Econet Wireless Zimbabwe 2016 annual report

INTEGRATED ANNUAL REPORT 2016

“So do not fear, for I am with you; do not be dismayed, for I am your God. I will strengthen you and help you; I will uphold you with my righteous right hand.”Isaiah 41:10

NIV Bible

Our Commitment to Integrated ReportingOur commitment to value creation for our stakeholders, innovation and sustainability leadership made this publication the natural evolution in our communication with stakeholders. This marks our fifth year of integrated reporting covering corporate social investment, environmental issues and ethical reporting.

Disclaimer - Forward-looking statementsAn integrated report includes certain ’forward-looking statements’. These forward-looking statements are necessarily about the future and therefore incorporate degrees of uncertainty. Consequently, future actual results and performance may differ from these statements.

The forward-looking statements are current as of the date of publication of the integrated report. The Company makes no representation that the information will be publicly updated after release of this integrated report.

ABOUT THIS REPORT

Our business strategies are robust. We remain committed to taking the necessary decisions to protect and enhance value for the shareholders

and other stakeholders.

Econet Wireless Zimbabwe Limited Integrated Annual Report 2016

1

Infrastructure,Innovation,

Cost optimisation &Social responsibility

OVERVIEW 3 Performance Highlights 3

Stakeholder Value Creation 4

New Products and Services 9

CORPORATE AND LEADERSHIP 10Our Business 10

Corporate Profile 12

Company Profile 13

Chairman’s Statement to Shareholders 14

Chief Executive Officer’s Operations Review 18

Board of Directors 20

From the Directors 23

GOVERNANCE 26Governance Statement 26

Risk Report 30

OUR STAFF AND COMMUNITY 37Corporate Social Investment 37

Our Staff 40

Econet Coverage Map - February 2016 43

COMPLIANCE AND FINANCIAL REPORTING 44Certificate by the Group Company Secretary 44

Directors’ Responsibility for Financial Reporting 46

Independent Auditors’ Report 47

Consolidated Statement of Financial Position 48

Consolidated Statement of Comprehensive Income 49

Consolidated Statement of Changes in Equity 50

Consolidated Statement of Cash Flows 51

Notes to the Financial Statements 52

Policy Notes to the Consolidated Financial Statements 90

ADMINISTRATION 111Strategic Business Partnerships 112

Shareholder Analysis 113

Corporate and Advisory Information 114

CONTENTS


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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



Stakeholder Value Creation

Our Value Drivers

The focus on customer experienceOur focus remains on delivering a seamless and simplified user experience for our customers, unlocking revenues and inculcating customer loyalty. In this regard a number of self-care deployments were made to bring customer convenience. The MyEconet app, EcoCash app , Data usage thresholds and data calculator provide the customer with a seamless experience and access to our diverse portfolio of services, without the need to remember numerous short codes.

Investment in infrastructure and resourcesThe Group continues to invest in infrastructure to develop the network. This will increase our coverage, improve our customer experience, keep pace with technological developments and support new products and services.

Transformation of the operating modelIn the period under review, the Group completed its project to mordenise the network. This has improved internet access through 4G/LTE coverage in major cities, towns and resort areas. Operating efficiencies were achieved through aggressive cost optimisation initiatives.

Growing overlay servicesDeveloping overlay services in order to diversify from voice, SMS and data remains a key focus for the Group. Services such as EcoHealth, Connected Car, EcoFarmer and EcoSure are expected to sustain revenue growth into the future. These overlay brands are fully explained on page 9. The Group continues to pursue mobile financial services as a potential growth frontier. International remittances have, therefore been added to the EcoCash menu to increase convenience to the customer.

Associate and subsidiariesThe Group has an associate and subsidiaries in diverse industry sectors such as financial services, fibre optic transmission delivery, financial transaction processing and switching, all of which support our revenue diversification strategy. Liquid Zimbabwe’s fibre network expansion continues to provide a stable platform for growing data and voice traffic. Synergies between Steward Bank and EcoCash enable the Group to offer unique financial products and services.


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Infrastructure


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Econet Wireless Zimbabwe Limited Integrated Annual Report 2016Econet Wireless Zimbabwe Limited Integrated Annual Report 2016

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EcoSure gives our customers the convenience and comfort of simple, affordable and reliable funeral cover. Customers access affordable funeral assurance packages via the phone with premiums ranging from as low as $0.50 (fifty cents) per month with pay outs ranging from $500 to $5 000 depending on the selected plan. Since its ground breaking launch in December 2014, EcoSure has transformed communities with more than one million previously underinsured Zimbabweans now having funeral insurance. EcoSure has gone even further and is increasingly attracting the interest of Burial societies and Corporates for the benefit of their members and employees respectively.


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During the year, the Group in partnership with various international entities successfully launched diverse products and services aimed at adding value to our customers. Notable among these new innovations are the following;

Ownai Ownai is a FREE Online market platform for Econet Wireless Zimbabwe subscribers to find, buy, place and sell a wide

range of products and services online with ease and convenience. The zero-rated (free browsing) multi-channel platform offers a traditional website and mobile optimized site for smartphones. In future, it will also offer more sites for feature phones and USSD service and Android/iOS apps. Ownai will evolve into an online market with storefronts, EcoCash online payments, inventory management tools and order fulfilment.

