set up 5 additional Learning Hubs to an existing 16 facilities nation-wide, which provide a convenient and accessible platform for educational research, learning support and spiritual enrichment for beneficiaries and communities at large.

Strategic CollaborationOne of the 21 Learning Hubs was commissioned at Bindura University of Science Education in the north-east of the country, cementing the strong strategic collaboration that the Trust has long cultivated and enjoyed with universities and tertiary learning institutions around the country and abroad. The Trust also collaborates with the University of Zimbabwe and the university’s College of Health Sciences, and with several universities in the region, including Monash University in South Africa and the highly regarded Waterford College in Swaziland.

Community ImpactIn the year under review, Capernaum Trust made significant impact through the Learning Hubs as 320,000 students used the facilities to take advantage of the free and diverse learning resources. The Trust trained 1,836 ‘contact teachers’ in IT skills, equipping them to train 389,200 students in basic IT skills that ensure they fully utilise the online learning resources available at the Learning Hubs and elsewhere.

Study and material supportIn a measure that is set to improve academic results and ensure beneficiaries are equipped to study using clean energy lighting, the Trust distributed close to 10,000 study solar lanterns to secondary school students. This was over and above food pack support that impacted over 35,025 families.

2. JOSHUA NKOMO SCHOLARSHIP FUNDEconet has been funding the Joshua Nkomo Scholarship Fund (JNSF) since its establishment in 2005 to support young, talented and academically gifted students by awarding them full education scholarships. Since inception, nearly 900 students have been offered scholarships. About 100 of them have secured scholarships to study abroad mainly at universities in the United Kingdom and the United States, including Harvard University.

An equal-opportunity-based programme whose reputation and credibility over the years has been built on its transparency and fairness, the JNSF scholarships are awarded to an equal number of female and male students drawn from the 10 administrative provinces of Zimbabwe.

The programme blends impeccable academic record and performance with community leadership qualities that ensure a future end-product of exceptionally capable and talented young leaders with a highly developed global sense of awareness and responsibility towards their communities.

In line with the goal to mentor and equip beyond academics, during the period under review JNSF conducted 9 Leadership and Personal Development workshops which reached 480 students on the scholarship and impacted 337,193 students nationwide.

3. NATIONAL HEALTHCARE TRUSTThe National Healthcare Trust Zimbabwe (NHTZ), established by Econet in 2008 in response to a nation-wide Cholera epidemic, has since inception collaborated with a number of partners to respond to emergency health crises in Zimbabwe.

Besides the Cholera epidemic, the Trust has worked with the Ministry of Health and Child Care to respond to the Typhoid outbreak of 2010 and the N1H1 global scare in the same year.

In 2014, the NHTZ supported over 25,000 people displaced by the Tokwe-Mukosi flood disaster with food aid, medical drugs, clothing, solar lighting and special needs support for the girl child caught in the crisis.

In the year under review, the NHTZ has worked closely with Econet to implement the successful, African Union-supported, continent-wide campaign to fight the deadly Ebola virus. With Econet partnering with other telcos across the continent to raise millions of dollars in funds directed at the epicentre of the disease outbreak in West Africa, the NHTZ worked with government departments and agencies across Zimbabwe to train public health care personnel, to supply protective equipment and clothing to health institutions and facilities, and to distribute information, communication and education materials to the public.

As Econet took a leadership role nationally and regionally in raising awareness and mobilising support and funding to combat the Ebola epidemic, the NHTZ once again proved to be an effective and competent implementer of health emergency crisis interventions, winning the Trust, the Zimbabwe National Chamber of Commerce (ZNCC) ‘Outstanding Corporate Social Responsibility’ award for 2014.

40

Corporate Social Investment

Investment in malaria prevention in all affected regions

Helping under-privileged children through primary education


41

Ou

r Perform

ance

Joshua Nkomo Scholarship graduates exceed 900 from inception

Communities assisted through Christian values

42

Our People and our Community

HUMAN CAPITAL

PERFORMANCE MANAGEMENT

A high performance culture has been embedded in the Group. Various tools are being used to monitor performance on a quarterly basis. Targeted training is being provided to close any performance gaps. In addition, performance improvement plans have been introduced to track performance of employees.

SAGE VIP - HR INFORMATION SYSTEMS IMPLEMENTATION

The implementation of SAGE VIP Payroll module was completed and the team is in the final stages of implementing the other modules of SAGE VIP.

HR SHARED SERVICES

The HR Shared Services model has been developed and it comprises of transactional and advisory service delivery channels. Automation and standardization of HR processes and systems will result in improved service delivery through employee and manager self-service portals.

STAFF COSTS MANAGEMENT

During the year, management remained focused on controlling staff costs within agreed thresholds. One key objective that the business embarked on is automation of systems and processes so as to minimize headcount pressures.

People and comm

unity

43

TALENT DEVELOPMENT

The business launched a Management Development Program in partnership with the University of Stellenbosch. This is the first of its kind program in Zimbabwe. Thirty managers have been enrolled on the program that runs for eight months. During the period, managers will attend classroom lessons and work on individual and group on-the-job assignments. The program is one of the many initiatives the business is embarking on in order to develop our talent pipeline. Other key initiatives are coaching and mentoring of graduate trainees as well as use of eLearning platforms to enable staff to access learning material during convenient times without negatively impacting on productivity.

STAFF ENGAGEMENT

The business continuously promotes open communication across all levels and the Chief Executive Officer’s quarterly staff briefs have been useful in promoting open dialogue between staff and the leadership team. Monthly newsletters have been distributed to all staff. An employee engagement survey using the Survey Monkey tool was conducted and the result shared with staff.

EMPLOYEE WELLNESS

The business launched an Employee Wellness week whereby staff and their spouses and children are educated on the importance of healthy living. The company continues to sponsor the Live to Love program whereby it provides medical support to staff and their dependents affected by HIV and AIDS.

44

Econet Solar continues to roll out new high quality products that are transforming the lives of Zimbabweans through access to clean, safe and affordable renewable energy solutions for both the rural, off grid and urban areas. Econet Solar takes pride in providing unrivalled quality offering Africa true energy independence.

Solar

44

People and comm

unity

45

Econet Coverage Map - February 2015

4G LTE COVERAGE

4G LTE COVERAGE

4G LTE COVERAGE

Our network coverage continues to expand year on year. We have 2G (GSM, GPRS, and EDGE) network connectivity in 70.6% of the land area of Zimbabwe. We also have 3G coverage in all urban centers and towns. 4G LTE service will continue to be rolled out to cover most of the urban centres of Zimbabwe.

4G LTE COVERAGE

3G COVERAGE

WIMAX COVERAGE

2G (GSM, GPRS & EDGE COVERAGE)

45

46

Consolidated Financial Statements

Financial ReportingCertificate by the Group Company Secretary 47

Directors’ Responsibility for Financial Reporting 48

Independent Auditor’s Report 49

Consolidated Statement of Financial Position 50

Consolidated Statement of Comprehensive Income 51

Consolidated Statement of Changes in Equity 52

Consolidated Statement of Cash Flows 53

Notes to the Consolidated Financial Statements 54

Policy Notes to the Consolidated Financial Statements 96

46

47

Financial Reporting

C. A. BANDA | Group Company Secretary

In my capacity as the Group Company Secretary, I hereby confirm, in terms of the Companies Act (Chapter 24:03), that, for the year ended 28 February 2015, Econet Wireless Zimbabwe Limited has lodged with the Registrar of Companies all such returns as are required of a public company in terms of the Companies Act and that all such returns are, to the best of my knowledge and belief, true and correct and up to date.

C. A. BandaGROUP COMPANY SECRETARY

29 April 2015

Certificate by the Group Company Secretary

48

Directors’ Responsibility for Financial Reporting

As required by company law, the Directors of Econet Wireless Zimbabwe Limited and its subsidiary companies are responsible for the maintenance of adequate accounting records, the preparation, integrity and fair representation of the financial statements and related information for each financial year. Econet Wireless Zimbabwe Limited and its subsidiary companies’ independent external auditors, Messrs Ernst & Young, have audited the financial statements and their report appears in this annual report.

The Directors are also responsible for the systems of internal control. The systems are designed to provide reasonable, but not absolute, assurance as to the reliability of the financial statements, and to safeguard, verify and maintain accountability over the assets, and to prevent and detect material misstatements and losses. Qualified personnel within the Group’s staff implement and monitor the systems. Nothing has been brought to the attention of the directors to indicate that any material breakdown in the functioning of these controls, procedures and systems had occurred during the course of the year.

The directors have reviewed the performance and financial position of the Group to the date of signing of these financials and confirm that the financial statements give a true and fair view of the state of affairs of the Group at 28 February 2015. They further confirm that they are satisfied that the Group has adequate financial resources to continue as a going concern.

The financial statements set out on pages 50 to 118 were approved by the Board of Directors on 29 April 2015 and signed on its behalf by:-

Dr J MyersCHAIRMAN



29 April 2015

49

Financial Reporting

50

All figures in US$ Note 2015 2014

ASSETS

Non-current assets

Property, plant and equipment 12 736,320,233 734,664,113 Investment property 13 4,167,267 3,656,586 Intangible assets 14 140,776,068 143,394,762 Deferred tax asset 15.1 19,000,816 19,238,457 Goodwill 43.3 6,090,632 6,090,632 Investment in associate 18.1 29,816,203 20,768,186 Financial instruments: -Held-to-maturity investments 17 40,177,977 11,736,041 -Available-for-sale investments 19 3,173,882 3,329,214 -Loans and advances - long term portion 24.6 20,676,622 20,488,728 -Other receivables - long term portion 23 12,954,603 -

Total non-current assets 1,013,154,303 963,366,719

Current assets

Inventories 22 18,533,606 25,901,874 Financial instruments: -Trade and other receivables 23 88,334,541 67,205,085 - Financial assets at fair value through profit or loss 21 408,820 76,853 - Loans and advances 24.6 40,821,466 45,782,432 - Cash and cash equivalents 32.4 95,238,733 71,331,021

Total currents assets 243,337,166 210,297,265

Total assets 1,256,491,469 1,173,663,984

EQUITY AND LIABILITIES

Capital and reserves

Share capital and share premium 25.2 40,763,691 37,448,131 Retained earnings 614,111,627 561,884,250 Other reserves 27 5,894,089 462,848 Equity attributable to owners of Econet Wireless Zimbabwe Limited 660,769,407 599,795,229 Non-controlling interest 4,525,321 3,924,078

Total equity 665,294,728 603,719,307

Non-current liabilities

Deferred tax liability 15.2 120,458,424 109,837,492 Financial instruments - long-term interest-bearing debt 30 165,757,698 134,852,046

Total non-current liabilities 286,216,122 244,689,538

Current liabilities

Deferred revenue 29 18,381,526 14,109,056 Financial instruments: -Trade and other payables 28 138,569,201 168,988,197 - Short-term interest bearing debt 30 98,175,726 105,427,999 - Deposits due to banks and customers 31.2 41,635,843 19,363,364 Income tax payable 8,218,323 17,366,523

Total current liabilities 304,980,619 325,255,139

Total liabilities 591,196,741 569,944,677 Total equity and liabilities 1,256,491,469 1,173,663,984

Dr J. Myers D. Mboweni K. V. ChirairoCHAIRMAN OF THE BOARD CHIEF EXECUTIVE OFFICER F INANCE DIRECTOR

29 April 2015

Consolidated Statement of Financial Position As at 28 February 2015

51

Financial Reporting

Consolidated Statement of Comprehensive Income For the year ended 28 February 2015


Revenue 2 746,182,640 752,677,719

Cost of sales and external services sold (245,952,350) (203,065,419)Impairment reversal/(losses) - loans and advances relating to the furniture book 8 85,585 (18,369,859)

Gross profit 500,315,875 531,242,441

Other income 9 6,590,029 8,683,092 Share of profit of associate 18.2 9,048,017 6,707,066 (Loss)/gain on financial assets at fair value through profit or loss 21 (2,740) 18,847 General administrative expenses (164,729,317) (139,407,992)Marketing and sales expenses (13,842,670) (21,800,993)Network expenses (47,971,645) (47,195,736)Other expenses (3,762,985) (6,072,642)

Profit from operations 285,644,564 332,174,083

Depreciation, amortisation and impairment (126,289,195) (101,723,923)

Profit for the year before net finance costs 4 159,355,369 230,450,160

Finance income 6 1,064,612 595,931 Finance costs 7 (37,076,496) (37,037,230)

Profit before taxation 123,343,485 194,008,861

Income tax expense 10 (53,135,878) (74,612,119)

Profit for the year 70,207,607 119,396,742

Other comprehensive incomeItems that may be reclassified subsequently to profit or lossFair value gain/(loss) on available -for- sale investments 19 210,738 (111,956)Taxation effect of other comprehensive income 5 (2,107) 1,109

208,631 (110,847)Items that may not be reclassified to profit or lossGain arising on revaluation of property and equipment - 6,626 Taxation effect of other comprehensive income - (1,706)

- 4,920

Other comprehensive income/(loss) for the year, net of tax 208,631 (105,927)

Total comprehensive income for the year 70,416,238 119,290,815

Profit for the year attributable to:Equity holders of Econet Wireless Zimbabwe Limited 70,256,228 119,281,716 Non-controlling interest (48,621) 115,026

70,207,607 119,396,742

Total comprehensive income attributable to:Equity holders of Econet Wireless Zimbabwe Limited 70,464,859 119,175,789 Non-controlling interest (48,621) 115,026

70,416,238 119,290,815

Basic earnings per share (dollars) 11 0.04 0.08

Diluted earnings per share (dollars) 11 0.04 0.08

52

Consolidated Statement of Changes in Equity For the year ended 28 February 2015

Attributed to the equity holders of Econet Wireless Zimbabwe Limited

Non-controlling

interestShare capital

and Share premium

Retained earnings

Otherreserves

(Note 27)

Total All figures in US$Balance at 28 February 2013 35,697,496 453,138,968 568,775 489,405,239 3,477,998 492,883,237

Profit for the year - 119,281,716 - 119,281,716 115,026 119,396,742

Other comprehensive income - - (105,927) (105,927) - (105,927)Fair value loss on available-for-sale investments - - (111,956) (111,956) - (111,956)Gain arising on revaluation of property and equipment - - 6,626 6,626 - 6,626 Taxation effect of other comprehensive income - - (597) (597) - (597)

Total comprehensive income - 119,281,716 (105,927) 119,175,789 115,026 119,290,815

1,750,635 (10,536,434) - (8,785,799) 331,054 (8,454,745)Utilisation of treasury shares 1,750,635 - - 1,750,635 - 1,750,635 Share buyback (Note 16.4) - (9,902,521) - (9,902,521) - (9,902,521)Acquisition of shareholding of non-controlling interest - (633,913) - (633,913) 331,054 (302,859)

Balance at 28 February 2014 37,448,131 561,884,250 462,848 599,795,229 3,924,078 603,719,307

Profit for the year - 70,256,228 - 70,256,228 (48,621) 70,207,607

Other comprehensive income - - 208,631 208,631 - 208,631 Fair value gain on available-for-sale investments - - 210,738 210,738 - 210,738 Taxation effect of other comprehensive income - - (2,107) (2,107) - (2,107)

Total comprehensive income - 70,256,228 208,631 70,464,859 (48,621) 70,416,238

3,315,560 (18,028,851) 5,222,610 (9,490,681) 649,864 (8,840,817)Sale of treasury shares 3,315,560 17,405,612 - 20,721,172 - 20,721,172 Dividend paid - (29,835,888) - (29,835,888) - (29,835,888)Incorporation of subsidiary - - - - 300,000 300,000 Transfer to regulatory reserves - (5,222,610) 5,222,610 - - - Acquisition of shareholding of non-controlling interest (Note 43.2) - (375,965) - (375,965) 349,864 (26,101)

Balance at 28 February 2015 40,763,691 614,111,627 5,894,089 660,769,407 4,525,321 665,294,728

Total

53

Financial Reporting

Consolidated Statement of Cash FlowsFor the year ended 28 February 2015


Operating Activities

Cash generated from operations 32.2 226,962,021 384,953,189

Income tax paid 32.3 (51,421,332) (53,310,503)

Net cash flows from operating activities 175,540,689 331,642,686

Investing activities

Finance income 984,551 203,822 Acquisition of intangible assets 14 (6,841,825) (141,607,981)Acquisition of available-for-sale investments - (430,373)Acquisition of financial assets at fair value through profit or loss 21 (332,635) - Acquisition of investment property 13 (494,567) (376,668)Acquisition of held-to-maturity investments 17 (30,722,081) (1,447,517)Repayments on maturity of investments 2,360,205 -Net cash inflow on acquisition of subsidiary 120,631 (302,859)Incorporation of subsidiary 300,000 - Increase/(decrease) in deposits due to banks and customers 22,272,479 (16,987,347)(Increase)/decrease in loans and advances (12,393,019) 33,119,512 Purchase of property, plant and equipment: - to expand operating capacity (118,545,457) (139,718,276)Proceeds on disposal of property, plant and equipment 175,702 237,033

Net cash used in investing activities (143,116,016) (267,310,654)

Financing activities

Finance costs (36,593,731) (34,339,697)Dividends paid (29,815,016) - Share disposal/(buy-back) 34,721,172 (9,902,521)Proceeds from borrowings 120,963,640 48,385,371 Repayment of borrowings (97,793,026) (75,373,792)

Net cashflows used in financing activities (8,516,961) (71,230,639)

Net increase/(decrease) in cash and cash equivalents 23,907,712 (6,898,607)

Cash and cash equivalents at the beginning of the year 71,331,021 78,229,628

Cash and cash equivalents at the end of the year 32.4 95,238,733 71,331,021

54

1 OPERATING SEGMENTS

The principal activities set out below are the basis on which the Group reports its primary segment information.

For management purposes, the Group is organised into business units based on their products and services and has the following reportable segments:

Cellular Network OperationsEconet Wireless (Private) Limited provides cellular network services which form the main business of the Group.

Financial ServicesSteward Bank Limited provides retail, corporate, and investment banking services in the key economic centres of Zimbabwe. Ecocash provides mobile money transfer services, while Transaction Payment Solutions (Private) Limited provides financial transaction switching, point of sale and overlay services that exploit the convergence of banking, information technology and telecommunications.

BeveragesMutare Bottling Company (Private) Limited provides beverages to both individual and corporate clients.

Investments and AdministrationIncluded in this segment is E W Capital Holdings (Private) Limited which is the investment vehicle through which the Group holds a variety of investments listed on the Zimbabwe Stock Exchange and Econet Wireless Zimbabwe Limited, the Group’s holding company.

ReportingNo operating segments have been aggregated to form the above reportable operating segments.

Management monitors the operating results of its business units separately for the purposes of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit and is measured consistently with operating profit or loss in the consolidated financial statements.

Notes to the Consolidated Financial Statements For the year ended 28 February 2015

55

Financial Reporting

1 OPERATING SEGMENTS (continued)

Segment information for the year ended 28 February 2015

All figures in US$

Cellular

operations Financial Services Beverages

Investments and

administration All other

SegmentsSegments

total

Adjustments and

eliminations Group total

Revenue from external customers* 647,534,217 71,532,232 19,150,946 - 832,406 739,049,801 - 739,049,801

Revenue from transacting with other operating segments of the same entity - 10,372,080 - - (1,040,886)

9,331,194 (9,331,194) -

Interest income from banking operations - 7,132,839 - - - 7,132,839 - 7,132,839

Total revenue 647,534,217 89,037,151 19,150,946 - (208,480) 755,513,834 (9,331,194) 746,182,640

Depreciation (107,973,728) (3,536,254) (1,514,200) - (13,135) (113,037,317) - (113,037,317)

Amortisation of intangibles (9,146,433) (358,781) - - - (9,505,214) - (9,505,214)

Finance income 1,379,374 179,678 61,486 971,420 2,137 2,594,095 (1,529,483) 1,064,612

Finance costs (36,927,447) (22,494) (1,592,441) (971,420) - (39,513,802) 2,437,306 (37,076,496)

Share of profit of associate - - - 9,048,017 - 9,048,017 - 9,048,017

Income tax expense (52,339,931) (895,047) 197,822 (11,496) (87,226) (53,135,878) - (53,135,878)

Segment profit(loss) 64,642,643 (372,692) 241,189 9,045,328 (490,539) 73,065,929 (2,858,322) 70,207,607

Acquisition of segment non-current assets*** (116,105,283) (5,616,868) (2,269,245) - (1,395,886) (125,387,282) - (125,387,282)

Segment assets**

1,207,758,616 248,251,256 33,525,937 184,789,873 5,583,090 1,679,908,772 (423,417,303) 1,256,491,469

Segment liabilities 491,213,455

178,060,323 22,182,942 179,937,084 2,612,963 874,006,767 (282,810,026) 591,196,741

Notes * Revenue for all other segments includes medical aid subscriptions as well as funeral assurance premiums. **Included in segment assets is an amount of $29 816 203 pertaining to an investment in associate accounted for using the equity method. *** The amount excludes acquisition of financial instruments and deferred tax assets. Segment information for the year ended 28 February 2014

All figures in US$

Cellular

operations Financial Services Beverages

Investments and

administration All other

SegmentsSegments

total

Adjustments and

eliminations Group total

Revenue from external customers 692,677,828 35,054,954 19,307,981 - - 747,040,763 - 747,040,763

Revenue from transacting with other operating segments of the same entity - 6,182,640 - - - 6,182,640 (6,182,640) -

Interest income from banking operations - 5,636,956 - - - 5,636,956 - 5,636,956

Total revenue 692,677,828 46,874,550 19,307,981 - - 758,860,359 (6,182,640) 752,677,719

Depreciation (88,050,181) (2,082,622) (1,055,918) (383) - (91,189,104) - (91,189,104)

Amortisation of intangibles (6,486,411) (638,620) - - - (7,125,031) - (7,125,031)

Finance income 484,181 89,706 4,371 1,565 - 579,823 16,107 595,930

Finance costs (36,616,949) (26,501) (465,339) - - (37,108,789) 71,559 (37,037,230)

Share of profit of associate - - - 6,707,066 - 6,707,066 - 6,707,066

Income tax expense (81,092,689) 6,917,105 (436,535) - - (74,612,119) - (74,612,119)

Segment profit(loss) 140,913,749 (27,195,268) 740,581 3,898,487 - 118,357,549 1,039,193 119,396,742

Acquisition of segment non-current assets (259,889,923) (7,256,114) (14,180,514) - - (281,326,551) - (281,326,551)

Segment assets 1,140,941,856 201,656,013 30,925,537 184,866,062 - 1,558,389,468 (384,725,484)

1,173,663,984

Segment liabilities 489,039,337

131,092,392 19,823,732 174,821,464 - 814,776,925 (244,832,250) 569,944,675 Note: Included in segment assets is an amount of $20 768 186 pertaining to an investment in associate accounted for using the equity method.