Ruzivo Ruzivo Digital Learning is an online interactive digital learning platform targeted at primary and secondary students

in Zimbabwe. All our content is aligned to the Zimbabwean curricula. Grade 4, 5, 6 and 7 Mathematics and Science education content has been endorsed by the Ministry of Primary and Secondary Education, Curriculum Development Unit (CDU).

Connected Home Econet Connected Home, is an innovative solution which enables customers to monitor, control and secure their homes

and properties via their mobile phones. This service allows one to see live videos of what is going on in the home, using a cell phone from anywhere in the world. The system detects fire and water leaks that can damage or destroy property.

EcoFarmer 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.

EconetHealth EcoHealth leverages on the mobile phone platform to deliver innovative m-health solutions that transform lives of

communities. EcoHealth Tips provides health information via the phone in selected languages. These innovative products have been positively received by consumers. The business will continue to innovate to make healthcare available to the majority of Zimbabweans at an affordable price.

Connected Car Econet Connected Car gives Econet customers the power to manage and maintain their vehicles from their tablets,

smartphones, any web portal or through the Econet Connected Car Mobile Application. Econet Connected Car offers Fleet Management Service, Personal Vehicle Management and Roadside Assistance. Econet Connected Car is the perfect affordable vehicle tracking solution for both corporates and individuals who want to be in control of their vehicles.

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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 Values

The values we hold in common are:

PioneeringWe 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.

ProfessionalismIn 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.

PersonalInternally 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.

Econet Broadband subscriptions continue to grow and now stand at 6.5 million subscribers. The business continues to drive affordability by providing appealing data packages and low entry data enabled gadgets. The ZTE V795 and C310 handsets were introduced to meet this need. In the same period several exciting packages were launched namely Daily Bundles, Social Bundles, FUP policy, Free Twitter, amongst many others. 4G /LTE was also introduced on mobile devices whilst more sites were also rolled out.

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Corporate Profile

EconetWireless

ZimbabweLimited

CoreBusiness

EnterpriseBusiness

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Company Profile

ECONET WIRELESS ZIMBABWE LIMITED (EWZL) - ZIMBABWE HOLDING COMPANYThis Integrated Annual Report incorporates the results of all the subsidiaries and associate 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

CORE BUSINESS

Econet Wireless (Private) LimitedEconet Wireless (Private) Limited is EWZL’s cellular network operator, offering voice and sms, broadband and overlay services.

ENTERPRISE BUSINESS

Steward Bank LimitedSteward Bank Limited offers financial services in Zimbabwe. It plays a pivotal role in the Group, especially for EcoCash, as the bank holds the banking licence necessary for mobile money 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 beverages franchise in the eastern region of Zimbabwe.

Steward Health (Private) LimitedSteward Health is a leading provider in tailor made medical insurance solutions.

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.

ASSOCIATE COMPANY

Data Control And Systems (1996) (Private) Limited T/A Liquid Telecom ZimbabweThe Group has a 51% interest in Liquid Zimbabwe. Liquid 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.

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OVERVIEW The country has experienced the collapse of commodity prices and de-industrialisation, which have been compounded by the ongoing drought and liquidity challenges, putting considerable strain on an already fragile economy. The resultant effects, such as job losses, continued deflation and increasing informalisation has continued to negatively affect disposable income.

This is the first annual financial period since the 35% reduction in voice tariffs, combined with a 5% excise duty on airtime. We estimate that the adverse impact of the tariff reduction on the full year revenues was about US$ 95 million. Contrary to normal practice, where excise duties are levied on the customer, the excise duty on airtime, was levied on the Company. This position was, however, reversed on 1 January 2016, and the Company was allowed to levy the duty on its customers. The excise duty levied on the Company resulted in a revenue reduction of US$ 30 million, for the year under review.

In addition, the Postal and Telecommunications Regulatory Authority reduced inter-connection rates from 5 cents per minute to 4 cents per minute and increased the Universal Services Fund (USF) levy from 0.5% to 1.5%, with effect from 1 January 2016. The negative impact of these factors amounted to US$ 4.5 million on revenue and US$ 0.8 million on costs, respectively.

The Government issued Statutory Instrument 95 of 2014 which requires all subscribers to be registered. The business embarked on an intensive subscriber registration and validation exercise, a process that saw non-compliant customers being deregistered. However, in order to assist customers who were not compliant in the required time frame, we implemented an aggressive program to support customers who had been deregistered to meet the requirements. This resulted in most of our deregistered subscribers being reconnected. The revenue lost from the deregistered subscribers amounted to US$ 2 million and the cost to reconnect these subscribers came to US$ 0.5 million.

Availability of grid power remains a major challenge for the business. To mitigate against these power outages and lessen customer inconvenience, the business continued to invest in alternative power sources through diesel generators, deep cycle batteries and solar power solutions. The business has invested over US$ 55 million towards the provision of alternative power and incurred an average of about $ 7 million per annum in ongoing operating costs to run diesel generators.

The adverse developments, described above, are beyond the control of the Company. Notwithstanding, we have adjusted our business model to protect key revenue segments and improve

DR J. MYERS | Chairman of the Board

Chairman’s Statement to Shareholders

We continue to tailor our products and services to

remain relevant to our customers, understanding

that they are under financial strain and so are demanding

ever greater value for money

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efficiencies. As announced in the media, we embarked on aggressive cost reduction measures, on a scale larger than what has ever been implemented in the Company’s history. Initiatives implemented included, a reduction in total gross compensation by 20%; retrenchment of over 150 employees and extensive negotiations with all suppliers to achieve a 15% reduction in costs across all line items.