56

Notes to the Consolidated Financial Statements (continued)For the year ended 28 February 2015

1 OPERATING SEGMENTS (continued)


Reconciliation of profit

Segment profit 73,065,929 118,357,549

AdjustmentsRevenue (1,040,887) (6,182,640)Cost of sales 6,416,934 1,155,474 Expenses 1,863,447 5,394,315 Other (expenses)/income (8,568,333) 794,474 Investment income (1,529,483) (122,430)

Group profit 70,207,607 119,396,742

Reconciliation of assets

Segment operating assets 1,679,908,772 1,558,389,468 Investment in subsidiaries (127,881,311) (124,469,860)Inter-company receivables (295,535,992) (260,255,624)

Group operating assets 1,256,491,469 1,173,663,984

Reconciliation of liabilities

Segment operating liabilities 874,006,767 814,776,925 Inter-company payables (282,810,026) (244,832,250)

Group operating liabilities 591,196,741 569,944,675

2 REVENUE

Revenue is made up of :Local airtime 362,375,773 441,042,715 Interconnection fees and roaming 117,477,421 127,623,451 Data - SMS and internet services 154,425,141 101,242,680 Other sales (beverage sales, handset sales, accessories and commissions)

104,771,466

77,131,917

Interest income from banking operations 3 7,132,839 5,636,956 746,182,640 752,677,719

3 NET INTEREST INCOME FROM BANKING OPERATIONS 3.1 Interest income from banking operations

Loans and advances to customers 7,132,839 5,636,956

3.2 Interest expense from banking operations

Interest on deposits due to banks and other customers (1,225,129) (1,816,837)

5,907,710 3,820,119

57

Financial Reporting

4 PROFIT FROM OPERATIONS

All figures in US$ Note 2015 2014Profit for the year before net finance costs is arrived at after taking the following income/(expenditure) into account:

Impairment reversal/ (charge) on trade and other receivables 23 11,683,306 (19,678,214)Impairment of loans and advances to customers 24.4 (3,251,676) (2,276,283)

Auditors remuneration* (1,166,076) (1,352,500)- audit fees (1,166,076) (1,352,500)

Depreciation and impairment of property, plant and equipment 12 (115,812,011) (92,018,851)

Amortisation and impairment of intangible assets 14 (9,505,214) (7,598,976)

Loss on disposal of property, plant and equipment (55,882) (92,507)

Write-off of property, plant and equipment (747,283) (2,105,775)

Employee benefits (77,378,784) (72,555,215)- short-term benefits (72,012,473) (67,460,006)- post-employment benefits (5,366,311) (5,095,209)

Compensation of directors and key management: (8,582,589) (7,868,629)Non-executive directors- For services as directors (1,434,815) (1,400,578)Executive directors- For management services 33.3 (7,147,774) (6,468,051)

*Group audit fee includes US$ 977 000 (2014: US$ 1 150 000) for the mobile business and the balance of US$ 189 076 (2014: US$ 202 500) relates to other subsidiaries.

5 DISCLOSURE OF TAX EFFECTS RELATING TO EACH COMPONENT OF OTHER COMPREHENSIVE INCOME

2015 2014

All figures in US$Gross

amount Tax

effect Net

amount Gross

amount Tax

effect Net

amount Items that may be reclassified subsequently to profit or lossFair value loss on available-for-sale financial assets 210,738 (2,107) 208,631 (111,956) 1,109 (110,847)

Items that may not be reclassified to profit or lossGain arising on revaluation of property and equipment - - - 6,626 (1,706) 4,920

Other comprehensive income, net of tax 210,738 (2,107) 208,631 (105,330) (597) (105,927)

58


6 FINANCE INCOME


Interest earned from bank deposits 592,443 203,822 Interest from held-to-maturity investments 472,169 392,109

1,064,612 595,931

7 FINANCE COSTS

Interest on loans and bank overdrafts (37,076,496) (37,037,230)

The interest rate applied is based on an effective interest rate calculated using the cashflow obligations arising under the terms of the loans.

8 IMPAIRMENT LOSSES- LOANS AND ADVANCES RELATING TO FURNITURE BOOK

Impairment reversal/(loss) on furniture loans 85,585 (15,546,073)Bad debts written off - (2,823,786)

85,585 (18,369,859)Add interest income (included in revenue) 348,956 1,653,007 Net profit/(loss) attributable to furniture loans 434,541 (16,716,852)

This related to the previous banking model where the bank was acting as a financier for furniture loans. In the new

model, no new furniture loans are being granted.

9 OTHER INCOME

Sundry income 185,030 2,020,053 Other bank income 6,503,605 5,689,539 Fair value adjustment on investment property 13 (83,874) 809,401 Realised forex gains/(losses) 160,497 (25,286)Unrealised forex (losses)/gains (175,229) 189,385

6,590,029 8,683,092

10 INCOME TAX EXPENSE

Current income tax (27,604,970) (51,038,012) Deferred tax 15.3 (10,862,746) (10,747,622) Withholding tax (14,668,162) (12,826,485)

Income tax expense (53,135,878) (74,612,119)

Tax rate reconciliation

Profit before taxation 123,343,485 194,008,861

Reconciliation of tax charge:

Normal tax at 25.75% (31,760,947) (49,957,282)

Effect of share of profit from associate 2,329,864 1,727,069

Net dis-allowable expenses (9,036,633) (13,555,421)

Withholding tax (14,668,162) (12,826,485)

Income tax expense (53,135,878) (74,612,119)

59

Financial Reporting

11 EARNINGS PER SHARE

All figures in US$ 2015 2014Profit for the year attributable to ordinary shareholders 70,256,228 119,281,716

Adjustment for capital items (gross of tax):

Loss on disposal of property, plant and equipment 55,882 92,507 Write off of property, plant and equipment 747,283 2,105,775 Impairment of property, plant and equipment 2,774,694 830,069

Tax effect on adjustments (921,299) (779,800)

Headline earnings attributable to ordinary shareholders 72,912,788 121,530,267

Basic earnings basis The calculation is based on the profit attributable to ordinary shareholders and the weighted average number of

shares in issue for the year which participated in the profit of the Group. Fully diluted earnings basis The calculation is based on the profit attributable to ordinary shareholders and the weighted average number of

shares in issue after adjusting for conversion of share options not yet exercised and convertible instruments (as applicable). There were no instruments with a dilutive effect at the end of the financial year.

Headline earnings Headline earnings comprise of basic earnings attributable to ordinary shareholders adjusted for profits, losses

and items of a capital nature that do not form part of the ordinary activities of the Group, net of their related tax effects.

Number of shares

Weighted average number of ordinary shares for the purposes of basicand diluted earnings per share

1,581,784,694

1,563,868,999

Basic earnings per share (dollars) 0.04 0.08

Headline earnings per share (dollars) 0.05 0.08

Diluted basic earnings per share (dollars) 0.04 0.08

Diluted headline earnings per share (dollars) 0.05 0.08

60


12 PROPERTY, PLANT AND EQUIPMENT

All figures in US$ Land and buildings

Cellular Network

equipment Office

equipment

Beverage Plant and

equipment Vehicles

Work-in- progress Total

At Cost

At 28 February 2013 44,738,858 662,511,848 41,590,101 4,343,369 9,498,974 144,310,572 906,993,722

Reclassification - - (6,332,137) 6,332,137 - - - Additions 2,919,945 3,542,522 7,909,983 10,485,295 3,326,955 111,533,576 139,718,276 Write offs - (3,849,911) (9,400) - (33,970) (156,702) (4,049,983)Disposals - - (963,376) - (288,518) - (1,251,894)Transfer to Investment property (1,519,000) - - - - - (1,519,000)Transfer from WIP 1,256,386 169,120,341 6,432,587 - - (176,809,314) - Transfers from Intangible assets - 114,987 - - - - 114,987

At 28 February 2014 47,396,189 831,439,787 48,627,758 21,160,801 12,503,441 78,878,132 1,040,006,108

Acquisition of Subsidiaries - - 21,808 - 24,415 - 46,223 Additions 1,007,433 3,629,894 5,895,436 2,338,995 1,041,432 104,632,267 118,545,457 Write offs - (2,502,020) (113,006) - (20,371) (33,465) (2,668,862)Disposals - (59,042) (328,171) - (148,161) - (535,374)Transfer to Investment property (99,988) - - - - - (99,988)Transfer from WIP 1,911,791 89,520,169 11,589,027 - 41,556 (103,062,543) - Transfers to Intangible assets - - - - - (44,695) (44,695)

At 28 February 2015 50,215,425 922,028,788 65,692,852 23,499,796 13,442,312 80,369,696 1,155,248,869

Accumulated depreciation & impairment

At 28 February 2013 (7,456,401) (192,507,466) (11,306,930) (1,406,893) (3,510,147) - (216,187,837)

Reclassification - - 1,729,850 (1,729,850) - - - Charge for the period (1,187,301) (80,516,917) (7,212,885) (667,683) (1,603,996) - (91,188,782)Write offs - 2,532,914 1,869 - 6,270 - 2,541,053 Disposals 1,019 - 241,247 - 82,925 - 325,191 Revaluation 6,625 - - - - - 6,625 Transfers - (8,176) - - - - (8,176)Impairment (46,455) - (524,933) (197,381) (61,300) - (830,069)

At 28 February 2014 (8,682,513) (270,499,645) (17,071,782) (4,001,807) (5,086,248) - (305,341,995)

Charge for the period (1,516,273) (99,492,160) (9,547,270) (1,000,750) (1,480,864) - (113,037,317)Write offs - 1,856,846 50,015 - 14,718 - 1,921,579 Disposals - 5,623 213,750 - 84,418 - 303,791 Transfers - (4,769) 4,769 - - - - Impairment - - (2,567,741) - (206,953) - (2,774,694)

At 28 February 2015 (10,198,786) (368,134,105) (28,918,259) (5,002,557) (6,674,929) - (418,928,636)

CARRYING VALUE

At 28 February 2015 40,016,639 553,894,683 36,774,593 18,497,239 6,767,383 80,369,696 736,320,233 At 28 February 2014 38,713,676 560,940,142 31,555,976 17,158,994 7,417,193 78,878,132 734,664,113

During the financial year ended 28 February 2015, one subsidiary closed some of its branches and, as a result, certain leasehold improvements such as partitioning and furniture and fittings became unusable. Another subsidiary had point of sale terminals that management evaluated and decided that they are not going to realise any value from their use. The recoverable amount of the assets was therefore determined to be nil and hence an impairment of US$2,774,694 was recorded, being the difference between the carrying amount of these assets and their recoverable amounts. The recoverable amount was based on fair value less costs to sell.

Debt is collateralised over Zimbabwean based network equipment. The carrying amount of the related debt is US$ 242.5 million (2014: US$ 227.9 million) . Refer to Note 30 for the breakdown of loan facilities with collateralised debt.

The amount of borrowing costs capitalised during the year ended 28 February 2015 is US$ Nil (2014: US$552 532). The rate used to determine the amount of borrowing costs eligible for capitalisation was Nil%

(2014: 15%), which is the effective interest rate of the specific borrowings.

61

Financial Reporting

13 INVESTMENT PROPERTY

All figures in US$ 2015 2014Opening balance 3,656,586 951,517

Additions 495,270 376,668 Disposal (703) - (Loss)/gain on fair value of investment property (83,874) 809,401 Transfer from property, plant and equipment 99,988 1,519,000

Closing balance 4,167,267 3,656,586 Investment property pertains to industrial and residential properties leased to third parties. The Group’s investment

properties were valued by an independent professional valuer at 28 February 2015 on the basis of open market value. Rental income pertaining to the investment property recognised in profit and loss for the year amounted to US$53 000 (2014: US$153 169) and costs amounted to US$12 634 (2014: US$23 186).

Valuation technique Significant observable inputs

Range (weighted average)

Office properties Implicit investment approach (Refer below)

Comparable rentals per month per sqm US$8.86 - US$12

Residential stands Market value of similar properties (Refer below) Comparable rate per sqm US$20- US$25

In arriving at the market value for property, the implicit investment approach was applied based on the capitalisation

of income. This method is based on the principle that rents and capital values are inter-related. Hence given the income produced by a property, its capital value can be estimated. Comparable rentals inferred from properties within the locality of the property based on use, location, size and quality of finishes were used. The rentals were then adjusted per square meter to the lettable areas, being rentals achieved for comparable properties as at 28 February 2015. The rentals are then annualised and a capitalisation factor was applied to give a market value of the property, also inferring on comparable premises which are in the same category as regards the building elements.

In assessing the market value of the residential stands, values of various properties that had been recently sold or which are currently on sale and situated in comparable residential areas were used. Market evidence from other Estate Agents and local press was also taken into consideration.

Generally, a change in the assumption made for the estimated comparable rentals per month and comparable rate per square metre is accompanied by a directionally similar change in the fair value of the investment property.

62


14 INTANGIBLE ASSETS

All figures in US$

Licences Computer

software TotalAt 28 February 2013:Cost 2,814,494 9,552,552 12,367,046

Accumulated amortisation (55,526) (2,818,952) (2,874,478)Carrying amount 2,758,968 6,733,600 9,492,568

Movement for the year:Additions 139,118,755 2,489,226 141,607,981 Amortisation (5,220,910) (1,904,122) (7,125,032)Impairment (473,944) - (473,944)Transfer - (106,811) (106,811)

At 28 February 2014:Cost 141,933,249 12,041,778 153,975,027Accumulated amortisation (5,750,380) (4,829,885) (10,580,265)Carrying amount 136,182,869 7,211,893 143,394,762

Movement for the year:Additions - 6,841,825 6,841,825 Amortisation (6,875,000) (2,630,214) (9,505,214)Transfer from property, plant and equipment - 44,695 44,695

At 28 February 2015:Cost 141,933,249 18,928,298 160,861,547 Accumulated amortisation and impairment (12,625,380) (7,460,099) (20,085,479)Carrying amount 129,307,869 11,468,199 140,776,068

Intangible assets pertain to licences and computer software held by Econet Wireless (Private) Limited and Steward Bank Limited. The Group uses the expected usage of the asset to determine the useful life of intangible assets. At 28 February 2015 the computer software had an average remaining useful life of two and a half years and licences had an average remaining useful life of 18 years.

63

Financial Reporting

15 DEFERRED TAX The following are the major deferred tax liabilities and assets recognised by the Group, and the movements

thereon.

All figures in US$ Assessed

losses

Property, plant and

equipmentDeferred revenue

Provisions and other Total

15.1 Deferred tax asset

At 28 February 2013 2,151,404 - 2,586,280 904,929 5,642,613

Tax charged to equity - - - (1,706) (1,706)Credit to profit for the year 6,542,597 - 1,025,221 6,029,732 13,597,550

At 28 February 2014 8,694,001 - 3,611,501 6,932,955 19,238,457

Credit to profit for the year 1,190,019 (6,280) 1,119,342 (2,547,002) (243,921)Acquisition of subsidiaries - 6,280 - - 6,280

At 28 February 2015 9,884,020 - 4,730,843 4,385,953 19,000,816 The Group has accounted for a deferred tax asset pertaining to deferred revenue since the temporary difference

is expected to reverse in the foreseeable future. Further, the Group has also accounted for a deferred tax asset arising from losses incurred by Steward Bank Limited in anticipation of the bank’s return to profitability.

The unrecognised deferred tax assets arising from unused tax losses for subsidiaries of the Group amount to US$1 956 898 (2014: US$494 000).


losses

Property, plant and

equipment

Deferred revenue

Provisions and other Total

15.2 Deferred tax liability

At 28 February 2013 - 85,463,322 - 30,107 85,493,429

Charge to profit for the year - 24,345,172 - - 24,345,172 Credit to other comprehensive income - - - (1,109) (1,109)

At 28 February 2014 - 109,808,494 - 28,998 109,837,492

Charge to profit for the year - 12,046,485 - (1,427,660) 10,618,825 Charge to other comprehensive income

- - - 2,107 2,107

At 28 February 2015 - 121,854,979 - (1,396,555) 120,458,424

The deferred tax liability arises mainly from the difference between accounting and tax treatment of depreciation.

64


15 DEFERRED TAX (continued)


losses

Property, plant and

equipment

Deferred revenue

Provisions and Other Total

15.3 Net deferred tax asset / (liability)

At 28 February 2013 2,151,404 (85,463,322) 2,586,280 874,822 (79,850,816)

Credit /(charge) to profit for the year 6,542,597 (24,345,172) 1,025,221 6,029,732 (10,747,622)Credit to other comprehensive income - - - (597) (597)

At 28 February 2014 8,694,001 (109,808,494) 3,611,501 6,903,957 (90,599,035)

Credit /(charge) to profit for the year 1,190,019 (12,052,765) 1,119,342 (1,119,342) (10,862,746)Charge to other comprehensive income - - - (2,107) (2,107)Acquisition of subsidiaries - 6,280 - - 6,280

At 28 February 2015 9,884,020 (121,854,979) 4,730,843 5,782,508 (101,457,608)

16 INVESTMENTS AND LOANS IN SUBSIDIARIES

All figures in US$ Percentage 2015 2014 COMPANY

16.1 Cost of investmentsEconet Wireless (Private) Limited 100% 3,133,903 3,133,903 (Cellular network operator in Zimbabwe)

Transaction Payment Solutions (Private) Limited 100% 26,209 108 (Computer data processing service provider)

E. W. Capital Holdings (Private) Limited 100% 17,797,668 17,797,668 (Investment company)

Pentamed Investments (Private) Limited 100% 6,220,598 6,220,598 (Investment company)

Steward Bank Limited 100% 97,317,584 97,317,584 (Banking operations in Zimbabwe)

Econet Life (Private) Limited 85% 2,885,350 - (Funeral assurance company in Zimbabwe)

Steward Health (Private) Limited 100% 500,000 - (Medical aid company in Zimbabwe)

Total investments in subsidiaries 127,881,312 124,469,861

On the 27th of June 2014, the Company incorporated a new subsidiary, Econet Life (Private) Limited which is involved in funeral assurance. The capital injected into Econet Life (Private) Limited was $2 885 350. The company also acquired the remaining 15.7% stake in Transaction Payment Solutions (Private) Limited resulting in it becoming a 100% owned subsidiary. The Company also acquired Steward Health (Private) Limited. Refer to Note 43 for the acquisition of Steward Health (Private) Limited and the acquisition of the minority interest in Transaction Payment Solutions (Private) Limited.

65

Financial Reporting

16 INVESTMENTS AND LOANS IN SUBSIDIARIES (continued)

All figures in US$ 2015 2014

16.2 Inter-company receivables

Pentamed Investments (Private) Limited 1,886,351 1,886,351 Econet Wireless Global Limited - 16,385,901 Total loans to group companies 1,886,351 18,272,252

16.3 Inter-company payables

Econet Wireless (Private) Limited (160,630,873) (137,497,797)Econet Wireless Capital Holdings Limited (16,611,898) (16,611,898)

(177,242,771) (154,109,695)

Net investments and loans in group companies (47,475,108) (11,367,582)

16.4 Treasury shares The cost of the share buy-backs (treasury stock) has been debited to capital and reserves. The cost of shares

bought back for the year ended 28 February 2015 was US$32 859 424 (2014: US$9 902 521). Proceeds from sale of Treasury shares for the year ended 28 February 2015 amounted to US$53 580 596. The number of treasury shares on hand at 28 February 2015 were 33 162 109 (2014: 89 674 249).

17 HELD-TO-MATURITY INVESTMENTS

All figures in US$ 2015 2014Opening balance 11,736,041 9,896,415 Additions 30,722,081 1,447,517 Repayments received on maturity (2,752,314) -Interest accrued 472,169 392,109 Closing balance 40,177,977 11,736,041

Held-to-maturity investments include bearer bonds with a carrying amount of US$33 699 847 (2014: US$4 088 443) and investments with local financial institutions amounting to US$6 478 130 (2014: US$7 647 598). The bearer bonds yield interest at a rate of 6.8% and 7.332% per annum. The bonds are contracted

to be repaid within the next 2 years.

66


18 INVESTMENT IN ASSOCIATE 18.1 The Group has a 51% interest in Data Control & Systems (1996) (Private) Limited, which is involved in the provision

of internet related services. Data Control & Systems (1996)(Private) Limited is a private entity that is not listed on any public exchange. The Group’s interest in Data Control & Systems (1996) (Private) Limited is accounted for using the equity method in the consolidated financial statements. The following table illustrates the summarised financial information of the Group’s investment in Data Control & Systems (1996) (Private) Limited:

All figures in US$ 2015 2014Associate’s statement of financial position:

Non-current assets 158,558,581 113,945,824 Current assets 35,269,098 37,270,592 Current liabilities (48,222,473) (29,315,323)Non-current liabilities (90,082,590) (84,119,686)Equity 55,522,616 37,781,407 Proportion of the Group’s ownership 51% 51%Group's ownership 28,316,534 19,268,517

Fair value adjustment 1,499,669 1,499,669

Carrying amount of the investment 29,816,203 20,768,186

Associate’s revenue and profit:

Revenue 74,095,310 59,353,260 Cost of sales (14,366,543) (13,423,530)Administrative expenses (29,843,323) (23,455,697)Finance costs (5,522,299) (4,553,119)Profit before tax 24,363,145 17,920,914 Tax expense (6,621,928) (4,769,804)Profit for the year (continuing operations) 17,741,217 13,151,110 Group’s share of profit for the year 9,048,017 6,707,066

Reconciliation of carrying amount of investment in associate Opening balance 20,768,186 14,061,120 Share of profit of associate 9,048,017 6,707,066 Closing balance 29,816,203 20,768,186

18.2 Share of profit associate

Share of profit of Data Control & Systems (1996) (Private) Limited 9,048,017 6,707,066 9,048,017 6,707,066

19 AVAILABLE-FOR-SALE INVESTMENTS

Opening balance 3,329,214 3,010,797 (Disposals)/additions (366,070) 430,373 Fair value gain/(loss) 210,738 (111,956)

Closing balance 3,173,882 3,329,214

The available for sale instruments comprise of investments in listed entities.

67

Financial Reporting

20 FAIR VALUES OF FINANCIAL INSTRUMENTS The carrying amounts of financial instruments as disclosed in the statement of financial position approximate their

fair values.

Fair value hierarchy

The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique;

Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are

observable, either directly or indirectly Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based

on observable market data.

All figures in US$ Total Level 1 Level 2 Level 3

At 28 February 2015

Investment Property 4,167,267 - - 4,167,267 Financial assets at fair value through profit or loss

408,820

408,820 - -

Available-for-sale financial assets 3,173,882 3,173,882 - - 7,749,969 3,582,702 - 4,167,267

During the reporting period ending 28 February 2015, there were no transfers between Level 1 and Level 2 fair

value measurements, and no transfers into and out of Level 3 fair value measurements.

All figures in US$ Total Level 1 Level 2 Level 3

At 28 February 2014

Investment Property 3,656,586 - - 3,656,586 Financial assets at fair value through profit or loss 76,853

76,853 - -

Available-for-sale financial assets 3,329,214 3,329,214 - - 7,062,653 3,406,067 - 3,656,586

During the reporting period ending 28 February 2014, there were no transfers between Level 1 and Level 2 fair

value measurements, and no transfers into or out of Level 3 fair value measurements.

21 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

All figures in US$ 2015 2014Opening balance 76,853 58,006 Additions 332,635 - Acquisition of subsidiaries 2,072 - Fair value (loss)/gain (2,740) 18,847

Closing balance 408,820 76,853 Investments held at fair value through profit or loss comprise of equity investments. The fair value is based on the

Zimbabwe Stock Exchange published share prices.

68


22 INVENTORIES

All figures in US$ 2015 2014Merchandise at net realisable value 10,622,118 16,697,314 Spares, stationery and other 7,911,488 9,204,560

18,533,606 25,901,874

The directors are of the opinion that the inventory amounts are recorded at values that are not in excess of their recoverable amounts. All inventories are expected to be recovered within twelve (12) months.

The cost of inventories recognised as an expense during the year amounted to US$29 835 702 (2014:US$28 858 164).

Inventories written off during the course of the year amounted to US$723 214 (2014: US$1 229 241). 23 FINANCIAL INSTRUMENTS: TRADE AND OTHER RECEIVABLES

All figures in US$ 2015 2014Trade receivables 34,579,267 37,562,131 Interconnect debtors 39,666,016 31,835,084 Intercompany receivables 3,345,108 200,000 Other receivables 28,623,058 27,170,084 Impairment losses recognised (17,878,908) (29,562,214)

88,334,541 67,205,085 There is a concentration of credit risk associated with Interconnect Debtors.

Interconnect debt is split between current and non-current as follows:Payable within 1 year 39,666,016 31,835,084 Payable 1 Year to 2 Years 12,954,603 -

52,620,619 31,835,084

Impairment losses recognisedPertaining to prior year balances (29,562,214) (9,884,000)Impairment reversed/(recognised) during the year 11,683,306 (19,678,214)

(17,878,908) (29,562,214)

Trade receivables are non-interest bearing and are generally on terms of 30 to 90 days.

In determining the impairment losses disclosed above, the Group considers any change in the credit quality of a trade receivable from the date the credit was initially granted up to the end of the reporting period.

Ageing of trade and other receivables that are past due but not impaired30 days 6,144,566 7,817,881 60-90 days 4,001,324 6,161,400 90+ 26,642,863 13,535,817 Total 36,788,753 27,515,098

Before accepting any new individual customer, the Group conducts trade reference checks to establish the credit history of the applicant. The Group also conducts due diligence assessments on individuals, companies and their directors.

In light of the fact that security is held against the amounts detailed above, the Group considers the trade and other receivables past due to be recoverable and thus has not impaired these amounts.

69

Financial Reporting

24 LOANS AND ADVANCES TO BANK CUSTOMERS

All figures in US$ 2015 2014 24.1 Total loans and advances to bank customers

Corporate lending 47,152,417 58,832,365 Small-to-Medium Enterprise lending 291,602 290,209 Consumer lending 18,618,158 1,434,046

66,062,177 60,556,620

Less: Allowance for impairment (7,856,141) (4,604,466)58,206,036 55,952,154

24.2 Maturity analysis

Due within 1 yearLess than one month 39,836,416 38,666,379 1 to 3 months 2,768,796 139,393 3 to 6 months 672,577 418,812 6 months to 1 year 2,107,766 843,308 Gross loans and advances due within 1 year 45,385,555 40,067,892

Allowance for impairment (7,856,141) (4,604,466)

Total due within 1 year 37,529,414 35,463,426

Due after 1 year1 to 5 years 15,419,488 19,852,023 Over 5 years 5,257,134 636,705 Gross loans and advances due after 1 year 20,676,622 20,488,728

Total gross loans 66,062,177 60,556,620

Total loans net of impairment 58,206,036 55,952,154

24.3 Sectorial analysis of utilisations

2015 2014

All figures in US$ US$ % US$ %Mining 2,772,970 4% 871,158 1%

Manufacturing 32,640,655 49% 53,315,925 88%Agriculture 3,900,345 6% 1,537,546 3%Distribution 2,413,259 4% 660,086 1%Services 5,725,605 9% 2,101,322 4%Individuals 18,609,343 28% 2,070,583 3%

66,062,177 100% 60,556,620 100%

There is a material concentration of loans and advances in the Manufacturing category constituting 49% (2014: 88%) of gross loans and advances.

70


24 LOANS AND ADVANCES TO BANK CUSTOMERS (continued)

24.4 Allowance for impairment on loans and advances

A reconciliation of the allowance for impairment losses for loans and advances, by class, is as follows:

All figures in US$Corporate

lendingSME

lendingConsumer

lending TotalAt 28 February 2013 2,776,720 20,406 (468,943) 2,328,183 Charge/(credit) for the year 1,827,746 (20,406) 468,943 2,276,283 At 28 February 2014 4,604,466 - - 4,604,466

Charge for the year 3,251,676 - - 3,251,676 At 28 February 2015 7,856,142 - - 7,856,142

24.5 Loans and advances relating to furniture

All figures in US$ Note 2015 2014Gross furniture loans 18,752,539 25,865,079 Allowance for credit losses (15,460,487) (15,546,073)Net furniture loans 3,292,052 10,319,006

24.6 Total loans and advances

Total loans and advances to bank customers 24.1 58,206,036 55,952,154 Loans and advances relating to furniture 24.5 3,292,052 10,319,006

61,498,088 66,271,160

The amount above is broken down into current and non-current as follows:Non-current portion 20,676,622 20,488,728 Current 40,821,466 45,782,432

61,498,088 66,271,160

25 SHARE CAPITALGroup and company

Authorised 3 000,000,000 (2014: 3 000,000,000)Shares consisting of:-2 000,000,000 (2014: 2 000,000,000)Ordinary shares of $0.001 each 2,000,000 2,000,000 - 1 000,000,000 (2014: 1 000,000,000)Class "A" ordinary shares of $0.001 each 1,000,000 1,000,000

3,000,000 3,000,000

71

Financial Reporting


25.1 Issued and fully paid

1 640 021 430 (2014: 1 640 021 430)Shares consisting of: 909 325 280 (2014: 909 325 280) 909,325 909,325 Ordinary shares of $0.001 each -730 696 150 (2014: 730 696 150) 730,696 730,696 Class "A" ordinary shares of $0.001 each

1,640,021 1,640,021

Unissued shares are under the control of the directors, subject to the Companies Act (24:03) and the Memorandum & Articles of Association.

25.2 Capital and Reserves

Movement in share capital and share premium

All figures in US$ Number of

shares Share capital

Share premium Total

Balance at 28 February 2013 1,640,021,430 1,640,021 34,057,475 35,697,496 Utilisation of treasury shares - - 1,750,635 1,750,635

Balance at 28 February 2014 1,640,021,430 1,640,021 35,808,110 37,448,131 Sale of treasury shares - - 3,315,560 3,315,560

Balance at 28 February 2015 1,640,021,430 1,640,021 39,123,670 40,763,691

25.3 Class “A” shares On 1 July 2003, Econet Wireless Zimbabwe Limited (“EWZL”) entered into an arrangement with Dunstone

(Private) Limited, to acquire its 100% owned subsidiary Econet Wireless Capital Holdings (Private) Limited (“EWCH”). Under the arrangement, EWZL issued 73,984,368 (739,843,680 after share split) Class “A” ordinary shares in exchange for 999,000 EWCH shares. These shares rank parri passu in all respects with the existing issued ordinary shares with the exception that, in the event of EWZL becoming the owner of Econet Wireless Limited (“EWL”) shares, and deciding to distribute the shares to its members, the Class “A” ordinary shares will not participate in the distribution of the EWL shares.

25.4 Share buy-backs Under the authority granted at the Annual General Meeting of 1 August 2014 the directors were authorised to re-

purchase the Company’s own shares on the market. The company, as duly authorized by Article 10 of its Articles of Association, may undertake the purchase of its own ordinary shares in such manner or on such terms as the directors may from time to time determine, provided that the repurchases are not made at a price greater than 5% above the weighted average of the market value for the securities for the five business days immediately preceding the date of the repurchase and also provided that the maximum number of shares authorized to be acquired shall not exceed 10% (ten percent) of the Company’s issued ordinary share capital. This authority shall expire at the next Annual General Meeting, and shall not extend beyond 15 months from the date of this resolution.

25.5 Issue of shares There was no new issue of shares in the current year.

72


26 DIRECTORS’ SHAREHOLDING

At 28 February 2015, there were no outstanding share options granted to the directors. At that date, the following directors held directly and indirectly the following number of ordinary shares in the Company.

28 February 2015 Ordinary shares S.T. Masiyiwa* 13,287 C. Fitzgerald 10,699,010 D. Mboweni 7,014,684 T.P. Mpofu 10,376,420 K. Chirairo 84,400 J. Myers 17,168 B. Mtetwa - S. Shereni 2,200 Total 28,207,169

28 February 2014 Ordinary shares S.T. Masiyiwa* 329,217 C. Fitzgerald 10,709,010 D. Mboweni 7,014,684 T.P. Mpofu 10,380,580 K. Chirairo 84,400 J. Myers 19,970 B. Mtetwa 130,910 S. Shereni 2,200 Total 28,670,971

*Mr. S.T. Masiyiwa is a beneficiary of a trust that has an indirect shareholding in Econet Wireless Global Limited. Econet Wireless Global Limited holds 630 579 551 shares (2014: 659 539 483 shares) in Econet Wireless Zimbabwe Limited.

27 OTHER RESERVES

All figures in US$ OtherAvailable-for

sale TotalBalance at 28 February 2013 - 568 775 568 775Additions 6,626 - 6,626

Fair value loss on available-for-sale investments - (111,956) (111,956)Deferred tax arising out of reserves (1,706) 1,109 (597)

Balance at 28 February 2014 4,920 457,928 462,848

Transfer to regulatory reserves 5,222,610 - 5,222,610 Fair value gain on available-for-sale investments - 210,738 210,738 Deferred tax arising out of reserves - (2,107) (2,107)

Balance at 28 February 2015 5,227,530 666,559 5,894,089

Available for sale reserve This reserve records fair value changes on available-for-sale financial assets. Other reserves relate to Steward Bank Regulatory Reserve which caters for excess credit loss provisions that

result from calculation of impairments on loans and receivables according to the expected loss model as required per Reserve Bank of Zimbabwe regulations.

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Financial Reporting

28 TRADE AND OTHER PAYABLES


Local trade accounts payable 66,076,714 50,912,050 Foreign trade accounts payable 18,648,390 53,923,898 Short term inter-group payables 1,306,432 1,008,652 Other payables 52,537,665 63,143,597

138,569,201 168,988,197

Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs together with credit granted on equipment purchases. The average credit period on purchases is between 7 and 30 days. The Group has financial risk management policies in place to ensure that all payables are settled within the agreed credit timeframe.

Other payables comprise of the accrual of certain operational expenses.

29 DEFERRED REVENUE

All figures in US$ 2015 2014Deferred prepaid airtime 18,381,526 14,109,056

18,381,526 14,109,056

The deferred revenue arises from the unused prepaid airtime. The directors are of the opinion that the carrying amounts approximate the fair values of the services to be provided.

30 FINANCIAL INSTRUMENTS: INTEREST-BEARING DEBT

All figures in US$ 2015 2014Opening balance 240,280,045 264,570,934 Additions during the year 120,963,640 48,385,371 Net repayments (97,793,026) (75,373,792)Accrued interest 482,765 2,697,532Closing balance 263,933,424 240,280,045

Long term portion 165,757,698 134,852,046 Short term portion 98,175,726 105,427,999

263,933,424 240,280,045

74


30 FINANCIAL INSTRUMENTS: INTEREST-BEARING DEBT (continued)

Loan repayment structure

FinancierEffective

dateInitial Facility

Limit

Value at Acquisition

dateAmounts

paid to dateFinance cost

accruedTotal loanobligation

Short-termportion

Long-termportion

Effective Borrowing

rate as at 28 Feb 15

Securityterms

All figures in US$

African Export and Import Bank/ Econet Wireless Global Limited 24-May-12

75,000,000

64,741,635

43,421,053 9,282,724 30,603,306 14,867,569

15,735,737 11.4%Guarantee by Econet Wireless Global Limited

African Export and Import Bank/ Econet Wireless Global Limited

27-Dec-13

28,000,000

27,440,000 27,440,000 - - - - 9.0%Guarantee by Steward Bank Limited

Ericsson Credit AB 24-May-12 39,900,000 37,115,392 34,200,000 2,838,709 5,754,101 5,754,101 - 5.0% Guarantee by Econet Wireless Global Limited

China Development Bank 11-May-12 135,000,000 125,171,774 63,519,882 10,165,834 71,817,726 31,874,731 39,942,995 6.4% Guarantee by Econet

Wireless Global Limited

Industrial Development Corporation 28-Sep-12 20,000,000

17,151,454 8,000,000 2,098,672 11,250,126 3,705,299


PTA 15-Jan-13

20,000,000 19,820,000 12,727,273 348,478

7,441,205 7,441,205 - 6.2%Guarantee by Econet Wireless Global Limited

PTA 4-Apr-13 8,800,000 9,220,982 302,616 154,899 9,073,265 2,264,927 6,808,338 10.0% Equipment Purchased

Ericsson Credit AB 30-Jun-14 14,763,973 13,458,837 2,952,795 848,739 11,354,781 5,499,583 5,855,198 7.4% Guarantee by Econet Wireless Global Limited

Ericsson Credit AB 30-Jun-14 50,567,500

19,932,861

1,292,697

160,648

18,800,812 5,400,974


China Development Bank 30-Jun-14

93,000,000

75,095,408 -

1,259,700

76,355,108 (115,657) 76,470,765 5.7%

Guarantee by Econet Wireless Global Limited

Sub Total 485,031,473 409,148,343 193,856,316 27,158,403 242,450,430 76,692,732 165,757,698 7.3%

Bank working capital facility 22-Jul-13 21,482,994 21,482,994 - - 21,482,994 21,482,994 - Unsecured

Total 506,514,467 430,631,337 193,856,316 27,158,403 263,933,424 98,175,726 165,757,698

The weighted average interest rate on long-term borrowings for the Group as at 28 February 2015 was 7.3% (2014: 7.8%). In addition to the all inclusive rate of borrowing of 7.3% the Group pays guarantee fees of 6% per annum to EWG for the guarantee provided on the multi-creditor loan facilities.

The borrowing powers of the directors are as disclosed in Note 40.

Summary of borrowing covenants

African Export and Import Bank (Afrexim Bank) / Econet Wireless Global Econet Wireless (Private) Limited and Econet Wireless Global Limited signed an agreement with Afrexim on 24

November 2011 for a facility of US$130 million. US$75 million of this loan facility was applied to Econet Wireless (Private) Limited to refinance an existing bridging facility of US$63 million from the same Bank and at the same time increase the loan facility by a further US$ 12 million. This loan is part of the multi-creditor loan facilities detailed below.

CDB The facilities in the schedule above have been applied to the expansion of the cellular network. In May 2012,

US$135 million of the facilities was refinanced through a loan from the China Development Bank, as part of the multi-creditor loan facilities detailed below.

Multi-creditor loan facilities The company secured multi-creditor loan facilities of US$307 million prior to 28 February 2014 and US$158.3 million in the 2015 financial year, from a group of financial institutions namely; Industrial Development Corporation of South Africa (IDC), Eastern and Southern African Trade and development bank (PTA Bank), China Development Bank (CDB) and Ericsson Credit AB (Ericsson)and a syndicate led by African Export Import Bank (Afrexim Bank), which also includes DEG, PROPARCO, FMO, Steward Bank and CBZ Bank.

75

Financial Reporting

The terms of the security package are detailed in an Inter-creditor Security Sharing Agreement, which provides for the sharing of security between the financial institutions. The multi-creditor loan facilities were used to refinance the existing loans and for further network expansion. The loans are at various interest rates and maturity periods of up to five years. The multi-creditor loan facilities contain a number of covenants, representations, and events of default typical of a credit facility arrangements of this size and nature, including financial covenants relating to consolidated debt (as defined) including:

1. Debt service coverage ratio (DSCR) of greater than or equal to 1.5 2. Net Interest bearing Indebtedness (NIBFI) to EBITDA ratio of less than or equal to 1.5 3. Total liabilities/Total assets ratio less than or equal to 0.67 4. Shareholders’ funds/Total assets ratio geater than or equal to 0.4

Debt service means in respect of a relevant period, the short term portion of long term borrowings (as defined under IFRS) plus interest paid for that relevant period ( as defined under IFRS). The DSCR is therefore the ratio of cash generated from operations for the relevant period, to debt service for that period.

Net Interest bearing Financial Indebtedness means in respect of any relevant period, all short term interest bearing debt and long term interest bearing debt for that relevant period less cash and cash equivalents.

The Company was in compliance with such covenants as at 28 February 2015. The Directors believe the company will be able to continue to meet these covenant ratios during the term of the facilities.

Inter-creditor and Security Sharing Agreement In terms of the agreements for the multi-creditor loan facility between Econet Wireless Group companies and

the lenders listed above - ZTE, Industrial Development Corporation of South Africa, China Development Bank, Ericsson Credit AB, Afrexim Bank - the lenders have agreed to a pool arrangement for security of their facilities. The Security Pool arrangement is contained in the Inter-creditor and Security Sharing Agreement.

Afrexim Bank was appointed the “Security Agent” in terms of the Inter-creditor and Security Sharing Agreement to hold in trust security on behalf of the syndicated creditors. The role of the Security Agent being, inter alia, to mobilize the syndicate lenders, holding security on behalf of the lenders, managing the collection of debt service payments on behalf of the lenders and enforcing securities while under instruction of the lenders. Barclays Bank of Zimbabwe Limited, Steward Bank Limited and Ecobank Burundi SA are the “Local Administrative Agents” to assist the Security Agent.

The security pool includes the following:

assets, and

guarantees to the lenders participating in the inter-creditor and security sharing agreement.

76


31 DEPOSITS DUE TO BANKS AND CUSTOMERS


31.1 Due to banks Deposits due to other banks - -

31.2 Due to customers Current accounts 23,711,243 10,909,404 Term deposits 17,924,600 8,453,960

41,635,843 19,363,364

31.3 Maturity analysis of depositsLess than 1 month 23,711,243 10,909,404 1 to 3 months 17,924,600 8,453,960

41,635,843 19,363,364

31.4 Sectoral analysis of deposits

2015 2014

All figures in US$ US$ % US$ %

Financial 4,077,478 9.8% 449,560 2.3%Transport and telecommunications 4,738,484 11.4% 2,628,524 13.6%Mining 17,355 0.1% 15,426 0.1%Manufacturing 554,742 1.3% 121,355 0.6%Agriculture 181,461 0.4% 161,760 0.8%Distribution 417,577 1.0% 284,506 1.5%Services 14,455,715 34.7% 3,934,700 20.3%Government and parastatals 4,223,936 10.1% 13,499 0.1%Individuals 12,032,189 28.9% 11,581,738 59.8%Other 936,906 2.3% 172,296 0.9%

41,635,843 100% 19,363,364 100%

77

Financial Reporting

32 CASH FLOW INFORMATION

32.1 Cash generated from operations before working capital changes

All figures in US$ Note 2015 2014Profit before tax 123,343,485 194,008,861

Adjustments for :Depreciation and impairment 12 115,812,011 92,018,851Amortisation and impairment of intangible assets 14 9,505,214 7,598,977 Impairment of Goodwill 43.3 224,685 - Bad debts written off 303,936 1,323,581 Write off of property, plant and equipment 12 747,283 2,105,775 Loss on disposal of property, plant and equipment 55,882 92,507 Fair value gains/(loss) on financial assets at fair value through profit or loss 21

2,740 (18,847)

Impairment of trade receivables - 19,678,214 Increase in other provisions 48,506 - Impairment of loans and advances 3,166,091 19,930,954 Share of profit of associate 18.1 (9,048,017) (6,707,066)Loss/(gain) on fair value of investment property 83,874 (809,401)Net finance costs 6 & 7 36,011,884 36,441,299 Increase in deferred revenue 29 4,272,470 3,981,439 Inventory write-off 22 723,214 1,229,241 Increase in provision for inventory write-off 860,138 -

286,113,396 370,874,385

32.2 Adjustments for working capital changes

Decrease/(increase) in inventories 5,786,498 (12,687,329)Increase in trade and other receivables (34,227,663) (23,350,566)(Decrease)/increase in trade and other payables (30,710,210) 50,116,699

(59,151,375) 14,078,804

Cash generated from operations 226,962,021 384,953,189

32.3 Income tax paid

Opening balance of liability 17,366,523 6,812,529 Add: current taxation charge for the year 10 27,604,970 51,038,012 Add: withholding taxes paid 10 14,668,162 12,826,485 Less: closing balance of liability (8,218,323) (17,366,523)

51,421,332 53,310,503

32.4 Cash and cash equivalentsShort term investments 875,104 - Bank balances and cash 94,363,629 71,331,021

95,238,733 71,331,021

Included in cash and cash equivalents is the following:Reserved and restricted cash balances 69,030,205 58,265,500

Restricted and reserved cash balances represent debt service reserve amounts which are secured to lenders and amounts held in trust for the Ecocash customers.