PERFORMANCE REVIEWRevenue for the year ended 29 February 2016 was US$ 641.0 million compared to US$ 746.2 million for last year. This reduction in revenue was as a result of the regulatory price reductions and increased levies as well as the deterioration in the economic environment.

The downward trend in voice revenue caused by the introduction of services such as WhatsApp is a universal trend experienced by the industry globally. Econet has been pursuing various measures aimed at mitigating this revenue decline. The most advanced of these measures being the investment in and growth of broadband data services, as well as the expansion of Mobile Financial Services, such as EcoCash and EcoSure. All these new services experienced robust growth during this period.

Average Revenue Per User (ARPU) declined from US$ 8.15 per month to US$ 6.84 and Earnings Before Interest, Taxation Depreciation and Amortisation (EBITDA) closed at US$ 238.4 million compared to US$ 285.6 million for the prior year. Profit after tax was US$ 40.2 million compared to US$ 70.2 million for the prior year, impacted by high depreciation charge of US$ 136.6 million, compared to US$ 126.3 million in the previous year. The debt to equity ratio continued to show marked improvement, decreasing from 36% to 31%, after repaying a total of US$ 86.7 million to lenders for the period under review.

CORPORATE SOCIAL INVESTMENTOver the past seventeen years, Econet has impacted over 200 000 orphaned and vulnerable children whilst increasing support to highly talented students to further their education at various tertiary institutions.

BOARD APPOINTMENTSI am pleased to announce the appointment of Mr Roy Chimanikire to the position of Finance Director. I have all the confidence that he will contribute to the success of the business and I wish him every success.

OUTLOOKThe ongoing foreign currency shortages and general liquidity constraints have made it difficult for customers to spend on goods and services. The stagnation of the economy and the

consequent impact on consumers will continue to put a strain on all businesses operating in Zimbabwe.

In spite of these challenging operating circumstances, we continue to tailor our products and services to remain relevant to our customers, understanding that they are under financial strain and so are demanding ever greater value for money. Consequently, we continue to review our product pricing, bundle composition, marketing and selling strategies to offer solutions based on clearly understood customer segments and markets. The board and management continue to seek cost efficiencies, wherever possible, in order to deliver a lean and agile operation.

The Company’s operating model remains the foundation on which we will deliver sustainable performance in the future. Through relentlessly pursuing innovation, the Group will continue to roll out products and services that are customer-centric and technologically relevant.

DIVIDEND DECLARATION I am pleased to announce that the Company declared a cash dividend of 0.90 US cents per share amounting to US$13.3 million, for the year ended 29 February 2016.

Payment of the dividend will be effected on or about 12 August 2016. Withholding tax will be deducted at a rate of 10%, where applicable.

Payments to foreign shareholders will be subject to exchange control approval and payment guidelines for foreign remittances. Dividend accounts will be funded on or about 12 August 2016. Foreign shareholders should appoint and make their own arrangements with a local bank of their choice to receive dividend on their behalf and to facilitate the foreign remittance for them.

The shares of the Company will be traded cum-dividend on the Stock Exchange up to the market day of 29th July 2016 and ex-dividend as from 1st August 2016.

APPRECIATIONI thank our customers, staff, shareholders, regulators and strategic partners, board members and management for their continued support.

DR. J. MYERSCHAIRMAN OF THE BOARD

23 May 2016

Chairman’s Statement to Shareholders (continued)

Innovation


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INTRODUCTIONIIn line with global trends, the local telecom industry is experiencing a decline in voice revenues. We anticipated this trend hence over the years we invested in new infrastructure and created an innovation pipeline to create new revenue streams.

In a shrinking economy, we maintained our market value share at 70% of the total market value while aggressively growing broadband and mobile financial services. These new innovations have lower margins compared to voice margins but contribute to overall profitability in a meaningful way as they are developed, largely, using the existing cost base. The decision to invest in data infrastructure is critical as data services are expected to eclipse voice services as the mainstay product of telecommunications operators.

Our continued innovation through such platforms as the EcoCash mobile money service has laid the foundation for future growth in overlay services. EcoCash remains the largest mobile money service in Zimbabwe, and one of the largest in the region. As at 29 February 2016, EcoCash had 5.8 million registered users and recorded transactions of over US$ 6.6 billion, both within Zimbabwe and from Zimbabweans remitting money from outside the country.

The Company’s resilience through continued investment in infrastructure and introduction of innovative products is key to surviving and growing in an increasingly volatile and complex economic environment. The Company increased its focus on cost optimization to protect profitability.

Services such as EcoSure and EcoFarmer registered growth during the period under review. For example, EcoSure has covered over 1 million lives during the course of the year while EcoFarmer now has 900 000 clients. We see great potential in these two services and have exciting plans for our customers in the near future. OPERATIONS REVIEWIn the last quarter of the financial year, it became increasingly difficult to make foreign payments as the country had low resources in its nostro accounts. We are monitoring the evolving macro-economic situation and we continue to take proactive measures to protect the business. We believe that EcoCash is the solution to the current liquidity challenges and can assist the country in mitigating the cash shortages.