78


33 RELATED PARTY TRANSACTIONS

33.1 Transactions

All figures in US$ 2015 2014Transactions with Members of Econet Wireless Global GroupSale of goods and services to fellow subsidiaries 53,173,818 60,213,320 Sale of goods and services to associates 1,483,242 540,920Purchases of goods and services from associates (40,728,942) (32,153,813) Purchases of goods and services from fellow subsidiaries (61,604,598) (50,876,053)

Other related partiesTransactions with Econet Wireless Pension fund (4,250,505) (4,905,844)

33.2 Net balancesAmounts owed to Members of Econet Wireless Global Group (9,550,199) (8,561,184)Amounts receivable from Members of Econet Wireless Global Group 6,709,805 7,029,674 Amounts owed by Econet Wireless Pension fund 4,145,258 -

Details of guarantees provided by the parent company are disclosed in Note 30.

33.3 Compensation of key management personnel The remuneration of directors and other members of key management during the year was as follows:

Short-term-benefits-for management services 7,147,774 6,468,051 For services as directors 1,434,815 1,400,578

8,582,589 7,868,629

34 GROUP EMPLOYEE BENEFITS Econet Wireless Group Pension Fund Contributions are made to the defined contribution scheme through monthly deduction by the Company on

members’ salaries and remitted to the Fund. National Social Security Authority Scheme This is a defined contribution scheme promulgated under the National Social Security Act of 1989. The Company’s

obligation under the scheme are limited to specific contributions legislated from time to time. 35 FINANCIAL RISK MANAGEMENT 35.1 Capital risk management The Group’s objectives when managing capital are:

shareholders and benefits for other stakeholders, and

level of risk.

The Group sets the amount of capital in proportion to risk. The Group manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt.

Consistent with others in the industry, the Group monitors capital on the basis of the debt-to-adjusted capital ratio. This ratio is calculated as net debt divided by adjusted capital. Net debt is calculated as total debt (as shown in the statement of financial position) less cash and cash equivalents. Adjusted capital comprises all components of equity other than amounts accumulated in equity relating to cash flow hedges, and includes some forms of subordinated debt.

79

Financial Reporting

The debt-to-adjusted capital ratios were as follows:

All figures in US$ 2015 2014Total debt 263,933,424 240,280,045 Less: cash and cash equivalents (95,238,733) (71,331,021)Net debt 168,694,691 168,949,024

Total equity 665,294,728 603,719,307

Adjusted debt-to-capital ratio 25% 28%

(i) Debt is defined as long and short-term borrowings, as detailed in Note 30. (ii) Equity includes all capital and reserves of the Group. (iii) Steward Bank Limited has met Reserve Bank of Zimbabwe Capital requirements as detailed in Note 37.

35.2 Financial risk management objectives The Group’s Corporate Treasury function provides services to the business, coordinates access to domestic and

international financial markets, monitors and manages the financial risks relating to the operations of the group through internal risk reports which analyse exposures by degree and magnitude of risks. These risks include market risk (including currency risk, interest rate risk and price risk), credit risk, liquidity risk and cash flow interest rate risk.

The Group’s Audit Committee, consisting of executive and non-executive directors, meets on a regular basis to analyse, amongst other matters, currency and interest rate exposures and re-evaluate treasury management strategies against revised economic forecasts. Compliance with Group policies and exposure limits is reviewed at quarterly Board meetings.

The Group has a dedicated committee of the Board which reviews the loan exposures on a regular basis and monitors repayment plans. The Group has been able to meet its obligations in the current financial period and the Directors believe that appropriate measures have been implemented to ensure that the Group has the ongoing capacity to meet its obligations arising from these exposures.

35.3 Interest rate risk management Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of

changes in market interest rates. The Group invests in money market instruments which are subject to changes in interest rates on the local money markets. The Group’s policy is to adopt a non-speculative approach to managing interest rate risk. Approved funding instruments include; bankers acceptances, call loans, overdrafts, foreign loans and where appropriate, long-term loans.

The Group has borrowings that are subject to both fixed interest rates and floating interest rates. Details of the Group’s borrowings are described in Note 30. The Board of Directors has a committee that is dedicated to reviewing the loan exposures and repayment plans for the Group’s external borrowings. The Committee that reviews the loan exposures meets on a regular basis and uses various models to project the Group’s risk exposures and proposes methods to deal with the risk arising in an appropriate manner. This committee also approves the term sheets for such borrowings, and ensures that the interest rate exposure of the Group is appropriately managed.

The sensitivity of the Group’s statement of comprehensive income to the changes in interest rates on its material exposures is disclosed in Note 35.3.1 below. The Directors, at the reporting date, were not aware of any information or events that may have a significant impact on the reported profit and loss of the Group or that would result in material changes in the structure of the Group’s statement of comprehensive income.

80


35 FINANCIAL RISK MANAGEMENT (continued)

35.3.1 Interest rate sensitivity analysis The following table demonstrates the sensitivity to a reasonably possible change in interest rates on interest

bearing debt. The interest rate sensitivity is applied on an effective interest rate of 7.3% (2014 7.8%).

2015

All figures in US$Adjusted

interest

Future interest payable

at current rate

Impact on profit or loss:

gain / (loss)Tax

effect

Impact on equity:

gain/(loss)

If interest rate goes up by 2% to 9.3% 36,178,519 27,034,204 (9,144,315) (2,354,661) (6,789,654)If interest rate goes down by 2% to 5.3% 18,140,660 27,034,204 8,893,544 2,290,088 6,603,456

2014

All figures in US$Adjusted

interest

Future interest payable

at current rate

Impact on profit or loss:

gain / (loss)Tax

effect

Impact on equity:

gain/(loss)

If interest rate goes up by 2% to 9.8% 25,427,165 18,866,150 (6,561,015) (1,689,461) (4,871,554)If interest rate goes down by 2% to 5.8% 10,191,666 18,866,150 8,674,484 2,233,680 6,440,804

35.4 Other price risks Other price risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of

changes in market prices (other than those arising from interest rate risk and currency risk) whether those changes are caused by factors specific to the individual financial instrument or to its issuer or factors affecting all similar financial instruments traded in that market.

The Group invests in tradable securities that are quoted on the Zimbabwe Stock Exchange and maintains two portfolios for these investments, a trading portfolio and a long-term investment portfolio.

At the reporting date, the exposure to listed equity securities at fair value was US$ 3 173 882. A decrease of 5% on the share price could have an impact of approximately US$159 000 on the income or equity attributable to the Group, depending on whether the decline is significant or prolonged. An increase of 5% in the value of the listed securities would only impact equity, but would not have an effect on profit or loss.

35.5 Credit risk management Credit risk refers to the risk that the counterparty will default on its contractual obligations resulting in financial

loss to the Group. The Group has adopted a policy of only dealing with credit worthy counterparties and obtaining sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group’s exposure and the credit ratings of its counterparties are continuously monitored and the credit exposure is controlled by counterparty limits that are reviewed and approved regularly.

Financial assets, which potentially subject the group to concentrations of credit risk, consist principally of cash, short-term deposits, trade receivables and intercarrier receivables. The group’s cash equivalents are placed with high quality financial institutions. Trade receivables are presented net of the allowance for impairment losses. Credit risk with respect to debtors is limited due to the widespread customer base and ongoing credit evaluations to maintain credit worthiness of the customers. Where appropriate, trade receivables are converted onto the prepaid service. Intercarrier receivables and payables are regulated by interconnect contracts. Intercarrier receivables and payables for foreign cellular traffic are managed through a reputable foreign finance house which ensures the net monthly outstanding amounts are collected from the foreign interconnect partners.

At the reporting date, there was significant concentration of credit risk on the interconnect balances owing to the company. Refer to Note 23.

The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in the statement of financial position.

81

Financial Reporting

35.6 Foreign currency risk management The schedule below shows the composition of the monetary assets, by currency at the respective year end in

United States dollars at the reporting date. Bank and cash balances- US$

All figures in US$ AUD JPY BWP Euro Rand USD GBP Total

2015Bank and cash balances 2,168 495 14,132 741,017 599,645 92,990,625 15,546 94,363,628 Short term deposits - - - - - 875,104 - 875,104Closing balance 2,168 495 14,132 741,017 599,645 93,865,729 15,546 95,238,732

2014Bank and cash balances - - 6,870 21,461 452,388 70,846,414 3,888 71,331,021 Closing balance - - 6,870 21,461 452,388 70,846,414 3,888 71,331,021

Foreign currency risk is the risk that the Group may be affected adversely as a result of foreign currency fluctuations

on the various currencies that the entity holds. The Group maintains cash and bank balances in various currencies so that payments can be made in the currency of the respective invoices. This covers the entity against short-term foreign currency fluctuations. In addition to this the bulk of the Group’s bank and other monetary balances are United States Dollar denominated thereby minimising this risk.

As at year end, the converted values of the non USD denominated bank and other monetary balances were minimal and insignificant to the Group hence a sensitivity analysis has not been performed for foreign currency fluctuations.

35.7 Liquidity risk management Ultimate responsibility for liquidity risk management rests with the board of directors, which has built an appropriate

liquidity risk management framework for the management of the Group’s short, medium and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.

The table below summarises the maturity profile of the Group’s financial liabilities based on contractual undiscounted payments.

All figures in US$ On

demand Less than 3 months

3 to 12 months

1 to 5 years Total

Year ended 28 February 2015

Interest-bearing debt 21,482,994 20,585,193 56,107,539 165,757,698 263,933,424 Trade and other payables - 138,569,201 - - 138,569,201 Deposits due to banks and other customers 23,711,243 17,924,600 - - 41,635,843

45,194,237 177,078,994 56,107,539 165,757,698 444,138,468

Year ended 28 February 2014

Interest-bearing debt 12,385,371 30,137,195 62,905,433 134,852,046 240,280,045 Trade and other payables - 168,988,197 - - 168,988,197 Deposits due to banks and other customers 10,909,404 8,453,960 - - 19,363,364

23,294,775 207,579,352 62,905,433 134,852,046 428,631,606

The disclosed financial instruments in the above table are the gross undiscounted cash flows.

82


36 DISCLOSURES IN RESPECT OF BANKING SUBSIDIARY 36.1 Statement of financial position for Steward Bank Limited

All figures in US$ 2015 2014ASSETS

Cash and cash equivalents 23,755,668 19,118,215 Financial assets at fair value through profit or loss 14,538,537 20,750,864 Loans and advances to customers 59,547,175 57,293,301 Loans and advances relating to furniture loans 3,292,051 10,319,006 Financial assets held to maturity 33,699,848 4,088,444 Other receivables 5,032,108 3,243,770 Investment properties 3,430,267 3,276,586 Property and equipment 3,959,860 4,571,613 Intangible assets 5,692,934 5,587,482 Deferred tax asset 11,687,315 10,497,296

164,635,763 138,746,577


Deposits due to banks and customers 87,685,312 62,119,670 Loans and borrowings 8,840,300 2,307,807 Provisions 788,389 626,365 Other liabilities 3,815,499 1,892,751 Equity 63,506,263 71,799,984

164,635,763 138,746,577

36.2 Risk management Risk is inherent in the Bank’s activities, but is managed through a process of ongoing identification, measurement

and monitoring, subject to risk limits and other controls. This process of risk management is critical to the Bank’s continuing profitability and each individual within the Bank is accountable for the risk exposures relating to his or her responsibilities. The Bank is exposed to credit risk, liquidity risk, strategic risk, reputational risk and market risk. It is also subject to country risk and various operating risks.

Risk management structure The Board of Directors is responsible for the overall risk management approach and for approving the risk

management strategies, policies and principles. The Board has established the Assets and Liabilities Management Committee (ALCO) and other governance committees which have the responsibility for the development of the risk strategy and implementing principles, frameworks, policies and limits. The Bank also has fully embedded the Bank wide Risk Management Framework with all significant risk types allocated to the risk control owners.

Risk measurement and reporting systems Information compiled from all the businesses is examined and processed in order to analyse, control and identify risks on a timely basis. The Board receives a comprehensive risk report once a quarter which is designed to provide all the necessary information in order for them to exercise their oversight role.

Excessive risk concentration Concentrations arise when a number of counterparties are engaged in similar business activities, or activities in

the same geographical region, or have similar economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentrations indicate the relative sensitivity of the Bank’s performance to developments affecting a particular industry or geographical location.

In order to avoid excessive concentrations of risk, the Bank’s policies and procedures include specific guidelines to focus on maintaining a diversified portfolio. Identified concentrations of credit risks are controlled and managed accordingly.

83

Financial Reporting

36 DISCLOSURES IN RESPECT OF BANKING SUBSIDIARY (continued) 36.2 Risk management (continued)

36.2.1 Credit Risk Credit risk is the risk that the Bank will incur a loss because its customers or counterparties fail to discharge their

contractual obligations. The Bank manages and controls credit risk by setting limits on the amount of risk it is willing to accept for individual counterparties and for geographical and industry concentrations, and by monitoring exposures in relation to such limits.

The Bank has established a credit quality review process to provide early identification of possible changes in the creditworthiness of counterparties, including regular collateral revisions. Counterparty limits are established by the use of a credit risk classification system, which assigns each counterparty a risk rating. Risk ratings are subject to regular revision. The credit quality review process aims to allow the bank to assess the potential loss as a result of the risks to which it is exposed and take corrective action.

Impairment assessments For accounting purposes, the Bank uses an incurred loss model for the recognition of losses on impaired financial

assets. This means that losses can only be recognised when objective evidence of a specific loss event has been observed. Triggering events include the following:

- Significant financial difficulty of the customer - A breach of contract such as a default of payment - Where the bank grants the customer a concession due to the customer experiencing financial difficulty - It becomes probable that the customer will enter bankruptcy or other financial reorganisation - Observable data that suggests that there is a decrease in the estimated future cash flows from the loans

This approach differs from the expected loss model used for regulatory capital purposes in accordance with Basel II.

Individually assessed allowances: The Bank determines the allowances appropriate for each individually significant loan or advance on an individual

basis, including any overdue payments of interest, credit rating downgrades, or infringement of the original terms of the contract. Items considered when determining allowance amounts include the sustainability of the counterparty’s business plan, its ability to improve performance if it is in a financial difficulty, projected receipts and the expected pay-out should bankruptcy ensue, the availability of other financial support, the realisable value of collateral and the timing of the expected cash flows. Impairment allowances are evaluated at each reporting date, unless unforeseen circumstances require more careful attention.

Collectively assessed allowances: Allowances are assessed collectively for losses on loans and advances and for held-to-maturity debt investments

that are not individually significant (including residential mortgages, government debt and unsecured consumer lending) and for individually significant loans and advances that have been assessed individually and found not to be impaired.

The Bank generally bases its analysis on historical experience. However, when there are significant market developments, regional and/or global, the Bank would include macroeconomic factors within its assessments. These factors include, depending on the characteristics of the individual or collective assessment: unemployment rates, current levels of bad debts, changes in laws, changes in regulations, bankruptcy trends, and other consumer data. The Bank may use the aforementioned factors as appropriate to adjust the impairment allowances.

84


36 DISCLOSURES IN RESPECT OF BANKING SUBSIDIARY (continued)

36.2 Risk management (continued)

Allowances are evaluated separately at each reporting date with each portfolio.

The collective assessment is made for groups of assets with similar risk characteristics, in order to determine whether provision should be made due to incurred loss events for which there is objective evidence, but the effects of which are not yet evident in the individual loans assessments. The collective assessment takes account of data from the loan portfolio (such as historical losses on the portfolio, levels of arrears, credit utilisation, loan to collateral ratios and expected receipts and recoveries once impaired) or economic data (such as current economic conditions, unemployment levels and local or industry–specific problems). The approximate delay between the time a loss is likely to have been incurred and the time it will be identified as requiring an individually assessed impairment allowance is also taken into consideration. Local management is responsible for deciding the length of this period, which can extend for as long as one year. The impairment allowance is then reviewed by credit management to ensure alignment with the Bank’s overall policy.

Financial guarantees and letters of credit are assessed in a similar manner as for loans.

Credit related commitments risks: The Bank makes available to its customers guarantees that may require that the Bank makes payments on their

behalf and enters into commitments to extend credit lines to secure their liquidity needs. Letters of credit and guarantees (including standby letters of credit) commit the bank to make payments on behalf of customers in the event of a specific act. Such commitments expose the Bank to similar risks to loans and are mitigated by the same control processes and policies.

Fair value of collateral and credit enhancements held

All figures in US$

MaximumExposure to Listed

Securities

Letters of credit

/Guarantees Property Other Total

NetExposure to

At 28 February 2015:Financial assets:Cash and cash equivalents 18,650,991 - - - - - 18,650,991 Financial assets at fair value through profit or loss

14,538,537 - - - - -

14,538,537

Loans and advances to customers 86,155,854 - - 4,414,697 744,250 5,158,947 80,996,907 Financial assets held to maturity 33,699,848 - - - - - 33,699,848 Other receivables 5,032,108 - - - - - 5,032,108

158,077,338 - - 4,414,697 744,250 5,158,947 152,918,391

At 28 February 2014:Financial assets:Cash and cash equivalents 12,715,322 - - - - - 12,715,322 Financial assets at fair value through profit or loss 20,750,864 - -

- - - 20,750,864

Loans and advances to customers 61,897,766 - - 1,843,470 661,250 2,504,720 59,393,046 Financial assets held to maturity 4,088,444 - - - - - 4,088,444 Other receivables 3,243,768 - - - - - 3,243,768

102,696,164 - - 1,843,470 661,250 2,504,720 100,191,444

85

Financial Reporting

Collateral and other credit enhancements The amount and type of collateral required depends on an assessment of the credit risk of the counterparty.

Guidelines are in place covering the acceptability and valuation of each type of collateral. The Bank also obtains guarantees from parent companies for loans to their subsidiaries.

Management monitors the market value of collateral, and will request additional collateral in accordance with the underlying agreement.

Credit quality per industrial sector The Bank manages the credit quality of financial assets using internal credit ratings. The table below shows the

credit quality by industrial sector for all financial assets exposed to credit risk, based on the Bank’s internal credit rating system. The amounts presented are gross of impairment allowances.

Neither past due nor impaired

All figures in US$Grade A

High grade

Grade BStandard

grade

Grade CSub-

standard

Past due but not

impairedIndividually

impaired TotalAt 28 February 2015:Individuals 14,952,872 888,042 725,895 815,261 2,568,412 19,950,482Mining 89,133 2,159,276 - - 524,561 2,772,970 Manufacturing 26,122,567 52,145 - 5,711,818 754,125 32,640,655Agriculture 1,367,404 1,280,384 - 300,412 952,145 3,900,345 Distribution 1,706,100 164,848 - - 542,311 2,413,259 Services 3,010,517 - 200,501 - 2,514,587 5,725,605

47,248,593 4,544,695 926,396 6,827,491 7,856,141 67,403,316

The Bank’s concentrations of risk are managed by client/counterparty, by geographical region and by industry sector. The maximum credit exposure to any client or counterparty as of 28 February 2015 was US$29 million (2014: US$ 30.6 million).

Neither past due nor impaired

All figures in US$Grade A

High grade

Grade BStandard

grade

Grade CSub-

standard

Past due but not

impairedIndividually

impaired TotalAt 28 February 2014:Individuals 134,890 240,850 1,271,868 758,510 1,005,613 3,411,731 Mining - 421,158 - - 450,000 871,158 Manufacturing 52,621,213 44,814 - - 649,898 53,315,925 Agriculture 41,682 371,929 - 234,266 889,669 1,537,546 Distribution 9,452 409,590 - - 241,044 660,086 Services 547,185 - 185,894 - 1,368,242 2,101,321

53,354,422 1,488,341 1,457,762 992,776 4,604,466 61,897,767

Commitments and guarantees To meet the financial needs of customers, the Bank enters into various irrevocable commitments and contingent

liabilities. Even though these obligations may not be recognised on the statement of financial position, they do contain credit risk and are therefore part of the overall risk of the Bank.

The table below shows the Bank’s maximum credit risk exposure for commitments and guarantees.

The maximum exposure to credit risk relating to a financial guarantee is the maximum amount the Bank would have to pay if the guarantee is called upon. The maximum exposure to credit risk relating to a loan commitment is the full amount of the commitment. In both cases, the maximum risk exposure is significantly greater than the amount recognised as a liability in the statement of financial position.

86




All figures in US$ 2015 2014Financial guarantees 40,313,388 63,300,000 Commitments to lend - 24,000

40,313,388 63,324,000

Included in financial guarantees at 28 February 2014 is an amount of $23.3 million extended to Econet Wireless Zimbabwe Limited, the Bank’s holding company and Econet Wireless (Private) Limited, the Bank’s fellow subsidiary. The guarantee expired in the current year.

36.2.2 Liquidity Risk and Funding Management

Liquidity risk is defined as the risk that the Bank will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. Liquidity risk arises because of the possibility that the Bank might be unable to meet its payment obligations when they fall due under both normal and stress circumstances. To limit this risk, management has arranged diversified funding sources in addition to its core deposit base, and adopted a policy of managing assets with liquidity in mind and monitoring future cash flows and liquidity on a daily basis. The Bank has developed internal control processes and contingency plans for managing liquidity risk. This incorporates an assessment of expected cash flows and the availability of high grade collateral which could be used to secure additional funding if required.