To support growth in new products and services, the business invested in over 100 additional customer service channels. For customer convenience, all customer service channels offered a one stop shop facility including EcoCash and selected banking services. The Platinum Suite service centres introduced in 2014 continued to offer highly personalized and valuable services to clients. Econet won the overall Super Brand Award for the sixth year in a row in the Business-to-Business category of the Marketers Association of Zimbabwe (MAZ), with Buddie scooping the award in Business to Consumer category.

Chief Executive Officer’s Operations Review

Innovation, customer-centricity and business

efficiency continue to be the key drivers of

the business.

DOUGLAS MBOWENI | Chief Executive Officer

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Data usage continued to grow driven by our strategy to offer attractive data packages, which come with data capable devices. The business re-launched mobile data offload, an initiative that allows customers to offload their data to Wi-Fi thereby reducing mobile network traffic and improving the customers’ browsing experience. To induce uptake of mobile data and devices, we also introduced data bundling where a device purchase attracts a free data bundle allocation of as much as 6GB, usable for the first 3 months before one can then get to purchase data bundles on their own. This has significantly lowered the cost of our devices and subsequently increased device sales and mobile data uptake.

We increased our 4G/LTE sites during this financial year. This enhanced upload and download speeds.

To ensure compliance of all Econet subscribers to the requirements of Statutory Instrument SI95-2014, the business embarked on an intensive registration validation exercise in November and December 2015. Customers now have access to confirm and update their registration details online via a Self-Care solution.

The Government is working on regulations to implement mandatory infrastructure sharing for all telecommunications operators in Zimbabwe. We have submitted our concerns with certain aspects of the draft regulations and we await the outcome of the process.

My Econet Mobile App was launched in November 2015 which, among other functionalities, enables customers to activate on their own value added services, purchase airtime and data bundles, check balances, access the Econet social media pages and access Econet Promotions. A USSD based PUK Self Care solution was launched in October 2015 to enable customers to retrieve their PUK details at their convenience. Customer education support content was also developed to address awareness and education on the Self Care services.

We continued to offer our customers exciting and innovative value propositions. This saw the introduction of a nationwide “Mangwanani Zimbabwe” campaign which resonated with almost 7 million customers. An improved version of “Family and Friends” campaign was introduced in December 2015 and this service is expected to be dynamic in the next two years.

Airtime Credit Service (ACS) which allows Econet customers to borrow airtime loans, was revamped to include more denominations $0.30, $0.50 and $0.75. This has resulted in an increase of the number of customers actively using the service. Customer experience continues to be an area of priority focus for the business. In this regard, the business embarked on a massive nationwide network modernisation exercise that has seen the network improve nationwide, for the convenience of our customers.

In November 2015, the business introduced an exciting innovation, Ownai Online Market. The main goal of this product is to drive mobile data usage and subscriber loyalty in the market as part of our continued drive to grow revenues on data. Ownai is a platform where buyers and sellers meet, providing the biggest online classified adverts in Zimbabwe, zero rated to all Econet broadband subscribers.

FINANCIAL RESULTSProfit after tax of US$ 40.2 million was supported by growth in EcoCash and Data revenues and aggressive cost containment initiatives implemented during the year under review. The decline in profit after tax was largely due to the reduction in tariffs by the regulator by 35% with effect from 1 January 2015 as well as the continued deterioration in the economic environment. Capital expenditure intensity reduced to 14% from the previous year of 16% due to the robust investment made in our network in previous years. Our current investment focus is in 4G/LTE and network modernisation to deliver faster browsing speeds, increased network capacity, coverage and quality.

Restructuring of the balance sheet of Steward Bank resulted in the Bank reporting a profit before tax of $6.2 million. The loan to deposit ratio for the Bank averaged 58% reflecting cautious lending as a consequence of the current macro-economic environment.

OUTLOOKThrough our robust operating model, we are overcoming disruptive technology cycles and strong economic headwinds. The declining voice revenues will be eased by incentives and packages that suit declining disposable incomes and growing our broadband through wider 4G/LTE coverage, offering affordable smartphones and rolling out fibre to the home.

The ongoing cash shortages and the shortage of nostro value may impact on our ability to continously invest in the network. We will continue to be prudent in managing our external obligations.

Our focus will also be on growing mobile financial services through promoting EcoCash as a premier mobile merchant payment platform and broadening our mobile insurance offering. We are entering the media services space to enable us to offer media and entertainment services for our clients creating further headroom for value growth.

D. MBOWENICHIEF EXECUTIVE OFFICER

23 May 2016

Chief Executive Officer’s Operations Review (continued)


Mr Roy ChimanikireExecutive director -

Finance director

Dr James MyersChairman of the

Board of DirectorsIndependent Non-executive

director

Mr Strive MasiyiwaExecutive director

Mr Douglas MboweniExecutive director -

Chief Executive Officer

Mrs Tracy MpofuNon-executive director

Mr Krison ChirairoExecutive director

1 Dr James Myers Chairman Dr Myers was appointed to the board in May 2009. He

was appointed as Chairman of the board in December 2012. Apart from chairmanship of the board, Dr Myers chairs the board’s Remuneration Committee.

2 Mr Strive Masiyiwa Mr Masiyiwa is the founder of the Econet Group. His full

resume can be found on the Group’s website.

3 Mr Douglas Mboweni Mr 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.

4 Mrs Tracy Mpofu Mrs 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 a Chartered Accountant (South Africa).

5 Mr Krison Chirairo Mr Chirairo joined the Group in 1998. He was appointed to

the board in February 2007. He has an MBA and is a fellow member of both the Chartered Institute of Management Accountants and the Institute of Chartered Secretaries and Administrators. He also heads some of the Company’s subsidiaries.

6 Mr Roy Chimanikire Mr Chimanikire joined the Group in 2009 from Deloitte,

where he was a Partner. Mr Chimanikire is a qualified Chartered Accountant (Zimbabwe) and current President of the Institute of Chartered Accountants of Zimbabwe. He was appointed to the board in February 2016 as the Group’s Finance Director.

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Mr Godfrey Gomwe Independent Non-executive

director

Mr Martin EdgeIndependent Non-executive

director

Mr Craig FitzgeraldNon-executive director

Mrs Sherree ShereniIndependent Non-executive

director

Ms Beatrice MtetwaNon-executive director

7 Ms Beatrice Mtetwa A lawyer whose achievements in the legal field have

earned her international recognition, Ms Mtetwa was appointed to the board in October 2010.

8 Mrs Sherree Shereni Mrs Shereni is an Economist with diverse corporate affairs

experience in the soft drink beverage sector across Africa and Southern Asia. Her accomplishments in this field have been recognised internationally and have resulted in successful public-private partnerships and outcomes for business, governments and civil society throughout Africa. An accomplished former central banker, Mrs Shereni joined the Board in May 2013.

9 Mr Godfrey Gomwe Mr 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 (Zimbabwe) and sits on a number of other boards. He has vast experience in the

corporate world, having held various executive positions in the last 27 years.

10 Mr Martin Edge Mr Edge is a UK CA and an Oxford MA, 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.

11 Mr Craig Fitzgerald Mr Fitzgerald is a Chartered Accountant (Zimbabwe), as

well as an Associate Chartered Accountant (ICAEW). He was appointed to the board in 2003, and has over 16 years experience in the telecommunications industry regionally and internationally.

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Econet Premium offers the customer the sentimental feeling related with being on a post-paid package. The package comprises three categories Premium Unlimited, Premium and Premium Plus. Econet Premium packages are designed with corporates and individuals in mind as they come with flexible plans which allow customers to access the best device deals, personalised numbers, international roaming, data services and telemetry packages with a convenient 30 day post-paid billing cycle.


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From the Directors

The Directors have pleasure in presenting their report for the year ended 29 February 2016. As required by the Companies Act (Chapter 24:03) the Directors also present the audited financial statements as at the end of the financial year. In the report “Group” refers to Econet Wireless Zimbabwe Limited and its subsidiary companies.

Principal Activities and Operations ReviewThe Group’s main line of business is the provision of telecommunication services. However, innovation has remained one of the Group’s strategic commitments. The commitment to innovation has seen the Group expanding into new areas and diversifying its services to boost revenue. Through its subsidiaries and associates, the Group introduced a number of new products during the year.

A comprehensive review of the Group’s operations and results for the year are to be found in the Chairman’s Report and the Chief Executive Officer’s Operations Review.

As part of its oversight responsibilities, the Board, in conjunction with management, maintained a close watch on the impact of the regulatory environment.

Human CapitalThe continuing harsh economic environment in the country led to the Group having to review and restructure its human resources capital. The Board reviewed and approved the findings made and authorised implementation of the recommendations put forward. Initiatives implemented included, a resolution to reduce total gross compensation by 20% and retrenchment of over 150 employees.

Going forward the key focus area will be achieving continuous improvement in skills and productivity and remaining an employer of choice. To this end, the Group continues to provide career development opportunities, competitive remuneration and performance management.

Consolidated ResultsFull details of the financial results of the Group are set out in the accompanying financial statements.

DividendThe Company declared a cash dividend of 0.90 US cents per share amounting to US$13.3 million, for the year ended 29 February 2016.

Share CapitalThe Group’s authorised and issued share capital remained the same during the year. Details of the share capital are outlined in Note 24 of the financial statements.

Pursuant to the authority granted by shareholders at the annual general meeting held on 31 July 2015, the Group embarked on market purchases of its own shares. The total number of shares purchased came to 163,992,435. Shareholders will be asked at the forthcoming annual general meeting to renew the authority for share buy backs.

Directors The names of the Directors who served during the year are shown in the Board of Directors’ section.

As provided in Article 69 of the holding Company’s Articles of Association, Directors are not required to hold any shares in the company by way of qualification.

There was one change to the Board composition during the year: the appointment of Mr R Chimanikire as Finance Director. Following the appointment, the Board consisted of eleven members: four executive, three non-executive and four independent non-executive. In terms of Article 89.2 of the Company’s Articles of Association, Mr R Chimanikire will retire at the next annual general meeting and, being eligible, offers himself for re-election.

In terms of 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 will retire by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for re-election: Mr C Fitzgerald, Ms B Mtetwa and Mr K Chirairo.

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

Directors’ InterestsDetails of Directors’ interest in the share capital of the Company are shown on Note 25 of the financial statements.

The table on page 27 shows the number of meetings of the Board and its committees held during the year and the Directors’ attendance of those meetings. The table only covers the independent Directors. As a matter of policy, executive Directors attend meetings as required by the matters at hand and since they are not paid for their attendance, only the attendance of independent Directors is reported on.