The Bank maintains a portfolio of highly marketable and diverse assets that are assumed to be easily liquidated in the event of an unforeseen interruption of cash flow. The Bank places emphasis on lines of credit that it can access to meet liquidity needs. In accordance with the Bank’s policy, the liquidity position is assessed and managed under a variety of scenarios, giving due consideration to stress factors relating to both the market in general and specifically to the Bank. The most important of these is to maintain limits on the ratio of net liquid assets to customer liabilities, to reflect market conditions.

The key ratios during the year were as follows:

2015 2014

At 28February

Maximumduring period

Minimumduring period

At 28February

Maximumduring period

Minimumduring period

Advances to deposits ratio 105% 105% 72% 100% 146% 87%Net liquid assets to customer liabilities ratio 56% 57% 50% 29% 31% 2%

The Bank stresses the importance of current accounts and savings accounts as sources of funds to finance lending to customers. They are monitored using the advances to deposit ratio, which compares loans and advances to customers as a percentage of core customer current and savings accounts, together with term funding with a remaining term to maturity in excess of one year. Loans to customers that are part of reverse repurchase arrangements, and where the Bank receives securities which are deemed to be liquid, are excluded from the advances to deposits ratio.

The Bank defines liquid assets for the purposes of the liquidity ratio as cash balances, short–term interbank deposits and highly-rated debt securities available for immediate sale and for which a liquid market exists.

Analysis of financial assets and liabilities by remaining contractual maturities The table below summarises the maturity profile of the undiscounted cash flows of the Bank’s financial assets and liabilities. Repayments which are subject to notice are treated as if notice were to be given immediately. However, the Bank expects that many customers will not request repayment on the earliest date the Bank could be required to pay and the table does not reflect the expected cash flows indicated by the Bank’s deposit retention history.

87

Financial Reporting



3 months to 1 year

1 year to 5 years

Over 5 years Total

At 28 February 2015:

Financial assets:Cash and cash equivalents 23,755,668 - - - - 23,755,668 Financial assets at fair value through profit or loss 14,538,537 - - - - 14,538,537 Loans and advances to customers 39,836,416 2,768,796 2,780,343 16,760,627 5,257,134 67,403,316Loans and advances relating to furniture loans 18,752,538 - - - - 18,752,538 Financial assets held to maturity - - 15,522,683 18,177,165 - 33,699,848 Other receivables 5,032,109 - - - - 5,032,109 Total undiscounted financial assets 101,915,268 2,768,796 18,303,026 34,937,792 5,257,134 163,182,016

Financial liabilities:Deposits due to banks and customers 58,180,228 29,505,084 - - - 87,685,312 Loans and borrowings 181,500 4,600,800 2,517,000 1,541,000 - 8,840,300 Total undiscounted financial liabilities 58,361,728 34,105,884 2,517,000 1,541,000 - 96,525,612

Net undiscounted financial assets/(liabilities) 43,553,540 (31,337,088) 15,786,026 33,396,792 5,257,134 66,656,404


Financial assets:Cash and cash equivalents 19,118,215 - - - - 19,118,215 Financial assets at fair value through profit or loss 20,750,864 - - - - 20,750,864 Loans and advances to customers 13,212,355 139,393 1,262,120 46,647,193 636,705 61,897,766 Loans and advances relating to furniture loans - - 10,346,031 15,519,047 - 25,865,078 Financial assets held to maturity - - - - 4,088,444 4,088,444 Other receivables - 3,243,770 - - - 3,243,770 Total undiscounted financial assets 53,081,434 3,383,163 11,608,151 62,166,240 4,725,149 134,964,137

Financial liabilities:Deposits due to banks and customers 45,622,074 16,497,596 - - - 62,119,670 Loans and borrowings 918,381 437,878 1,052,817 - - 2,409,076 Total undiscounted financial liabilities 46,540,455 16,935,474 1,052,817 - - 64,528,746

Net undiscounted financial assets/(liabilities) 6,540,979 (13,552,311) 10,555,334 62,166,240 4,725,149 70,435,391

The table below shows the contractual expiry by maturity of the bank’s contingent liabilities and commitments. Each undrawn loan commitment is included in the time band containing the earliest date it can be drawn down. For issued financial guarantee contracts, the maximum amount of the guarantee is allocated to the earliest period in which the guarantee could be called.



3 months to 1 year

1 year to 5 years

Over 5 years Total


Financial guaranteesTotal commitments and guarantees - - 40,313,388 - - 40,313,388

- - 40,313,388 - - 40,313,388


Financial guarantees - - 63,300,000 - - 63,300,000 Commitments to lend - 24,000 - - - 24,000 Total commitments and guarantees - 24,000 63,300,000 - - 63,324,000

The Bank expects that not all of the contingent liabilities or commitments will be drawn before expiry of the

commitments.

36.2.3 Market Risk Market risk is the risk that the fair value or future cash flows of financial instruments will fluctuate due to changes

in market variables such as interest rates, foreign exchange rates and equity prices.

88




Interest rate risk Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or the

fair values of financial instruments. The Board has established limits on the non–trading interest rate gaps for stipulated periods. The Bank’s policy is to monitor positions on a daily basis and hedging strategies are used to ensure positions are maintained within the established limits.

Interest rate sensitivity The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other

variables held constant, of the Bank’s statement of comprehensive income.

The sensitivity of the statement of comprehensive income is the effect of the assumed changes in interest rates on the profit or loss for a year, based on the variable and fixed rate financial assets and financial liabilities held.

2015 2014

Change in interest

rates%

Sensitivity of profit or

lossUS$

Sensitivity of capital

US$

Change in interest

rates%

Sensitivity of profit or

lossUS$

Sensitivity of capital

US$

Currency:USD +6 3,914,104 3,914,104 +6 4,763,928 4,763,928USD +4 2,609,402 2,609,402 +4 3,175,952 3,175,952USD +2 1,304,701 1,304,701 +2 1,587,976 1,587,976USD -2 (1,304,701) (1,304,701) -2 (1,587,976) (1,587,976)USD -4 (2,609,402) (2,609,402) -4 (3,175,952) (3,175,952)USD -6 (3,914,104) (3,914,104) -6 (4,763,928) (4,763,928)

89

Financial Reporting

Interest rate repricing and gap analysis The table below analyses the Bank’s interest rate risk exposure on assets and liabilities. The financial assets and liabilities are categorised by the earlier of contractual repricing or maturity dates.



3 months to 1 year

1 year to 5 years

Over 5 years Total

TOTAL POSITION

At 28 February 2015

Assets:

Cash and cash equivalents - - - - 23,755,668 23,755,668 Financial assets at fair value through profit or loss - - - - 14,538,537 14,538,537Loans and advances to customers 39,836,416 2,768,796 672,577 2,107,766 14,161,620 59,547,175Loans and advances relating to furniture loans 3,292,051 - - - - 3,292,051Financial assets held to maturity - - 15,522,683 18,177,165 - 33,699,848 Other receivables - - - - 5,032,109 5,032,109Investment properties - - - - 3,959,860 3,959,860 Property and equipment - - - - 3,430,267 3,430,267Intangible assets - - - - 5,692,934 5,692,934 Deferred tax asset - - - - 11,687,314 11,687,314

43,128,467 2,768,796 16,195,260 20,284,931 82,258,309 164,635,763

Liabilities and equity:

Deposits due to banks and customers 58,180,228 29,505,084 - - - 87,685,312Loans and borrowings 181,500 4,600,800 2,517,000 1,541,000 - 8,840,300 Provisions - - - - 788,389 788,389 Other liabilities - - - - 3,815,499 3,815,499Equity - - - - 63,506,263 63,506,263

58,361,728 34,105,884 2,517,000 1,541,000 68,110,151 164,635,763

Interest rate repricing gap (15,233,261) (31,337,088) 13,678,260 18,743,931 14,148,158 -

Cumulative gap (15,233,261) (46,570,349) (32,892,089) (14,148,158) - -

90






3 months to 1 year

1 year to 5 years

Over 5 years Total

TOTAL POSITION

At 28 February 2014

Assets:

Cash and cash equivalents - - - - 19,118,215 19,118,215 Financial assets at fair value through profit or loss - - - - 20,750,864 20,750,864 Loans and advances to customers 27,958,699 139,393 1,262,120 27,933,089 - 57,293,301 Loans and advances relating to furniture loans - - - 10,319,007 - 10,319,007 Financial assets held to maturity - - - 4,088,444 - 4,088,444 Other receivables - - - - 3,243,770 3,243,770 Investment properties - - - - 3,276,586 3,276,586 Property and equipment - - - - 4,571,613 4,571,613 Intangible assets - - - - 5,587,482 5,587,482 Deferred tax asset - - - - 10,497,295 10,497,295

27,958,699 139,393 1,262,120 42,340,540 67,045,825 138,746,577

Liabilities and equity:

Deposits due to banks and customers 45,622,074 16,497,596 - - - 62,119,670 Loans and borrowings 699,442 437,879 1,170,486 - - 2,307,807 Provisions - - - - 626,365 626,365 Other liabilities - - - - 1,892,751 1,892,751 Equity - - - - 71,799,984 71,799,984

46,321,516 16,935,475 1,170,486 - 74,319,100 138,746,577

Interest rate repricing gap (18,362,817) (16,796,082) 91,634 42,340,540 (7,273,275) -

Cumulative gap (18,362,817) (35,158,899) (35,067,265) 7,273,275 - -

Foreign currency exchange rate risk Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange

rates. In accordance with the Bank’s policy, positions are monitored on a daily basis and hedging strategies are used to ensure positions are maintained within established limits. In view of the Bank’s minimal exposures to other currencies in the financial periods presented, the impact of currency fluctuations with the United States Dollar are not anticipated to have a significant impact on the Bank’s profit or loss and capital.

Operational Risk Operational risk is the risk of loss arising from systems failure, human error, fraud or external events. When

controls fail to operate effectively, operational risks can cause damage to reputation, have legal or regulatory implications, or lead to financial loss. The Bank cannot expect to eliminate all operational risks, but it endeavours to manage these risks through a control framework and by monitoring and responding to potential risks. Controls include effective segregation of duties, access, authorisation and reconciliation procedures, staff education and assessment processes, such as the use of internal audit.

Compliance Risk Compliance risk is the current and prospective risk to earnings or capital arising from violations of, or non-conformance

with, law, rules, regulations, prescribed practices, internal policies, and procedures, or ethical standards. This risk exposes the institution to fines and payment of damages. Compliance risk can lead to diminished reputation, limited business opportunities, reduced expansion potential, and an inability to enforce contracts. The Internal Audit and the Risk Department ensure that the Bank fully complies with all relevant laws and regulations.

91

Financial Reporting

Reputational Risk Reputational risk is the current and prospective impact on earnings and capital arising from negative public

opinion. This affects the institution’s ability to establish new relationships or services or continue servicing existing relationships. This risk may expose the institution to litigation, financial loss, or a decline in its customer base. The Bank has a Business Development department whose mandate is to manage this risk.

37 CAPITAL MANAGEMENT - IN RESPECT OF BANKING OPERATIONS

The objective of the Bank’s capital management is to ensure that it complies with the Reserve Bank of Zimbabwe (RBZ) requirements. In implementing the current capital requirements, the RBZ requires the Bank to maintain a prescribed ratio of total capital to total risk weighted assets. Risk weighted assets are arrived at by applying the appropriate risk factor as determined by the RBZ to the monetary value of the various assets as they appear on the Bank’s statement of financial position.

Regulatory capital consists of: - Tier 1 Capital (“the core capital”), which comprises of share capital, share premium, retained earnings (including

the current year profit or loss), the statutory reserve and other equity reserves. - Tier 2 Capital (“supplementary capital”), which includes subordinated term debt, revaluation reserves and

portfolio provisions. The core capital shall comprise not less than 50% of the capital base and portfolio provisions are limited to 1.25%

of total risk weighted assets. - Tier 3 Capital (“tertiary capital”) relates to an allocation of capital to meet market and operational risks.

The Bank’s regulatory capital position was as follows:

All figures in US$ 2015 2014Share capital 4,077 4,077 Share premium 106,317,629 106,317,629 Retained earnings (48,042,962) (36,434,372)Deferred tax asset (11,687,314) -

46,591,430 69,887,334

Less: Capital allocated for market and operational risk (2,400,917) (7,778,045) Advances to insiders (1,774,997) (1,753,119)Guarantees to insiders* (88,389) (23,300,000)

Tier 1 capital 42,327,127 37,056,170

Tier 2 capital 5,227,519 1,912,650 Non-distributable reserve 26,856 26,856 Portfolio provisions 5,200,663 1,885,794

Total Tier 1 and 2 capital 47,554,646 38,968,820

Tier 3 capital (sum of market and operational risk capital) 2,400,917 7,778,045

Total Capital Base 49,955,563 46,746,865

141,325,266 142,527,572

Tier 1 ratio 30% 26%Tier 2 ratio 4% 1%Tier 3 ratio 1% 5%Total capital adequacy ratio 35% 32%RBZ minimum requirement 12% 12%

92


37 CAPITAL MANAGEMENT - IN RESPECT OF BANKING OPERATIONS (continued) *In December 2013, the Bank provided a guarantee facility to Econet Wireless Zimbabwe Limited, its holding

company, and another to Econet Wireless (Private) Limited, a fellow subsidiary, as security for loan facilities of $20 million and $8 million, respectively, which were obtained from Afrexim Bank. The loan facilities have a tenor of 12 months, with monthly repayments of capital and interest. In line with banking regulations governing the treatment of bank exposures to insiders, the Bank took the prudent approach of reflecting the guarantee facility amounts remaining as a reduction to its core capital at 28 February 2014. The amount of the bank guarantees however reduces on a monthly basis in line with Econet Wireless Zimbabwe Limited and Econet Wireless (Private) Limited’s loan repayments to Afrexim Bank, resulting in a corresponding decrease to the reduction in core capital emanating from the guarantees advanced to insiders. As at 28 February 2015, the guarantee had expired.

38 OPERATING LEASE ARRANGEMENTS 38.1 Leasing arrangements Operating leases include leases of certain buildings and sites where the Group’s base stations are located. The

remaining lease terms vary between 4 months and 8 years. Various options exist for the Group to renew the leasing arrangements on expiry.


38.2 Payments recognised as an expenseMinimum lease payments 6,241,007 3,412,798

38.3 Non-cancellable lease commitmentsNot later than one year 5,983,462 6,304,543 Later than one year and not later than five years 17,951,563 14,813,035 Later than five years 624,786 5,739,852

24,559,811 26,857,430

39 GOING CONCERN The Directors have assessed the ability of the company to continue operating as a going concern and believe that

the preparation of these financial statements on a going concern basis is still appropriate.

40 BORROWING POWERS In terms of the Company’s Articles of Association, the directors may exercise the powers of the Company to

borrow up to 200% of the aggregate of:

-the issued share capital and share premium or stated capital of the Company and: -the distributable and non-distributable reserves, including unappropriated profits of the Company reduced by any

adverse amount reflected in the statement of comprehensive income, excluding: - goodwill - revaluation reserves arising prior to 28 February of each year - provision for taxation, deferred tax, and any balance standing to the credit of the tax equalisation account.

The current borrowings are within the limit.

41 CAPITAL COMMITMENTS


Authorised and contracted for 72,378,031 139,940,260 Authorised and not contracted for 3,325,270 49,765,045

75,703,301 189,705,305

93

Financial Reporting

The capital expenditure is to be financed from internal cash generation, extended supplier credits and bank credit.

42 CONTINGENT LIABILITIES The Group is regularly subject to an evaluation by tax authorities on its direct and indirect tax filings. The consequence

of such reviews is that disagreements can arise with tax authorities over the interpretation or application of certain tax rules applicable to the Group’s business. Such disagreements may not necessarily be resolved in a manner that is favourable to the Group. Additionally, the resolution of the disputes could result in an obligation to the Group.

43 ACQUISITION OF SUBSIDIARIES 43.1 Acquisition of Steward Health (Private) Limited The Group acquired 100% of the shares of Steward Health (Private) Limited on 1 March 2014. As a result, Steward

Health (Private) Limited was consolidated as a subsidiary from that date. The Group acquired Steward Health (Private) Limited because it enlarges the range of products that can be offered to its clients.

Assets acquired and liabilities assumed The fair values of the identifiable assets and liabilities of Steward Health (Private) Limited as at the date of

acquisition were:

All figures in US$

Fair valuerecognised on

acquisition2015

AssetsProperty, equipment and vehicles 46,223 Inventory 1,582 Available for sale investments 2,072 Trade and other receivables 160,332 Deferred taxation 6,280 Cash and cash equivalents 120,631

337,120 LiabilitiesTrade and other payables (61,805)

(61,805)

Total identifiable net assets at fair value 275,315 Goodwill 224,685 Purchase consideration 500,000

The fair values of trade and other receivables at acquisition date were US$160,332. The gross contractual amounts of trade and other receivables at acquisition date were US$160,332.

All figures in US$


acquisition2015

Purchase consideration: Consideration paidPaid for by treasury shares 366,070 Take-over of debt owed by Steward Health (Private) Limited 133,930

Total consideration 500,000

Analysis of cash flows on acquisition:Net cash acquired with the subsidiary (included in cash flows from investing activities) 120,631 Consideration paid for in cash on acquisition of subsidiary -

Net cash inflow on acquisition of subsidiary 120,631

94


43 ACQUISITION OF SUBSIDIARIES (continued) 43.2 Acquisition of additional interest in Transaction Payment Solutions (Private) Limited On 1 November 2014, the Group acquired an additional 15.7% interest in the voting shares of Transaction Payment

Solutions (Private) Limited, increasing its ownership interest to 100%. Cash consideration of $26 101 was paid to the non-controlling shareholders. Following is a schedule of additional interest acquired in Transaction Payment Solutions (Private) Limited:

Cash consideration paid to non-controlling shareholdersUS$

26,101 Carrying value of the additional interest in Transaction Payment Solutions (Private) Limited 349,864 Difference recognised in retained earnings 375,965

43.3 Goodwill

As at 28 February 2013 6,090,632

Movements -

As at 28 February 2014 6,090,632

Acquisition of subsidiary 224,685 Impairment of Goodwill (224,685)

As at 28 February 2015 6,090,632

Impairment testing of Goodwill The goodwill relates to the investment in Steward Bank.

The Group performed its annual impairment test as at February 2015 and February 2014. The Group considers the relationship between the investment in subsidiary and its net book value, among other factors, when reviewing for indicators of impairment. The pre-tax discount rate applied to cash flow projections is 15% (2014: 15%). As a result of this analysis, management did not identify an impairment of goodwill.

Key assumptions used in value in use calculations and sensitivity to changes in assumptions The calculation of value in use is most sensitive to the following assumptions: - Discount rates

Discount rates Discount rates represent the current market assessment of the risks specific to the Group, taking into consideration

the time value of money and individual risks of the underlying assets that have not been incorporated in the cash flow estimates. The discount rate calculation is based on the specific circumstances of the Group and is derived from its weighted average cost of capital (WACC). The WACC takes into account both debt and equity. The cost of debt is based on the interest-bearing borrowings the Group is obliged to service. Adjustments to the discount rate are made to factor in the specific amount and timing of the future tax flows in order to reflect a pre-tax discount rate.

A rise in pre-tax discount rate to 17% (i.e. +2%) would not result in an impairment. 43.4 Impact of acquisition on results of the Group Included in the profit for the year ended 28 February 2015, is a loss of US$375 660 attributable to Steward Health

(Private) Limited. Revenue for the year includes US$710 359 relating to Steward Health (Private) Limited.

43.5 Compulsory acquisition of remaining non-controlling interest In the prior financial year, the Group acquired the remaining 1.4% of the shares in Steward Bank effectively owning

the bank 100%.

All figures in US$


acquisition2014

Shareholding as at 28 February 2013 98.60%Additional acquisition 1.40%Shareholding as at 28 February 2014 100.00%

The Group paid a total of US$302 859 to the remaining non-controlling interest for this acquisition.

95

Financial Reporting

44 EVENTS AFTER THE REPORTING DATE There have been no material subsequent events.

45 APPROVAL OF FINANCIAL STATEMENTS

The financial statements were approved by the board of directors and authorised for issue on 29 April 2015.

46 COMPANY STATEMENT OF FINANCIAL POSITION

All figures in US$ Note 2015 2014ASSETSNon-current assetsProperty, plant and equipment 622,500 622,500 Investment in subsidiaries 16.1 127,881,312 124,469,861 Available-for-sale investments - 366,070 Investment in associate 18.1 29,816,203 20,768,186 Long term intercompany receivable 16.2 1,886,351 1,886,351

Total non-current assets 160,206,366 148,112,968

Current assets

Short-term inter-company receivables 16.2 - 16,385,901 Other receivables 4,296,056 - Cash and cash equivalents 501,669 792,151 Total currents assets 4,797,725 17,178,052

Total assets 165,004,091 165,291,020


EQUITY

Share capital and reserves (12,654,949) (7,341,861)

LIABILITIES

Non current liabilitiesIntercompany payables 16.3 177,242,771 154,109,695

Current liabilitiesShort term portion of long term borrowings - 16,385,901 Other payables 416,269 2,137,285

Total current liabilities 416,269 18,523,186

Total equity and liabilities 165,004,091 165,291,020

Dr J. Myers D. Mboweni K. V. ChirairoCHAIRMAN OF THE BOARD CHIEF EXECUTIVE OFFICER F INANCE DIRECTOR 29 April 2015

96

Policy note IFRS/IAS reference Content

A IAS 1(revised) Presentation of financial statements: General information and functional currency

B IAS 1(revised) Basis of preparation

C IAS 8 Change in accounting policy, adoption of new and revised Standards

D IAS 21 Effects of changes in foreign exchange rates

E IFRS 3, 10 Business combinations and goodwill

F IAS 28 Investment in associates and joint ventures

G IAS 38 Intangible assets

H IAS 23 Borrowing costs

I IAS 16 Property, plant and equipment

J IAS 40 Investment properties

K IAS 36 Impairment of property, plant and equipment and intangible assets

L IAS 17 Leases

M IAS 2 Inventories

N IAS 18 Revenue

O Other Income

P IAS 12 Income taxes

Q IAS 19 Employee benefits and retirement benefits

R IAS 1(revised) Current versus non-current classification

S IFRS 13 Fair value measurements

T IFRIC 17 Cash dividend and non-cash distribution to equity holders of the parent

U IAS 39, IFRS 7 Financial instruments – initial recognition, subsequent measurement and disclosure

V IAS 7 Cash and short term deposits

W IAS 32 Treasury shares

X IAS 37 Provisions

Y Fiduciary assets

Z IFRS 8 Operating segments

AA IAS 1 (Revised) Significant assumptions and key sources of estimation uncertainty

Policy Notes to the Consolidated Financial StatementsFor the year ended 28 February 2015

97

Financial Reporting

A GENERAL INFORMATION

A.1 The Company The Company was incorporated in Zimbabwe on

4 August 1998 and its main operating subsidiary, Econet Wireless (Private) Limited, on 23 August 1994. The address of its registered office and principal place of business is Econet Park, 2 Old Mutare Road, Msasa, Harare. The main business of the Group is mobile telecommunications and related overlay services. The ultimate holding company for the Group is Econet Wireless Global Limited which is incorporated in Mauritius. Except where specific reference is made to “the Company”, the notes disclosed in these financial statements pertain to the Group.

A.2 Currency of Account These consolidated financial statements are

presented in United States Dollars (US$) being the functional and presentation currency of the primary economic environment in which the Group operates.

B.1 BASIS OF PREPARATION The Group’s financial statements have been

prepared in accordance with International Financial Reporting Standards (IFRS), the International Financial Reporting Interpretations Committee (IFRIC) and the Zimbabwe Companies Act (Chapter 24:03) and related statutory instruments. With the exceptions noted below in policy Note C1 “New and Revised Standards and Interpretations-Adopted”, the accounting policies set out below have been consistently applied from the previous year and through the current year.

B.2 BASIS OF CONSOLIDATION The consolidated financial statements comprise

the financial statements of the Group and its subsidiaries as at 28 February 2015. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee if, and only if, the Group has:

rights that give it the current ability to direct the relevant activities of the investee)

from its involvement with the investee

investee to affect its returns

When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

other vote holders of the investee

arrangements

voting rights

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary.

Profit or loss and each component of Other Comprehensive Income (OCI) are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.

If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, non-controlling interest and other components of equity while any resultant gain or loss is recognised in profit or loss. Any investment retained is recognised at fair value.

C NEW AND REVISED STANDARDS

C.1 New and Revised Standards and Interpretations - Adopted

The Group applied for the first time certain standards and amendments, which were effective for the Group from 1 March 2014.

The nature and the impact of each new standard and amendment is described below:

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Policy Notes to the Consolidated Financial Statements (continued) For the year ended 28 February 2015

IFRS 10, IFRS 12 and IAS 27 Investment Entities (Amendments)

The investment entities amendments provide an exception to the consolidation requirement for entities that meet the definition of an investment entity.

The key amendments include:

of the definition and consider whether it has four typical characteristics, in order to qualify as an investment entity

circumstances, including its purpose and design, in making its assessment

investments in subsidiaries at fair value through profit or loss in accordance with IFRS 9 (or IAS 39, as applicable), except for investments in subsidiaries that provide services that relate to the entity’s investment activities, which must be consolidated

its investment in another controlled investment entity at fair value

investment entity is not permitted to retain the fair value accounting that the investment entity subsidiary applies to its controlled investees

funds, unit trusts and others that do not qualify as investment entities, the existing option in IAS 28, to measure investments in associates and joint ventures at fair value through profit or loss, is retained.

The amendments must be applied retrospectively, subject to certain transition reliefs.

Early application is permitted and must be

disclosed.

The concept of an investment entity is new in IFRS. The amendments represent a significant change for investment entities, which are currently required to consolidate investees that they control. Significant judgement of facts and circumstances may be required to assess whether an entity meets the definition of investment entity.

These amendments have no impact on the Group, since none of the entities in the Group qualifies to be an investment entity under IFRS 10.

IAS 32 Offsetting Financial Assets and Financial Liabilities — Amendments to IAS 32 Effective for annual periods beginning on or after 1 January 2014.

The amendments to IAS 32 clarify the meaning of “currently has a legally enforceable right to set-off”. The amendments also clarify the application of the IAS 32 offsetting criteria to settlement systems (such as central clearing house systems), which apply gross settlement mechanisms that are not simultaneous.

The amendments clarify that rights of set-off must not only be legally enforceable in the normal course of business, but must also be enforceable in the event of default and the event of bankruptcy or insolvency of all of the counterparties to the contract, including the reporting entity itself. The amendments also clarify that rights of set-off must not be contingent on a future event.

The IAS 32 offsetting criteria require the reporting entity to intend either to settle on a net basis, or to realise the asset and settle the liability simultaneously. The amendments clarify that only gross settlement mechanisms with features that eliminate or result in insignificant credit and liquidity risk and that process receivables and payables in a single settlement process or cycle would be, in effect, equivalent to net settlement and, therefore, meet the net settlement criterion.

The amendments must be applied retrospectively. Early application is permitted. If an entity chooses to early adopt, it must disclose that fact and also make the disclosure required by IFRS 7 Disclosures — Offsetting Financial Assets and Financial liabilities — Amendments to IFRS 7.

These amendments have no impact on the Group, since none of the entities in the Group has any offsetting arrangements.

IAS 39 Novation of Derivatives and Continuation of Hedge Accounting — Amendments to IAS

The amendments provide an exception to the requirement to discontinue hedge accounting in certain circumstances in which there is a change in counterparty to a hedging instrument in order to achieve clearing for that instrument. The amendments cover novations:

regulations, or the introduction of laws or regulations

instrument agree that one or more clearing counterparties replace the original counterparty to become the new counterparty to each of the parties

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terms of the original derivative other than changes directly attributable to the change in counterparty to achieve clearing

All of the above criteria must be met to continue hedge accounting under this exception.

The amendments cover novations to central counterparties, as well as to intermediaries such as clearing members, or clients of the latter that are themselves intermediaries.

For novations that do not meet the criteria for the exception, entities have to assess the changes to the hedging instrument against the de-recognition criteria for financial instruments and the general conditions for continuation of hedge accounting.

The amendments must be applied retrospectively. Early application is permitted and must be disclosed. The Group currently has no derivatives and therefore there is no significant impact on the Group financial statements.

IFRIC 21 Levies IFRIC 21 is applicable to all levies other than

outflows that are within the scope of other standards (e.g., IAS 12 Income Taxes) and fines or other penalties for breaches of legislation. Levies are defined in the interpretation as outflows of resources embodying economic benefits imposed by governments on entities in accordance with legislation.

The interpretation clarifies that an entity recognises a liability for a levy when the activity that triggers payment, as identified by the relevant legislation, occurs. It also clarifies that a levy liability is accrued progressively only if the activity that triggers payment occurs over a period of time, in accordance with the relevant legislation. For a levy that is triggered upon reaching a minimum threshold, the interpretation clarifies that no liability is recognised before the specified minimum threshold is reached.

The interpretation does not address the accounting for the debit side of the transaction that arises from recognising a liability to pay a levy. Entities look to other standards to decide whether the recognition of a liability to pay a levy would give rise to an asset or an expense under the relevant standards.

The interpretation must be applied retrospectively. Early application is permitted and must be disclosed. The interpretation has no impact on the Group as it has applied the recognition principles under IAS 37 Provisions, Contingent Liabilities and Contingent Assets consistent with the requirements of IFRIC 21 in prior years.

C.2 Standards issued but not yet effective at reporting date

IFRS 9 Financial Instruments – classification and measurement

On 24 July 2014, the International Accounting Standards Board (IASB) issued the final version of IFRS 9-Financial Instruments bringing together the classification and measurement, impairment and hedge accounting phases of the IASB’s project to replace IAS 39 Financial Instruments: Recognition and Measurement and all previous versions of IFRS 9. The classification and measurement requirements address specific application issues arising in IFRS 9 (2009) that were raised by preparers, mainly from the financial services industry. The expected credit loss model addresses concerns expressed following the financial crisis that entities recorded losses too late under IAS 39.

IFRS 9 stipulates that financial assets are measured at amortised cost, fair value through profit or loss, or fair value through other comprehensive income, based on both the entity’s business model for managing the financial assets and the financial asset’s contractual cash flow characteristics.

Apart from the ‘own credit risk’ requirements, classification and measurement of financial liabilities is unchanged from existing requirements. IFRS 9 is applicable for annual periods beginning on or after 1 January 2018, but early adoption is permitted. The Group is still assessing the impact of IFRS 9.

IFRS 15 Revenue from Contracts with Customers

The IASB and FASB have issued their joint revenue recognition standard, IFRS 15 Revenue from Contracts with Customers, which replaces all existing IFRS and US GAAP revenue requirements. The core principle of IFRS 15 is that revenue is recognised to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

IFRS 15 establishes a five-step model that will apply to revenue earned from a contract with a customer (with limited exceptions), regardless of the type of revenue transaction or the industry. The standard’s requirements will also apply to the recognition and measurement of gains and losses on the sale of some non-financial assets that are not an output of the entity’s ordinary activities (e.g., sales of property, plant and equipment or intangibles). Extensive disclosures will be required, including disaggregation of total revenue; information about performance obligations;

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changes in contract asset and liability account balances between periods and key judgements and estimates.

The standard is effective for annual periods beginning on or after 1 January 2017, but early adoption is permitted under IFRS. The Group is still assessing the impact of the standard on its contracts with customers.

IAS 16 and IAS 38 Clarification of Acceptable Methods of Depreciation and Amortisation

The IASB issued amendments to IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets prohibiting the use of revenue-based depreciation methods for fixed assets and limiting the use of revenue-based amortisation methods for intangible assets. The amendments are effective prospectively. The amendment becomes effective for annual periods beginning on or after 1 January 2016 and will not have any impact on the Group as depreciation is not based on revenue methods.

IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture – Amendments to IFRS 10 and IAS 28

The amendments address the conflict between IFRS 10 and IAS 28 in dealing with the loss of control of a subsidiary that is sold or contributed to an associate or joint venture. The amendments clarify that the gain or loss resulting from the sale or contribution of assets that constitute a business, as defined in IFRS 3 Business Combinations, between an investor and its associate or joint venture, is recognised in full. Any gain or loss resulting from the sale or contribution of assets that do not constitute a business, however, is recognised only to the extent of unrelated investors’ interests in the associate or joint venture.

The amendments are effective for annual periods beginning on or after 1 January 2016 and must be applied prospectively. The Group will consider the amendments when they become effective.

IFRS 11 Accounting for Acquisitions of Interests in Joint Operations – Amendments to IFRS 11

The amendments require an entity acquiring an interest in a joint operation in which the activity of the joint operation constitutes a business to apply, to the extent of its share, all of the principles in IFRS 3, and other IFRSs, that do not conflict with the requirements of IFRS 11. Furthermore, entities are required to disclose the information required in those IFRSs in relation to business combinations.

The amendments also apply to an entity on the formation of a joint operation if, and only if, an

existing business is contributed by the entity to the joint operation on its formation. Furthermore, the amendments clarify that for the acquisition of an additional interest in a joint operation in which the activity of the joint operation constitutes a business; previously held interests in the joint operation must not be remeasured if the joint operator retains joint control.

The amendments are applied prospectively and are effective for annual periods beginning on or after 1 January 2016. The Group will consider the amendments when it enters into transactions where the amendments are applicable.

Applying the Consolidation Exception - Amendments to IFRS 10, IFRS 12 and IAS 28

The amendments address issues that have arisen in applying the investment entities exception under IFRS 10. The amendments to IFRS 10 clarify that the exemption from presenting consolidated financial statements applies to a parent entity that is a subsidiary of an investment entity, when the investment entity measures all of its subsidiaries at fair value. Furthermore, the amendments to IFRS 10 clarify that only a subsidiary of an investment entity that is not an investment entity itself and that provides support services to the investment entity is consolidated. All other subsidiaries of an investment entity are measured at fair value.

The amendments to IAS 28 allow the investor, when applying the equity method, to retain the fair value measurement applied by the investment entity associate or joint venture to its interests in subsidiaries.

The amendments are effective for annual periods beginning on or after 1 January 2016 and are not expected to affect the Group as no companies within the Group meet the definition of an investment entity.

IAS 19 Defined Benefit Plans: Employee Contributions — Amendments to IAS 19

IAS 19 requires an entity to consider contributions from employees or third parties when accounting for defined benefit plans. IAS 19 requires such contributions that are linked to service to be attributed to periods of service as a negative benefit.

The amendments clarify that, if the amount of the contributions is independent of the number of years of service, an entity is permitted to recognise such contributions as a reduction in the service cost in the period in which the service is rendered, instead of allocating the contributions to the periods of service.

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The amendments are effective for annual periods beginning on or after 1 July 2014 and are not expected to affect the Group as it does not have defined benefit schemes.

IAS 27 Equity Method in Separate Financial Statements – Amendments to IAS 27

The amendments to IAS 27 Separate Financial Statements allow an entity to use the equity method as described in IAS 28 to account for its investments in subsidiaries, joint ventures and associates in its separate financial statements. Therefore, an entity must account for these investments either:

The entity must apply the same accounting for each category of investments.

The amendments must be applied retrospectively and are effective for year ends beginning on or after 1 January 2016 with early adoption permitted. The parent entity early adopted the amendment and investments in associates are being accounted for using the equity method in the separate financial statements.

IAS 1 Disclosure Initiative – Amendments to IAS 1

The amendments to IAS 1 Presentation of Financial Statements clarify, rather than significantly change, existing IAS 1 requirements.

The amendments clarify:

of profit or loss and OCI and the statement of financial position may be disaggregated.

in which they present the notes to financial statements

ventures accounted for using the equity method must be presented in aggregate as a single line item, and classified between those items that will or will not be subsequently reclassified to profit or loss. Furthermore, the amendments clarify the requirements that apply when additional sub-totals are presented in the Statement of Financial Position and the statement(s) of profit or loss and other comprehensive income.

The amendments are effective for annual periods beginning on or after 1 January 2016 and early application is encouraged.

C.3 Improvements to existing standards

2010- 2012 annual cycle of improvements (issued December 2013)

In December 2013, the IASB issued two cycles of Annual Improvements to IFRS. The changes are effective from 1 July 2014 either prospectively or retrospectively. A summary of applicable amendments is described below:

IFRS 3 Business Combinations - Scope for joint ventures

The amendment clarifies that joint arrangements are outside the scope of IFRS 3, not just joint ventures, and the scope exception applies only to the accounting in the financial statements of the joint arrangement itself. Amendment will be considered by the Group when it becomes effective to the extent applicable.

IFRS 3 Business Combinations - Accounting for contingent consideration in a business combination

Contingent consideration in a business acquisition that is not classified as equity is subsequently measured at fair value through profit or loss whether or not it falls within the scope of IFRS 9 Financial Instruments. The amendment will not affect the Group as it does not have any contingent considerations.

IFRS 8 Operating Segments - Aggregation of operating segments and reconciliation of the total of the reportable segment assets to the entity’s total assets

Operating segments may be combined/ aggregated if they are consistent with the core principle of the standard, if the segments have similar economic characteristics and if they are similar in other qualitative respects. If they are combined, the entity must disclose the economic characteristics (e.g., sales and gross margins) used to assess whether the segments are ‘similar’. The amendment will not have a material impact on the Group financial statements as no segments are combined.

Reconciliation of the total of the reportable segment assets to the entity’s total assets

The reconciliation of segment assets to total assets is only required to be disclosed if the reconciliation is reported to the chief operating decision maker, similar to the required disclosure for segment liabilities. The amendment will not have a material impact on the Group financial statements as the entity provides the reconciliation to the Chief Decision maker and a reconciliation is included under Note 1.

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IFRS 13 Fair value measurement - Portfolio exception

The amendment clarifies that the portfolio exception in IFRS 13 can be applied to financial assets, financial liabilities and other contracts. The amendment is not expected to affect the Group as it does not have financial assets, financial liabilities and other contracts that meet this criteria.

IAS 24 Related party disclosures - Key management personnel

The amendment clarifies that a management entity (an entity that provides key management personnel services) is a related party subject to the related party disclosures. In addition, an entity that uses a management entity is required to disclose the expenses incurred for management services. The amendment will not affect the Group as it has no management entity providing key management services to the Group.

IAS 40 Investment property - Clarifying the interrelationship of IFRS 3 and IAS 40 when classifying investment property or owner occupied property - Amendment to IAS 40

The description of ancillary services in IAS 40 differentiates between investment property and owner occupied property. IFRS 3 is used to determine if the transaction is the purchase of an asset or a business combination. The Group will consider the amendment when it enters into business combination transactions where judgement needs to be applied to determine whether the transaction is a purchase of a business or an asset.

2012 – 2014 Annual improvement cycle (issued September 2014)

In September 2014, the International Accounting Standards Board (“IASB”) issued Annual Improvements to IFRSs 2012-2014 cycle, which contains five amendments to four standards, excluding consequential amendments. The amendments are effective for annual periods beginning on or after 1 January 2016. Below is a list of those amendments.

IFRS 7 – Servicing Contracts Paragraphs 42A - H of IFRS 7 require an entity to

provide disclosures for any continuing involvement in a transferred asset that is derecognised in its entirety. The amendment clarifies that a servicing contract that includes a fee can constitute continuing involvement in a financial asset. An entity must assess the nature of the fee and arrangement against the guidance for continuing involvement in paragraphs IFRS 7.B30 and IFRS 7.42C in order to assess whether the disclosures are required.

The Group will consider the amendment, where applicable, when it becomes effective.

IFRS 7 – Applicability of the offsetting disclosures to condensed interim financial statements.

In December 2011, IFRS 7 was amended to add guidance on offsetting of financial assets and financial liabilities. In the effective date and transition for that amendment, paragraph 44R of IFRS 7 states that “An entity shall apply those amendments for annual periods beginning on or after 1 January 2013 and interim periods within those annual periods.

The interim disclosure standard, IAS 34, does not reflect this requirement, however, and it is not clear whether those disclosures are required in the condensed interim financial report.

The amendment removes the phrase ‘and interim periods within those annual periods’ from paragraph 44R, clarifying that these IFRS 7 disclosures are not required in the condensed interim financial report. However, the IASB noted that IAS 34 requires an entity to disclose ‘an explanation of events and transactions that are significant to an understanding of the changes in financial position and performance of the entity since the end of the last annual reporting period’. Therefore, if the IFRS 7 disclosures provide a significant update to the information reported in the most recent annual report, the IASB would expect the disclosures to be included in the entity’s condensed interim financial report.

The Group will consider the amendments in preparing its interim financial statements when they become effective.

IAS 34 Disclosure of information ‘elsewhere in the interim financial report’.

IAS 34 requires entities to disclose information in the notes to the interim financial statements ‘if not disclosed elsewhere in the interim financial report’. However, it is unclear what the IASB means by ‘elsewhere in the interim financial report’.

The amendment states that the required interim disclosures must either be in the interim financial statements or incorporated by cross-reference between the interim financial statements and wherever they are included within the greater interim financial report (e.g., in the management commentary or risk report).

The IASB specified that the other information within the interim financial report must be available to users on the same terms as the interim financial statements and at the same time. If

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users do not have access to the other information in this manner, then the interim financial report is incomplete.

The Group will consider the amendments, when they become effective, when preparing its interim financial report.

IFRS 5 – Changes in methods of disposal Assets (or disposal groups) are generally disposed

of either through sale or through distribution to owners. The amendment to IFRS 5 clarifies that changing from one of these disposal methods to the other should not be considered to be a new plan of disposal, rather it is a continuation of the original plan. There is therefore no interruption of the application of the requirements in IFRS 5.

The amendment must be applied prospectively to changes in methods of disposal that occur in annual periods beginning on or after 1 January 2016, with earlier application permitted.

The Group will consider the amendment, if applicable, when it becomes effective.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

D FOREIGN CURRENCIES The Group’s consolidated financial statements are

presented in United States dollars, which is also the parent company’s functional currency. For each entity the Group determines the functional currency and items included in the financial statements of each entity are measured using that functional currency.

Transactions in foreign currencies are initially recorded by the Group’s entities at their respective functional currency spot rates at the date the transaction first qualifies for recognition. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date. Differences arising on settlement or translation of monetary items are recognised in profit or loss.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined.

The gain or loss arising on re-translation of non-monetary items is treated in line with the recognition of gain or loss on change in fair value

of the item i.e. translation differences on items whose fair value gain or loss is recognised in other comprehensive income or profit or loss is also recognised in other comprehensive income or profit or loss.

E BUSINESS COMBINATIONS AND GOODWILL Business combinations are accounted for using

the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred measured at acquisition date fair value and the amount of any non-controlling interests in the acquiree. For each business combination, the Group elects whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs are expensed as incurred and included in administrative expenses.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

If the business combination is achieved in stages, any previously held equity interest is remeasured at its acquisition date fair value and any resulting gain or loss is recognised in profit or loss.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Contingent consideration classified as an asset or liability that is a financial instrument and within the scope of IAS 39 Financial Instruments: Recognition and Measurement, is measured at fair value with changes in fair value recognised either in profit or loss or as a change to OCI. If the contingent consideration is not within the scope of IAS 39, it is measured in accordance with the appropriate IFRS. Contingent consideration that is classified as equity is not re-measured and subsequent settlement is accounted for within equity.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests, and any previous interest held, over the net identifiable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Group re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure

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the amounts to be recognised at the acquisition date. If the reassessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognised in profit or loss.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

Where goodwill has been allocated to a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the disposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal. Goodwill disposed in these circumstances is measured based on the relative values of the disposed operation and the portion of the cash-generating unit retained.

F INVESTMENTS IN ASSOCIATES An associate is an entity over which the Group has

significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not control or joint control over those policies.

The considerations made in determining significant influence are similar to those necessary to determine control over subsidiaries.

The Group’s investment in its associate are accounted for using the equity method.

Under the equity method, the investment in an associate or a joint venture is initially recognised at cost. The carrying amount of the investment is adjusted to recognise changes in the Group’s share of net assets of the associate since the acquisition date. Goodwill relating to the associate is included in the carrying amount of the investment and is not tested for impairment individually.