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 Directors can exercise, on behalf of the Company, its powers to borrow money, as provided in Article 102 of the Company’s Articles of Association.

The details of the Group’s borrowing are set out in Note 30 to the financial statements.

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

Staff Pension FundA Board of Trustees administers the Group’s pension fund scheme. 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.

The recapitalization of the fund has been ongoing.

Special ResolutionsThe following special resolutions were approved and passed during the financial year at the Annual General Meeting held on 31 July 2015:- Special Resolution authorizing the Company to issue shares in dematerialized form.- Special Resolution authorizing the Company to deliver Directors’ Reports, Financial Statements and other documents in electronic form.- Special Resolution authorizing the payment of dividends through electronic means.

Corporate Social InvestmentDuring the year, the Group continued with its corporate social investment activities.

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

AuditorsThe proposal will be made at the next annual general meeting for Deloitte & Touche to continue as the Group’s auditors for the ensuing year.

By order of the Board

Dr J MyersCHAIRMAN

D MboweniCHIEF EXECUTIVE OFFICER

C A BandaGROUP COMPANY SECRETARY

23 May 2016

From the Directors (continued)

24

Buddie, Zimbabwe’s leading prepaid package has lived up to its promise of offering subscribers a deep-rooted friendship. With offers such as the Buddie Friends and Family &‘Good Morning Zimbabwe’, Buddie is committed to fulfilling the emotional needs of its customers by giving them products and services that will keep them connected with friends and family anytime, anywhere. The brand was awarded the 2015 Superbrand accolade, an indication that Buddie has created a love-mark in the hearts of the consumers. The brand will endeavor to give its customers more personalized and bundled offers that will enhance value to the consumers.


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The Group recognizes that good corporate governance is a critical aspect in terms of building shareholder value and giving assurance on the sustainability of the business. Accordingly, in the conduct of its business operations the Group ensures that the values of corporate governance, namely integrity, transparency and accountability, are observed and complied with. It acknowledges that an integral part of these values is to promote ethical, legal and transparent behavior in all its business dealings.

The Group continues to abide with the corporate governance principles set out in the King Codes and the recently promulgated Zimbabwe National Code on Corporate Governance as well as the mandatory principles of governance as contained in the Zimbabwe Stock Exchange listing requirements. The Group is also regulated by a number of regulatory authorities. Management maintains regular contacts with the regulators, the objective being to ensure the Group’s full compliance with the relevant laws and laid-down regulations.

THE BOARD OF DIRECTORS

Composition and appointmentThe Board has eleven members made up of four executive Directors, three non-executive Directors and four independent non-executive Directors. An independent 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, thus ensuring that the Board has the right balance of skills and experience. 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 31 July 2015, the following Directors were re-elected: Dr J Myers, Mr M Edge and Mrs T Mpofu.

Accountability and delegated functionsThe Board is responsible for the overall conduct of the Group’s business in accordance with statutes and generally accepted principles of board duties. It is responsible for the Group’s vision and strategic direction, its values and its governance. The Board is accountable to shareholders for the performance of the business and the Group’s long-term success. It is the Board’s responsibility to provide the leadership required for the Group to meet its performance objectives.

The Board is 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 Board monitors management’s performance and also ensures 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.

Stakeholder EngagementThe Board recognises the importance of engaging with stakeholders as a key aspect of good corporate governance. To this end, the Board has delegated to the Chief Executive Officer, the Finance Director and the Chairman the responsibility of communicating with stakeholders and the investment community. Regular briefing meetings are held with analysts, institutional investors and the media at which a wide range of areas are covered, among them the Group’s strategy, financial performance and corporate governance. The Board is kept fully appraised of the results of these engagements.

RightsAll Directors have unhindered access to the services of the Group Company Secretary who ensures that all board members observe the administration protocols of board and board committee proceedings.

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, Mrs S Shereni and Mr R Chimanikire (appointed to the board on 1 February 2016).

Directors’ interestsDirectors’ interests are disclosed before any board meeting and Directors are requested to disclose their interests whenever these arise. This practice is in line with the requirements of good corporate governance.

Governance Statement

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BOARD COMMITTEES

To ensure that the Board can devote as much time as possible to strategic matters, the Board has delegated some of its functions to board committees. This ensures that each specific area is subject to an appropriate level of scrutiny. The Board has four committees: Audit Committee, Risk Committee, Remuneration Committee and Social and Ethics Committee. The committees are each chaired by independent non-executive Directors.

The committees deal with specific matters delegated to them by the Board. Each committee operates under its terms of reference.

Audit CommitteeThe Committee’s primary role is to oversee the management and effectiveness of the Group’s accounting and internal control systems. It provides, on behalf of the Board, effective control over the Group’s finances and financial results and reviews the activity of the internal audit function and the performance of the Group’s external auditors. In this regard, it holds regular meetings with the Group’s external and internal auditors to assess risk management and review accounting principles.

The Committee takes note of new legislation and new international reporting standards and ensures that these are implemented by the business.

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, R. Chimanikire (Attendees). The Chairman and two members of the Committee are independent non-executive Directors.

Risk CommitteeThe Committee’s primary function is to oversee the risk management of the Group and to identify and monitor the key risk factors that may affect the Group. The Committee is cognisant of the fact that not all risks are within the control of the Group; it nevertheless brings these to the attention of the Board.