The statement of comprehensive income reflects the Group’s share of the results of operations of the associate. Any change in OCI of those investees is presented as part of the Group’s OCI. In addition, when there has been a change recognised directly in the equity of the associate, the Group recognises its share of any changes, when applicable, in the statement of changes in equity. Unrealised gains and losses resulting from transactions between the Group and the associate are eliminated to the extent of the interest in the associate.

The aggregate of the Group’s share of profit or loss of an associate is shown on the face of the statement of comprehensive income and represents profit or loss after tax and non-controlling interests in the subsidiaries of the associate.

The financial statements of the associate are prepared for the same reporting period as the Group.

After application of the equity method, the Group determines whether it is necessary to recognise an impairment loss on its investment in its associate. At each reporting date, the Group determines whether there is objective evidence that the investment in the associate is impaired. If there is such evidence, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value, and then recognises the loss in the Statement of Comprehensive Income.

Upon loss of significant influence over the associate, the Group measures and recognises any retained investment at its fair value. Any difference between the carrying amount of the associate upon loss of significant influence and the fair value of the retained investment and proceeds from disposal is recognised in profit or loss.

G INTANGIBLE ASSETS Intangible assets acquired separately are measured

on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses.

Internally generated intangibles, excluding capitalised development costs, are not capitalised and the related expenditure is reflected in profit or loss in the period in which the expenditure is incurred.

The useful lives of intangible assets are assessed as either finite or indefinite.

Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period

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or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the statement of comprehensive income in the expense category that is consistent with the function of the intangible assets.

Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

De-recognition An intangible asset shall be de-recognised: (a) on disposal; or (b) when no future economic benefits are

expected from its use or disposal.

Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of comprehensive income when the asset is derecognised.

G.1 Research and development costs Research costs are expensed as incurred.

Development expenditures on an individual project are recognised as an intangible asset when the Group can demonstrate:

intangible asset so that the asset will be available for use or sale

intention to use or sell the asset

economic benefits

the asset

expenditure during development

Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated amortisation and accumulated impairment losses. Amortisation of the asset begins when development is complete and the asset is available for use. It is amortised over the period of expected future benefit. Amortisation is recorded in cost of sales. During the period of development, the asset is tested for impairment annually.

G.2 Licence and Software The Group made upfront payments for the renewal

of its cellular operating licence. The licence was granted for a period of 20 years by the relevant

government agency with the option of renewal at the end of this period. As a result, the licence is assessed as having a finite useful life.

Software comprises software held by Transaction Payment Solutions (Private) Limited, software held by Econet Wireless (Private) Limited, and software held by Steward Bank Limited.

The software and licences are amortised as follows:

- licence held by Econet Wireless (Private) Limited amortised over 20 years.

- software held by Transaction Payment Solutions (Private) Limited is amortised over 2 to 4 years;

- software held by Econet Wireless (Private) Limited is amortised over 5 years; and

- software held by Steward Bank Limited is amortised over 4 years.

H BORROWING COSTS Borrowing costs directly attributable to the

acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

I PROPERTY, PLANT AND EQUIPMENT Capital work in progress, plant and equipment

and land and buildings are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Such cost includes the cost of replacing part of the plant and equipment and borrowing costs for long-term construction projects if the recognition criteria are met. When significant parts of plant and equipment are required to be replaced at intervals, the Group depreciates them separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred. The present value of the expected cost for the decommissioning of an asset after its use is included in the cost of the respective asset if the recognition criteria for a provision are met.

Property, plant and equipment is subsequently measured at cost less subsequent depreciation and accumulated impairment charges. (See Note K on Impairment of PPE.)

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Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets, as follows:

Depreciation is charged to profit or loss. The residual values, useful lives and methods of

depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.

Any item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss when the asset is derecognised.

J INVESTMENT PROPERTIES Investment properties are measured initially at

cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at fair value, which reflects market conditions at the reporting date. Gains or losses arising from changes in the fair values of investment properties are included in profit or loss in the period in which they arise, including the corresponding tax effect. Fair values are determined based on an annual evaluation performed by an accredited external independent valuer.

Investment properties are derecognised either when they have been disposed of or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognised in profit or loss in the period of derecognition.

Transfers are made to (or from) investment property only when there is a change in use. For a transfer from investment property to owner-occupied property, the deemed cost for subsequent accounting is the fair value at the date of change in use. If owner-occupied property becomes an investment property, the Group accounts for such property in accordance with the policy stated under property, plant and equipment up to the date of change in use.

K IMPAIRMENT OF NON-FINANCIAL ASSETS Further disclosures relating to impairment of non-

financial assets are also provided in the following notes:

Note AA

The Group assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (CGU) fair value less costs of disposal and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.

The Group bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Group’s CGUs to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of five years. For longer periods, a long-term growth rate is calculated and applied to project future cash flows after the fifth year.

Impairment losses of continuing operations, including impairment on inventories, are recognised in the statement of comprehensive income in expense categories consistent with the function of the impaired asset.

For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an indication that previously recognised impairment losses no longer exist or have decreased. If such indication exists, the Group estimates the asset’s or CGU’s recoverable amount. A previously recognised impairment loss

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is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the Statement of Comprehensive Income.

Goodwill is tested for impairment annually as at 28 February and when circumstances indicate that the carrying value may be impaired.

Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGUs) to which the goodwill relates. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in future periods.

Intangible assets with indefinite useful lives are tested for impairment annually as at 28 February at the CGU level, as appropriate, and when circumstances indicate that the carrying value may be impaired.

L LEASES The determination of whether an arrangement is

(or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.

Group as a lessee A lease is classified at the inception date as a

finance lease or an operating lease. A lease that transfers substantially all the risks and rewards incidental to ownership to the Group is classified as a finance lease.

Finance leases are capitalised at the commencement of the lease at the inception date fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in finance costs in the statement of comprehensive income.

A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Group will obtain ownership by

the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.

Operating lease payments are recognised as an operating expense in the statement of comprehensive income on a straight-line basis over the lease term.

Group as a lessor Leases in which the Group does not transfer

substantially all the risks and rewards of ownership of an asset are classified as operating leases. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.

The Group only has operating leases, as both lessor and lessee.

M INVENTORIES Inventories are assets (a) held for sale in the

ordinary course of business; (b) in the process of production for such sale; or (c) to be consumed in the production process or the rendering of services. The main categories of inventory recognised in the financial statements are (a) Merchandise comprising calling cards, handsets, accessories and simcards and (b) Spares, stationery and other inventory

Measurement Inventories are measured at the lower of cost or

net realisable value.

Cost comprises all costs necessary to bring the inventories to their present location and condition.

Net realisable value represents the estimated

selling price less all estimated costs incurred in the marketing, selling or distribution, where applicable.

The basis of determining cost is the weighted average method.

Impairment Write downs to net realisable value and inventory

losses are expensed in the period in which they occur. Obsolete and slow moving inventories are identified and written down to their estimated economic or realisable value.

The amount of any reversal of any write-down of inventories, arising from an increase in net realisable value, is accounted for as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.

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N REVENUE RECOGNITION Revenue is recognised to the extent that it is

probable that the economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duty. The Group has concluded that it is the principal in all of its revenue arrangements since it is the primary obligor in all the revenue arrangements, has pricing latitude and is also exposed to inventory and credit risks.

The specific recognition criteria described below must also be met before revenue is recognised.

Telecommunications N.1 Contract products Connection fees Revenue is recognised on the date of activation.

Access charges Revenue from access charges is recognised as

the customers are provided access to the network based on the agreed fixed charges.

Airtime Revenue is recognised on a usage basis.

N.2 Pre-paid products Starter packs Revenue is recognised on the date of purchase

when all risks and rewards associated with the starter-packs are transferred to the purchaser.

Airtime Revenue is recognised when a customer utilises

the airtime, at which point the risks and rewards have been transferred. Upon purchase of an airtime voucher the customer receives the right to make outgoing voice calls, use the short message service, download internet data and other overlay services to the value of the voucher. Revenue is deferred until such a time as the customer uses the airtime.

N.3 Internet services Subscriptions Subscriptions revenue is recognised on a straight-

line basis over the period of the subscription.

Data Services Revenue is recognised on the basis of usage by

the subscriber in accordance with the substance of the agreement.

N.4 Automated transaction services Software and hardware sales

Revenue is recognised when goods are delivered and ownership has passed.

Service revenues Revenue is recognised on the accrual basis in

accordance with the substance of the agreement.

N.5 Interconnect services Interconnect services revenue is recognised when

the service is rendered.

N.6 Bundled Products Post-paid and prepaid products with multiple

deliverables are defined as multiple element arrangements.

Post-paid products typically include the sale of a handset, activation fee and a service contract; and prepaid products include a subscriber identification module (SIM) card and airtime. These arrangements are divided into separate units of accounting, and revenue is recognised through application of the residual value method. In applying the residual value method, an estimate of the stand-alone selling price of a good or service is made by reference to the total transaction price less the sum of the observable stand-alone selling prices of other goods or services promised in the contract (the residual value).

N.7 Other revenue N.7.1 Sale of goods Revenue from the sale of goods is recognised

when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on delivery of the goods. Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates. The Group does not provide any extended warranties or maintenance contracts to its customers.

N.7.2 Interest income and expense For all financial instruments measured at

amortised cost, interest-bearing financial assets classified as available-for-sale, and financial instruments designated at fair value through profit or loss, interest income or expense is recorded using the effective interest (EIR) method. EIR is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or financial liability. The calculation takes into account all contractual terms of the financial instrument (for example, prepayment options) and includes any fees or incremental costs that are directly attributable to the instrument and are an integral part of the EIR, but not future credit losses.

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The carrying amount of the financial asset or financial liability is adjusted if the Bank revises its estimates of payments or receipts. The adjusted carrying amount is calculated based on the original EIR and the change in carrying amount is recorded as ’Interest income’ for financial assets and ’Interest expense’ for financial liabilities. However, for a reclassified financial asset for which the Bank subsequently increases its estimates of future cash receipts as a result of increased recoverability of those cash receipts, the effect of that increase is recognised as an adjustment to the EIR from the date of the change in estimate.

Once the recorded value of a financial asset or a group of similar financial assets has been reduced due to an impairment loss, interest income continues to be recognised using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss.

The bank earns fee and commission income from a diverse range of services it provides to its customers. Fee income can be divided into the following two categories:

Fee income earned from services that are provided over a certain period of time

Fees earned for the provision of services over a period of time are accrued over that period. These fees include commission income and asset management, custody and other management and advisory fees.

Loan commitment fees for loans that are likely to be drawn down and other credit related fees are deferred (together with any incremental costs) and recognised as an adjustment to the EIR on the loan. When it is unlikely that a loan will be drawn down, the loan commitment fees are recognised over the commitment period on a straight line basis.

Fee income from providing transactions services

Fees arising from negotiating or participating in the negotiation of a transaction for a third party, such as the arrangement of the acquisition of shares or other securities or the purchase or sale of businesses, are recognised on completion of the underlying transaction. Fees or components of fees that are linked to a certain performance are recognised after fulfilling the corresponding criteria.

N.7.4 Medical aid income Contribution income Contribution income is recognised in the

accounting period in which contributions are received and membership is granted.

Fees Fees are recognised as revenue in the accounting

period in which the services were rendered, by reference to the completion of the specific transaction assessed on the basis of the actual service provided as a proportion of the total services to be provided.

N.7.5 Insurance income Premium income Gross premiums comprise the premiums on

contracts entered into during the year. Premiums written include adjustments to premiums written in prior periods. Premium income arising from funeral cover is recognised when paid.

O OTHER INCOME

O.1 Net trading income from financial instruments Results arising from trading activities include all

gains and losses from changes in fair value and related interest income or expense and dividends for financial assets and financial liabilities ‘held for trading’.

O.2 Dividend Income Dividend income is recognised when the Group’s

right to receive the payment is established, which is generally when shareholders approve the dividend.

O.3 Rental income Rental income arising from operating leases

on investment properties is accounted for on a straight-line basis over the lease terms and is included in other income in the statement of comprehensive income.

P TAXES

P.1 Current income tax Current income tax assets and liabilities are

measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date in the country where the Group operates and generates taxable income.

Current income tax relating to items recognised directly in equity is recognised in equity and not in the statement of comprehensive income. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

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P.2 Deferred tax Deferred tax is provided using the liability method

on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.

Deferred tax liabilities are recognised for all taxable temporary differences, except:

from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss

differences associated with investments in subsidiaries, associates and interests in joint ventures, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future

Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except:

to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss

differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to

be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at that date, are recognised subsequently if new information about facts and circumstances change. The adjustment is either treated as a reduction in goodwill (as long as it does not exceed goodwill) if it was incurred during the measurement period or recognised in profit or loss.

P.3 Value Added Tax (VAT) Expenses and assets are recognised net of the

amount of sales tax, except:

on a purchase of assets or services is not recoverable from the taxation authority, in which case, the tax is recognised as part of the cost of acquisition of the asset or as part of the expense item, as applicable

with the amount of Value Added Tax included

The net amount of VAT recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position.

Q EMPLOYEE BENEFITS Employee benefits are all forms of consideration

given in exchange for services rendered by employees or for the termination of employment.

The classification, recognition and measurement of these employee benefits is as follows;

a) Short-term employee benefits Short-term employee benefits are employee

benefits (other than termination benefits) that

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are expected to be settled wholly before twelve months after the end of the annual reporting period in which the employees render the related service. The Group’s short term employee benefits comprise remuneration in the form of salaries, wages, bonuses, employee entitlement to leave pay and medical aid.

The undiscounted amount of all short-term employee benefits expected to be paid in exchange for service rendered are recognised as an expense or as part of the cost of an asset during the period in which the employee renders the related service. The Group recognises the expected cost of bonuses only when the Group has a present legal or constructive obligation to make such payment and a reliable estimate can be made.

b) Post-employment benefits Post-employment benefits are employee benefits

(other than termination benefits and short-term employee benefits) that are payable after the completion of employment.

Post-employment benefits comprise retirement benefits that are provided for Group employees through an independently administered defined contribution fund and by the National Social Security Authority (NSSA), which is also a defined contribution fund from the Group’s perspective. Payments to the defined contribution fund and to the NSSA scheme are recognised as an expense when they fall due, which is when the employee renders the service. The Group has no liability for Post-employment Retirement Benefit Funds once the current contributions have been paid at the time the employees render service.

During the year the Group contributed to the Group defined contribution fund and to the NSSA scheme.

c) Termination benefits are employee benefits provided in exchange for the termination of an employee’s employment as a result of either an entity’s decision to terminate an employee’s employment before the normal retirement date or an employee’s decision to accept an offer of benefits in exchange for the termination of employment. The Group recognises termination benefits as a liability and an expense at the earlier of when the offer of termination cannot be withdrawn or when the related restructuring costs are recognised under IAS 37 Provisions, Contingent Liabilities and Contingents Assets.

Termination benefits are measured according to the terms of the termination contract. Where termination benefits are due more than 12 months

after the reporting period, the present value of the benefits shall be determined. The discount rate used to calculate the present value shall be determined by reference to market yields on high quality corporate bonds at the end of the reporting period.

The Group had no termination benefit commitments during the year.

R CURRENT VERSUS NON-CURRENT CLASSIFICATION

The Group presents assets and liabilities in statement of financial position based on current/non-current classification. An asset is current when it is:

sold or consumed in the normal operating cycle or;

or;

months after the reporting period or;

from being exchanged or used to settle a liability for at least twelve months after the reporting period

All other assets are classified as non-current.

A liability is current when:

operating cycle or;

trading or;

after the reporting period or;

the settlement of the liability for at least twelve months after the reporting period

The Group classifies all other liabilities as non-current.

Deferred tax assets and liabilities are classified as non-current assets and liabilities.

S FAIR VALUE MEASUREMENT The Group measures financial instruments such

as available for sale financial assets and financial assets at fair value through profit or loss and non-financial assets such as investment properties, at fair value at each balance sheet date. Fair value related disclosures for financial instruments and non-financial assets that are measured at fair value or where fair values are disclosed, are summarised in the following notes:

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significant estimates and assumptions Notes AA, 13, 20 and 21

measurement hierarchy Note 20

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. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

liability or;

most advantageous market for the asset or liability

The principal or the most advantageous market must be accessible by the Group.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities

Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable

Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

The board of directors through management determines the policies and procedures for both recurring fair value measurement, such as investment properties, and for non-recurring measurement, such as assets held for sale, where applicable.

External valuers are involved for valuation of significant assets, such as investment properties. Involvement of external valuers is decided upon annually by the board of directors. Selection criteria includes market knowledge, reputation, independence and whether professional standards are maintained.

At each reporting date, management analyses the movements in the values of assets and liabilities which are required to be remeasured or re-assessed as per the Group’s accounting policies. For this analysis, management verifies the major inputs applied in the latest valuation by agreeing the information in the valuation computation to contracts and other relevant documents.

For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

T CASH DIVIDEND AND NON-CASH DISTRIBUTION TO EQUITY HOLDERS OF THE PARENT

The Company recognises a liability to make cash or non-cash distributions to equity holders of the parent when the distribution is authorised and the distribution is no longer at the discretion of the Company. As per the corporate laws in Zimbabwe, a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in equity.

Non-cash distributions are measured at the fair value of the assets to be distributed with fair value re-measurement recognised directly in equity. Upon distribution of non-cash assets, any difference between the carrying amount of the liability and the carrying amount of the assets distributed is recognised in the statement of comprehensive income.

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U FINANCIAL INSTRUMENTS – INITIAL RECOGNITION AND SUBSEQUENT MEASUREMENT

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

U.1 Financial assets Initial recognition and measurement Financial assets are classified, at initial recognition,

as financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, available for sale financial assets, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset.

Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date,i.e., the date that the Group commits to purchase or sell the asset.

Subsequent measurement For purposes of subsequent measurement

financial assets are classified in four categories:

or loss

U.1.1 Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets held for trading and financial assets designated upon initial recognition at fair value through profit or loss. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net changes in fair value presented in the statement of comprehensive income.

U.1.2 Loans and receivables Loans and receivables are non-derivative financial

assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method, less impairment. Amortised cost is calculated by taking into account any discount or premium on

acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the statement of comprehensive income. The losses arising from impairment are recognised in profit or loss.

For more information on receivables, refer to Note 23 and 24.

U.1.3 Held-to-maturity investments Non-derivative financial assets with fixed or

determinable payments and fixed maturities are classified as held to maturity when the Group has the positive intention and ability to hold them to maturity. After initial measurement, held to maturity investments are measured at amortised cost using the EIR, less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance income in the statement of comprehensive income. The losses arising from impairment are recognised in the statement of comprehensive income.

U.1.4 Available For Sale financial assets Available For Sale (“AFS”) financial assets include

equity investments and debt securities. Equity investments classified as AFS are those that are neither classified as held for trading nor designated at fair value through profit or loss. Debt securities in this category are those that are intended to be held for an indefinite period of time and that may be sold in response to needs for liquidity or in response to changes in market conditions.

After initial measurement, AFS financial assets are subsequently measured at fair value with unrealised gains or losses recognised in OCI and credited in the AFS reserve until the investment is derecognised, at which time the cumulative gain or loss is recognised in other operating income. If the investment is determined to be impaired, the cumulative loss is reclassified from the AFS reserve to profit or loss.

Interest earned whilst holding AFS financial assets is reported as interest income using the EIR method. The Group evaluates whether the ability and intention to sell its AFS financial assets in the near term is still appropriate. When, in rare circumstances, the Group is unable to trade these financial assets due to inactive markets, the Group may elect to reclassify these financial assets if management has the ability and intention to hold the assets for foreseeable future or until maturity.

For a financial asset reclassified from the AFS category, the fair value carrying amount at the date of reclassification becomes its new amortised cost and any previous gain or loss on the asset

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that has been recognised in equity is amortised to profit or loss over the remaining life of the investment using the EIR. Any difference between the new amortised cost and the maturity amount is also amortised over the remaining life of the asset using the EIR. If the asset is subsequently determined to be impaired, then the amount recorded in equity is reclassified to the statement of comprehensive income.

Derecognition A financial asset (or, where applicable, a part of a

financial asset or part of a group of similar financial assets) is primarily derecognised (i.e., removed from the Group’s consolidated statement of financial position) when:

asset have expired or;

receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset

When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Group continues to recognise the transferred asset to the extent of the Group’s continuing involvement. In that case, the Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.

U.1.5 Impairment of financial assets Further disclosures relating to impairment of

financial assets are also provided in the following notes:

Note AA

The Group assesses, at each reporting date, whether there is objective evidence that a financial asset or a group of financial assets is impaired. An impairment exists if one or more events that has occurred since the initial recognition of the asset (an incurred ‘loss event’), has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and observable data indicating that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

U.1.5.1 Financial assets carried at amortised cost For financial assets carried at amortised cost,

the Group first assesses whether impairment exists individually for financial assets that are individually significant, or collectively for 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 the collective assessment of impairment.

The amount of any impairment loss identified is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The present value of the estimated future cash flows is discounted at the financial asset’s original effective interest rate.

The carrying amount of the asset is reduced through the use of an allowance account and the loss is recognised in the statement of comprehensive income. Interest income (recorded as finance income in the statement of comprehensive income) continues to be accrued on the reduced carrying amount and is accrued using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. Loans together with the associated allowance are written off when there is no realistic prospect of future recovery and all collateral has been realised or has been transferred to the Group. If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because

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of an event occurring after the impairment was recognised, the previously recognised impairment loss is increased or reduced by adjusting the allowance account. If a write-off is later recovered, the recovery is credited to finance costs in the statement of comprehensive income.

U.1.5.2 AFS financial assets For AFS financial assets, the Group assesses at

each reporting date whether there is objective evidence that an investment or a group of investments is impaired.

In the case of equity investments classified as AFS, objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost. The determination of what is ‘significant’ or ‘prolonged’ requires judgement. ‘Significant’ is evaluated against the original cost of the investment and ‘prolonged’ against the period in which the fair value has been below its original cost. When there is evidence of impairment, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that investment previously recognised in the statement of comprehensive income – is removed from OCI and recognised in the statement of comprehensive income. Impairment losses on equity investments are not reversed through profit or loss; increases in their fair value after impairment are recognised in OCI.