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 what measures to undertake to mitigate the risks. A particular area of focus is to ensure compliance by the Group of all legal requirements relating to its line of business. As is the case with the other committees, the ultimate objective of the Committee’s function is to contribute to the building of a long-term sustainable business.

Members of the Committee are: Mrs S Shereni (Chairperson), Mr M Edge (Member) and Mr D Mboweni (Member).

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.

MEETING ATTENDANCE: INDEPENDENT NON-EXECUTIVE DIRECTORS

NAME

EWZL AUDIT

COMMITTEE RISK

COMMITTEE REMUNERATION

COMMITTEE SOCIAL & ETHICS

COMMITTEE TOTAL NUMBER OF MEETINGS 4 4 4 2 2

J. MYERS 4 4 N/A 2 N/A

G. GOMWE 4 N/A N/A N/A 2

S. SHERENI 4 4 4 N/A N/A

M. EDGE 4 4 3 N/A 1

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Remuneration CommitteeThe Committee advises the Board on, and handles on the Board’s behalf, issues relating to human resources, in particular remuneration, incentives and talent management. The ultimate objective is to attract into the Group, people with the right skills and thereafter retain and motivate those people.

During the year, in response to the continuing negative economic environment, the Committee oversaw a staff rationalization process that resulted in a restructuring of the Group’s operations.

The members of the Committee are: Dr J Myers (Chairman), Mr C Fitzgerald (Member), Mrs T P Mpofu (Attendee) and Mr D Mboweni (Attendee). The Chairman of the Committee is an independent non-executive director.

The Committee met twice during the year. The Chief Human Resources Officer attends the committee meetings and provides support and reports on matters for the Committee’s consideration. Social and Ethics CommitteeThe primary function of the Committee is to assist the Board in matters pertaining to sustainability, stakeholder management, good corporate citizenship, ethics management, employment equity and ensuring regulatory compliance. During the year, the Committee recommended to the Board the Group’s adoption of the United Nations Global Compact Principles and the Organization for Economic Co-operation and Development (OECD) principles regarding corruption. It also emphasized the importance of effective stakeholder management and pursuance by the Group of its social responsibility commitments.

Membership of the Committee is made up of three non-executive Directors, including the Chairman who is independent and one executive director. The following are the members of the Committee: Mr G Gomwe (Chairman), Mr K Chirairo (Member), Mrs T Mpofu (Member), Mrs B Mtetwa (Member).

Investor RelationsThe Group continues to recognize 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 interim 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 practicesIn terms of employment and equity practices the Group continues to instill in its people a culture of integrity, honesty and accountability. The overall objective is to ensure that the Group, through its people, performs well in terms of service and value delivery.

The Group is committed to equality of opportunity. 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.

Leadership development remains one of the key focus areas, the aim being to strengthen leadership skills within the Group. The Group also has in place an intern and apprenticeship programme through which it prepares young people for entry into the labour market.

The Group recognises the importance of effective employee communication. Accordingly, a communication system is in place to keep employees informed of announcements and important developments in the Group.

Governance Statement (continued)

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The Group also recognizes 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.

Independence of AuditorsThe Group’s Audit Committee confirms the independence of the Auditors, Deloitte & Touche, who are engaged by the Group for audit-related services. A resolution to re-appoint them as auditors for the ensuing year will be proposed at the 2016 annual general meeting. Whenever necessary, the Group calls upon the services of other firms to assist with non-audit management consultancy work.

Going concernThe Directors have assessed, subject to the current and anticipated economic conditions, the Group’s ability to continue as a going concern and hereby confirm that they are satisfied that the Group has adequate financial resources to continue in operational existence for the foreseeable future.

By order of the Board

Dr J MyersCHAIRMAN


C A BandaGROUP COMPANY SECRETARY

23 May 2016

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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 comprehensive risk management and internal control structures in place that enable the business to identify and analyze risks early and take appropriate action. The risk management and internal control system is designed to identify potential events that could negatively impact the Company and to provide reasonable assurance regarding the achievement of the Company objectives, specifically the ability to achieve 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 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 Company’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.

The Risk Division structure comprises of six independent and objective units namely:

• Internal Audit,• Corporate Risk,• Safety, Health and Environment• Business Continuity Management• Security & Investigations• Revenue Assurance and Fraud Control

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 role of corporate risk is to coordinate the Enterprise Risk Management (ERM) across the Group. In 2015/16, the corporate risk department focused on the following key areas:

Risk Report• Risk culture entrenchment within the business.• Automation of the enterprise risk management system.• Continued development and implementation of business processes.• Updated Risk Registers.

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 once all the key processes are operational. Major benefits of this programme will be business resilience, mitigating impact of disruptions, prioritisation of processes during recovery from a disruption and maintaining optimum client delivery levels. Crisis Management Trainings were conducted for 99% of the staff. Business resilience testing of some key Network components and systems that have failover capabilities already built have been carried during the course of the year. Evacuation drills for key sites are also being carried out regularly to ensure that staff members are prepared for site “denial of access” emergencies.

Security and InvestigationsThe Security and Investigations unit is responsible for asset protection and fraud prevention, detection and investigation. The function conducts regular security risk assessments to ensure adequacy of security measures vis-à-vis security risks the business may be faced with. It also performs regular fraud risk assessments on those areas within the business which are susceptible to the risk of fraud with the major areas being Procurement, Inventory, EcoSure, EcoCash, and Accounts Payable.