In the case of debt instruments classified as AFS, the impairment is assessed based on the same criteria as financial assets carried at amortised cost. However, the amount recorded for impairment is the cumulative loss measured as the difference between the amortised cost and the current fair value, less any impairment loss on that investment previously recognised in the statement of comprehensive income.

Future interest income continues to be accrued based on the reduced carrying amount of the asset, using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. The interest income is recorded as part of finance income. If, in a subsequent year, the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in the statement of comprehensive income, the impairment loss is reversed through the statement of comprehensive income.

U.2 Financial liabilities Initial recognition and measurement Financial liabilities are classified, at initial

recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Group’s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, financial guarantee contracts and derivative financial instruments.

Subsequent measurement The measurement of financial liabilities depends

on their classification, as described below:

U.2.1 Loans and borrowings This is the category most relevant to the Group.

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of comprehensive income.

This category generally applies to interest-bearing loans and borrowings. For more information refer Note 30.

U.2.2 Financial guarantee contracts Financial guarantee contracts issued by the Group

are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the best estimate of the expenditure required to settle the present obligation at the reporting date and the amount recognised less cumulative amortisation.

Derecognition A financial liability is derecognised when the

obligation under the liability is discharged, cancelled or expires.

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When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of comprehensive income.

U.3 Offsetting of financial instruments Financial assets and financial liabilities are offset

and the net amount is reported in the consolidated statement of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis or to realise the assets and settle the liabilities simultaneously.

V CASH AND SHORT-TERM DEPOSITS Cash and short-term deposits in the statement

of financial position comprise cash at banks and on hand and short-term deposits with a maturity of three months or less, which are subject to an insignificant risk of changes in value.

For the purpose of the consolidated statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above.

W TREASURY SHARES Own equity instruments that are reacquired

(treasury shares) are recognised at cost and deducted from equity.

No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Group’s own equity instruments. Any difference between the carrying amount and the consideration, if reissued, is recognised in share premium.

X PROVISIONS

General Provisions are recognised when the Group has

a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Group expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of comprehensive income net of any reimbursement.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax

rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

Y FIDUCIARY ASSETS To the extent that the Group provides trust and

other fiduciary services that result in the holding or investing of assets on behalf of its clients, the assets held in a fiduciary capacity are not reported in the financial statements, as they are not the assets of the Group.

Z OPERATING SEGMENT INFORMATION The Group identifies segments as components

of the Group that engage in business activities from which revenues are earned and expenses incurred (including revenues and expenses relating to transactions with other components of the same entity), whose operating results are regularly reviewed by the entity’s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

The chief operating decision-maker has been identified as the Group Chief Executive Officer.

Measurement of segment information The accounting policies of the reportable

segments are the same as the Group’s accounting policies. Segment information has been reconciled to the consolidated annual financial statements to take account of intersegment transactions and transactions and balances that are not allocated to reporting segments.

AA SIGNIFICANT ACCOUNTING JUDGEMENTS; ESTIMATES AND ASSUMPTIONS

The preparation of the Group’s consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

Other disclosures relating to the Group’s exposure to risks and uncertainties includes:

Note 35

35.3 and 36.2. Judgements In the process of applying the Group’s accounting

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policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the consolidated financial statements:

Capitalisation of borrowing costs When capitalising borrowing costs that are directly

attributable to the acquisition, construction or production of a qualifying asset, the matter of determining whether an asset takes a substantial period of time to get ready for its intended use, normally one year, is deemed to be a significant area of judgement.

In particular, where – as in the case of Econet – there are multiple financing sources for both general and specific use, allocation of borrowing costs demands significant judgement.

Estimates and assumptions The key assumptions concerning the future and

other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Group based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Group. Such changes are reflected in the assumptions when they occur.

AA. 1 Property, plant and equipment - IAS 16 Property, plant and equipment represent a

significant proportion of the asset base of the Group, being 58% (63% in prior year) of the Group’s total assets in the year under review. Therefore, the estimates and assumptions made to determine their carrying value and related depreciation are critical to the Group’s financial position and performance.

Residual values of property, plant and equipment

During the year management assessed the residual values of property, plant and equipment. Residual values of each asset category have been assessed by considering the fair value of the assets after taking into account age, usage and obsolescence. These residual values are reassessed each year and adjustments are made where appropriate. The valuation methods adopted in this process involves significant judgement and estimation.

Useful lives of property, plant and equipment A review of the estimated remaining lives of all

network equipment was performed using the engineering expertise within the business with

reference to published industry benchmarks. This review considered the following factors, at a minimum; the age of the equipment, technological advancements, current use of the equipment, and planned network upgrade programmes. The determination of the remaining estimated useful lives of the network equipment is deemed to be a significant area of judgment due to its highly specialised nature. Refer to Note I for the useful lives of property, plant and equipment.

AA.2 Intangible assets - IAS 38 Intangible assets include licences and

development costs. These assets arise from both separate purchases and from acquisition as part of business combinations. On the acquisition of mobile network operators, the identifiable intangible assets may include licences, customer bases and brands. The fair value of these assets is determined by discounting estimated future net cash flows generated by the asset, where no active market for the assets exists. The use of different assumptions for the expectations of future cash flows and the discount rate would change the valuation of the intangible assets.

Estimation of useful life The useful life used to amortise intangible assets

relates to the future performance of the assets acquired and management’s judgement of the period over which economic benefit will be derived from the asset.

The basis for determining the useful life for the most significant categories of intangible assets is as follows:

AA.2.1 Licences The estimated useful life is, generally, the term

of the licence, unless there is a presumption of renewal at negligible cost. Using the licence term reflects the period over which the Group will receive economic benefit. For technology specific licences with a presumption of renewal at negligible cost, the estimated useful economic life reflects the Group’s expectation of the period over which the Group will continue to receive economic benefit from the licence. The economic lives are periodically reviewed, taking into consideration such factors as changes in technology. Historically, any changes to economic lives have not been material following these reviews.

AA.2.2 Capitalised software The useful life is determined by management at

the time the software is acquired and brought into use and is regularly reviewed for appropriateness. For computer software licences, the useful life represents management’s view of the period over which the Group will receive benefits from the software, but not exceeding the licence term.

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For unique software products controlled by the Group, the life is based on historical experience with similar products as well as anticipation of future events, which may impact their life, such as changes in technology. Historically, changes in useful lives have not resulted in material changes to the Group’s amortisation charge.

AA.3 Impairment reviews - IAS 36 Impairment exists when the carrying value of

an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm’s length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a Discounted Cashflow (“DCF”) model. The cash flows are derived from the budget for the next five years and do not include restructuring activities that the Group is not yet committed to or significant future investments that will enhance the asset’s performance or the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. These estimates are most relevant to the goodwill recognised by the Group. The key assumptions used to determine the recoverable amount for the different CGUs are disclosed and further explained in Note 43.

AA.4 Provision for impairment of accounts receivable

The provision for impairment is based on an estimate of the recoverability of accounts receivable and subject to estimation. Refer to Note 23 for the basis of determining impairment loss provisions.

AA.5 Syndicated loans Certain cash flows used in the calculation of

amortised cost of the syndicated loans are based on forecast future interest rates (LIBOR) which are subject to estimation. The interest is based on various interest arrangements on facilities with various lenders. The Syndicated loans are detailed on Note 30.

AA.6 Deferred revenue Revenue for cellular network services is

recognised when the airtime is utilised by the customer. The unused air time as at 28 February 2015 has been deferred from revenue until the airtime has been used by the customers. The deferred revenue portion is determined by both information technology related checks and arithmetical formulae to identify the portion of revenue to be deferred.

AA.7 Investment property - determination of fair value

Where the fair values of investment property cannot be derived from an active market, they are determined using a variety of valuation techniques.

Determining the valuation technique to use and the inputs requires significant judgement.

Refer Note 13 for more detail on valuation of investment property.

AA.8 Impairment losses on loans and advances to bank customers

The Group reviews its individually significant loans and advances to bank customers at each statement of financial position date to assess whether an impairment loss should be recorded in the statement of comprehensive income. In particular, management’s judgement is required in the estimation of the amount and timing of future cash flows when determining the impairment loss. These estimates are based on assumptions about a number of factors and actual results may differ, resulting in future changes to the allowance.

Loans and advances that have been assessed individually and found not to be impaired and all individually insignificant loans and advances are then assessed collectively, in groups of assets with similar risk characteristics, to determine whether provision should be made due to incurred loss events for which there is objective evidence, but the effects of which are not yet evident. The collective assessment takes account of data from the loan portfolio (such as levels of arrears, credit utilisation, loan-to-collateral ratios, etc.), and judgements on the effect of concentrations of risks and economic data. Refer to Note 24 for the carrying amount of loans and advances to customers and more information on the impairment of loans and advances to customers.

AA.9 Taxes Deferred tax assets are recognised for unused tax

losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

Refer to Note 15 for tax losses carried forward. These losses relate to subsidiaries that have a history of losses, do not expire and may not be used to offset taxable income elsewhere in the Group. Further details on taxes are disclosed in Note 15.

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Sustainability through Innovation.

Our Strategic Business Partnerships 120

Shareholder Analysis 121

Corporate and Advisory Information 122

Financial Diary 123

Notice to Members 124

Administration

Continuing efforts are made to improve our customers’ experience through consistent provision of highly innovative services and products. We are present in all major locations countrywide and continue to expand our branch network to be closer to our customers.

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Our Strategic Business Partnerships

The opportunities in the market have made it imperative to broaden our relationship with key partners. This has enabled the business to deliver value to stakeholders and promote accelerated growth.

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Shareholder AnalysisFor the year ended 28 February 2015

Consolidated Top 20

Account Name Shares % of Total

1 ECONET WIRELESS GLOBAL LIMITED 630,579,551 38.45

2 STANBIC NOMINEES (PRIVATE) LIMITED (NNR) 389,280,618 23.74

3 AUSTIN ECO HOLDINGS LIMITED - NNR 89,872,460 5.48

4 OLD MUTUAL LIFE ASSURANCE COMPANY OF ZIMBABWE LIMITED 80,290,314 4.90

5 ECONET WIRELESS ZIMBABWE SPV LIMITED 48,475,095 2.96

6 ECONET WIRELESS ZIMBABWE LIMITED 34,055,345 2.08

7 EBENEZER TRUST 28,959,972 1.77

8 STANDARD CHARTERED NOMINEES (PRIVATE) LIMITED 27,110,683 1.65

9 STANDARD CHARTERED NOMINEES (PVT)LTD - NNR 24,207,410 1.48

10 NORTHUNDERLAND INVESTMENTS (PVT) LTD 22,020,090 1.34

11 AMRO INTERNATIONAL HOLDINGS LTD (NNR) 15,033,962 0.92

12 MINING INDUSTRY PENSION FUND 11,318,349 0.69

13 HELLIKOP INVESTMENTS (PVT) LTD-NNR 10,699,010 0.65

14 NATIONAL SOCIAL SECURITY AUTHORITY 10,454,285 0.64

15 PRESSFORTH INVESTMENTS (PRIVATE) LIMITED 10,317,570 0.63

16 ECONET EMPLOYEES BENEFICIARY TRUST 9,936,300 0.61

17 LOCAL AUTHORITIES PENSION FUND 8,156,137 0.50

18 COVERSITE (PRIVATE) LIMITED 7,014,684 0.43

19 CAPERNAUM TRUST ENDOWMENT FUND 6,218,472 0.38

20 FIRST MUTUAL LIFE 6,068,263 0.37

OTHER SHAREHOLDERS 169,952,860 10.33

TOTAL ISSUED SHARES 1,640,021,430 100.00

Range Holders % of Holders Shares % of Shares 0 - 100 2,443 26.63 104,951 0.01 101 - 200 738 8.04 121,727 0.01 201 - 500 988 10.77 338,431 0.02 501 - 1,000 1009 11.00 696,033 0.04 1,001 - 5,000 2361 25.73 4,851,664 0.30 5,001 - 10,000 525 5.72 3,632,680 0.22 10,001 - 50,000 582 6.34 12,527,721 0.76 50,001 - 100,000 157 1.71 11,033,049 0.67 100,001 - 500,000 209 2.28 48,866,670 2.98 500,001 - 1,000,000 61 0.67 44,037,521 2.69 1,000,001 - 10,000,000 82 0.89 244,113,916 14.88 10,000,001 - 20 0.22 1,269,697,067 77.42 Total 9,175 100.00 1,640,021,430 100.00

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Corporate and Advisory Information

Registered Office

Incorporated in the Republic of ZimbabweCompany registration number 7548/98Econet Park, 2 Old Mutare RoadMsasaHarareZimbabwe

Telephone: +263-486124-5+263-772 793 700Fax:+263- 4-486183E-mail: [email protected]: www.econet.co.zw

Group Company Secretary

Charles Alfred BandaEconet Park, 2 Old Mutare Road, MsasaHarareZimbabwe

Independent Auditors

Ernst & Young (Zimbabwe)Registered Public AuditorsAngwa City Cnr Julius Nyerere Way, Kwame Nkrumah AvenueHarareZimbabwe

Principal Bankers

72 (B) EL Maahad EL-Eshleraky StreetOpposite Merryland ParkRoxy, Heliopolis, Cairo 11341Egypt

Kurima HouseNelson Mandela AvenueBox CY 881 CausewayHarare

Stanbic Centre59 Samora Machel AvenueHarare

2nd Floor, 101 Union Avenue Building 101 Kwame Nkrumah AvenueHarareZimbabwe

Union House60 Kwame Nkrumah AvenueHarareZimbabwe

Principal legal advisors

Mtetwa and NyambiraiLegal Practitioners2 Meredith DriveEastleaHarareZimbabwe

Registrars and Transfer Secretaries

First Transfer Secretaries (Private) Limited1 Armagh AvenueEastleaHarareZimbabwe

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31 July 2015 Seventeenth Annual General Meeting of Shareholders, Econet Park, Harare

October 2015 Interim results and analyst briefing

28 February 2016 Financial year end

April 2016 Financial results and analyst briefing

June 2016 Annual Report 2016 publication

July 2016 Eighteenth Annual General Meeting of Shareholders, Econet Park, Harare

Financial DiaryFor the year ended 28 February 2015

Sustainability through Innovation.

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Notice is hereby given that the Seventeenth Annual General Meeting of the members of Econet Wireless Zimbabwe Limited will be held in the staff canteen, at the registered office of the Company at Econet Park, 2 Old Mutare Road, Msasa, Harare, Zimbabwe on Friday 31 July 2015 at 10.00am for the following purposes.

Ordinary BusinessTo consider and adopt the following resolutions:

1. Financial Statements To receive and adopt the financial statements for the year ended 28 February 2015 together with the reports of

the directors and auditors thereon.

2. Election of Directors To re-elect Dr. J. Myers, Mr. M. Edge and Mrs. T. Mpofu as directors of the company.

2.1. In accordance with Article 81 of the Company’s Articles of Association they retire by rotation at the Company’s Annual General Meeting and, being eligible, offer themselves for re-election. Each director shall be separately elected.

3. Directors Remuneration To approve the fees paid to the directors for the year ended 28 February 2015.

4. Auditors4.1. To approve the auditors’ remuneration for the previous year.

4.2. Pursuant to the Special Notice to Members published on 2 July 2015, to consider the appointment of Deloitte & Touche as auditors for the Company with effect from 31 July 2015.

5. Special Business To consider and, if thought fit, to adopt, with or without amendment, the following resolutions:

5.1. As an ordinary Resolution: Share Buy-back “That the Company, as duly authorised by Article 10 of its Articles of Association, may undertake the purchase of its own ordinary shares in such manner or on such terms as the directors may from time to time determine, provided that the repurchases are not made at a price greater than 5% above the weighted average of the market value for the securities for the five business days immediately preceding the date of the repurchase and also provided that the maximum number of shares authorised to be acquired shall not exceed 10% (ten percent) of the Company’s issued ordinary share capital.

That this authority shall expire at the next Annual General Meeting, and shall not extend beyond 15 months from

the date of this resolution”.

After considering the effect of the maximum repurchase of the shares, the Directors are confident that:a) The Company will be able to pay its debts for a period of 12 months after the date of the notice of the

Annual General Meeting.b) The assets of the Company will be in excess of its liabilities.c) The share capital and reserves of the Company are adequate for a period of 12 months after the date of the

notice of the Annual General Meeting.d) The Company will have adequate working capital for a period of 12 months after the date of the notice of

the Annual General Meeting.

5.2 As a special resolution: Amendment to the Company‘s Articles of Association

5.2.1 That the Board be and is hereby authorised to amend the Articles of Association of the Company by insertion in Article 2, after the definition of “Secretary”, of the following definition –“Securities Act” means the Securities and Exchange Act of Zimbabwe [Chapter 24:25]; and

5.2.2 That the Board be and is hereby authorised to amend the Articles of Association of the Company by the insertion after Article 16.4 of the following Article - “16.5 Notwithstanding the preceding provisions of this Article, the Directors shall be empowered to resolve that the Company shall issue shares in dematerialised form, and convert certificated shares to dematerialised shares, all as envisaged by the Securities and Exchange Act: provided that no certificated share shall be converted to a dematerialised share without the consent of the current holder thereof.”

Notice to Members

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5.2.3 That the Board is hereby authorised to amend the Articles of Association of the Company by addition of the following Article 128.2 (a) after Articles 128.2: “Electronic copies of the Directors’ Report, Statements of Financial Position, Comprehensive Income, Changes in Equity and Cash Flow and all other documents required to be annexed thereto, publicised on the Company’s website and delivered by electronic means to every member shall be deemed to be sufficient delivery to members. Provided that should a member request a hard copy of the Directors’ Report, Statements of Financial Position, Comprehensive Income, Changes in Equity and Cash Flow and all other documents required to be annexed thereto from the Company, the documents shall be provided to the member in hard copy format.”

5.2.4 That Article 123 of the Articles of Association of the Company be amended by the addition of a new paragraph to read as follows: “123.1 Any dividend, interest or other monies payable in respect of the shares may also be paid through any and all approved national payment systems and such payment may be notified to the recipient by communication to his electronic address, or in the case of joint holders, to the electronic address of that of one of the joint holders who is first named on the register of members or to such person or to such electronic address as the holder or joint holders may direct. Any one of the two or more joint holders may give effectual receipts for any dividends, bonuses or other money payable in respect of the shares held by them as joint holders.”


C. A. Banda GROUP COMPANY SECRETARY 29 April 2015

To be delivered by hand to:

First Transfer Secretaries (Private) Limited1 Armagh Avenue

EastleaHarare

Zimbabwe

Or toThe Group Company SecretaryEconet Wireless Zimbabwe Limited

Econet Park2 Old Mutare Road

MsasaHARARE

Or by post to:First Transfer Secretaries

P O Box 11HARARE

ZIMBABWE

ECONET WIRELESS ZIMBABWE LIMITED

FOR OFFICIAL USE

No. of Shares held

..............................

Proxy form for the Seventeenth Annual General Meeting of Econet Wireless Zimbabwe Limited to be held at Econet Park, 2 Old Mutare Road, Msasa, Harare, Zimbabwe on Friday 31 July 2015 at 10.00 a.m.

I/We

Being the registered holder/s of

Ordinary shares in Econet Wireless Zimbabwe Limited, do hereby appoint:

1 or failing him/her

2 or failing him/her the Chairman of the Annual General Meeting as my/our proxy to act for me/us at the Seventeenth Annual General Meeting of the Company which will be held at Econet Park, 2 Old Mutare Road, Msasa, Harare to vote for me/us on my/our behalf or to abstain from voting.

IN FAVOUR AGAINST ABSTAIN

1. Adoption of the 2015 Annual Financial Statements together with the reports of the Directors and the Auditors 2. Appointment of Directors�� $SSURYDO�RI�'LUHFWRUV·�UHPXQHUDWLRQ�� $SSURYDO�RI�$XGLWRUV·�UHPXQHUDWLRQ�IRU�WKH�SDVW�\HDU 5. Appointment of Auditors for the coming year 6. Special Business: Renewal of share buy-back authority 7. Special Business: Amendments to the Articles of Association(Kindly tick where appropriate)

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provided, with or without deleting “the Chairman of the Annual General Meeting”, but such deletion must be initialled by the VKDUHKROGHU��7KH�SHUVRQ�ZKRVH�QDPH�DSSHDUV�ÀUVW�RQ�WKH�IRUP�RI�SUR[\�DQG�ZKRVH�QDPH�KDV�QRW�EHHQ�GHOHWHG�VKDOO�EH�HQWLWOHG�to act as proxy to the exclusion of those whose names follow.

2. The authority of the person signing a proxy or representing an institutional shareholder should be attached to the proxy form in the IRUP�RI�D�%RDUG�UHVROXWLRQ�FRQÀUPLQJ�WKDW�WKH�SUR[\�KDV�EHHQ�DSSRLQWHG�WR�UHSUHVHQW�WKH�VKDUHKROGHU�DW�WKH�&RPSDQ\·V�DQQXDO�general meeting .

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4. The completion and lodging of this form of proxy shall not preclude the relevant shareholder from attending the Annual General Meeting and speaking and voting in person thereat to the exclusion of any proxy appointed in terms therefor should the shareholder wish to do so.

5. The Chairman of the Annual General Meeting may accept a proxy form which is completed and /or received other than in DFFRUGDQFH�ZLWK�WKHVH�LQVWUXFWLRQV��SURYLGHG�WKDW�KH�LV�VDWLVÀHG�DV�WR�WKH�PDQQHU�LQ�ZKLFK�D�VKDUHKROGHU�ZLVKHV�WR�YRWH�

6. Any alteration or correction to this form must be initialled by the signatory/signatories.

Signature of Shareholder Date

PLEASE NOTE,I�WKH�DGGUHVV�RQ�WKH�HQYHORSH�RI�WKLV�OHWWHU�LV�LQFRUUHFW��SOHDVH�ÀOO�LQ�WKH�FRUUHFW�GHWDLOV�EHORZ�DQG�UHWXUQ�WR�WKH�6HFUHWDU\�

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Econet Wireless Zimbabwe 2015 annual report

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Transcript of Econet Wireless Zimbabwe 2015 annual report