Revenue Assurance and Fraud ControlThe Revenue Assurance and Fraud Control function carries out activities aimed at timeous detection and closure of identified revenue leakages ensuring all products are delivered as expected, all services are correctly and completely charged and all revenues fully realised.

The assurance processes ensure that customers consume excellent products and services that have been de-risked from technical frauds considering the huge volumes of transaction. Management has put in place a Fraud Control framework that developed a continuous near-real time monitoring of emerging fraud issues, their effective detection, investigation and prevention and closure thus ensuring customers enjoy a unique experience in a low risk network environment.

The key pillars are:• Product, Infrastructure, Process and Partner Assurance: ensuring new products and services are integrated within the current revenue assurance and fraud management framework and scope.• Billing Assurance: ensuring accuracy of rating and billing of products and services.• Settlements and Accounting: to provide reasonable assurance that invoicing of services is accurate.• Measurement and Reporting: to provide assurance that reported revenue figures are accurate.

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• Usage Assurance: to provide assurance that all the usage being generated is being captured and data is complete for reporting purposes.• Investigations and corrective actions implementation continue to enhance improvements.

Environment and Social Commitment Econet Wireless (Private) Limited recognises that its activities could have both positive and negative impact on people, communities and the environment within which it operates. It is therefore committed to conducting ethical business practices which maintain and enhance the balance between economic, environmental and social aspects.

The environmental and social management programs are based on ISO Standards 14001 Environmental Management, 26000 Social Responsibility, 22301 Business Continuity Management, Occupational Health and Safety Assessment Series 18001 and IFC Performance standards.

Environmental and Social Systems and Programmes The Company continues to invest in Environmental and Social programmes with most of the expenditure going towards environmental, social and governance initiatives.

Carbon Footprint Reporting The thrust 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.

The business continued to evaluate and manage the carbon footprint levels and energy utilization.

The measurement focused mainly on Scope 1 + 2 (t CO2e) based on the GHG Protocol requirements.

• Scope 1 emissions (direct emissions from the combustion of fuel in BTS sites, buildings and company vehicles and the use of refrigerants) account for 37.5% of the company Scope 1 + 2 (t CO2e) .

• Scope 2 emissions (indirect emissions associated with the use of purchased electricity at EWZ controlled premises) account for 62.5% of the company Scope 1 + 2 (t CO2e).

Carbon foot print by Scope FY 2016 (tCO e/%)

Scope FY 2015 Percentage %

FY 2016 Percentage %

Scope 1 20 058 41% 22 781 37.5%

Scope2 29 315 59% 37 991 62.5%

Total 49 373 60 772

Scope 1 and 2 emissions present the greatest opportunity for improvement, with the following initiatives being implemented: • Decreasing the use of diesel in generators to BTS sites

through the use of hybrid energy solutions and external cooling. However, outages in electrical energy supply have played a significant role in the use of diesel run generators.

• The business has started reducing energy consumption through the implementation of the Hybrid Energy management systems and network modernisation. These comprises of moving equipment from indoor to outdoor in the Network (Telecommunication Infrastructure) which have a potential net reduction in power consumption of 30%.

• The utilisation of e-conference telecommunication systems such as teleconferencing, thus reducing travelling and consequent use of fuels.

Integrated Waste Management There was focus on Integrated Waste Management systems in line with best practices aimed at ensuring efficiencies in resource utilisation, legal compliance and environmental management. Key objectives of this initiative was based on the 4 Rs which are Reduce, Reuse, Recycle and Resale which will go a long way in waste management and cost minimisation.

The business entered into Obsolete Equipment Take Back programmes with key equipment suppliers as part of ensuring environmental friendly methods of disposal for electronic waste.

Quantities of Waste Recycled From 2012 – 2015

Used batteries, oil, feeder cables, scrap metal and waste paper is being sold to legally certified companies for recycling.

53,088

14,750 12,315

158,500

3,789

Batteries(kgs)

UsedOil(Litres)

FeederCables(kgs)

ScrapMetal(kgs)

Paper(kgs)

Scope137.5%

Scope262.5%

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Employee Wellness Programmes and Engagement Employee wellness and engagement is core to our corporate strategic pillar of creating people and cultural excellence. The business continued to promote quality of working life through the implementation of the following initiatives:• Staff engagement surveys to understand the stakeholder

expectations and needs.• Safety Health and Environmental Champions trainings to

ensure capacity for risk management.• Emergency and disaster management programmes to

ensure effective response to crises in the business.• Regular stakeholder engagement through Safety, health

and environment committees.• Providing regular medical counselling through the

company doctor where necessary.• Investigation of occupational incidents and providing

necessary risk mitigation strategies. Environmental and Social Management Performance The management of environmental and social performance remains key to meeting operational obligations. The following strategic initiatives were undertaken to ensure continual system improvements:• Monitoring and management of top key environmental and

social risks which include: infrastructure, access roads, legal compliance, working at heights and management of hazardous substance and pollution, including contractor supervision.

• Periodic risk assessments to identify risks and improve intervention strategies.

• Annual audits to ensure the evaluation of the environmental and social management programme implementation.

• Continuous monitoring and tracking of legal compliance and updating of legal registers.

• Investigation of accidents and incidents in order to identify root causes and develop necessary interventions.

• Regular reporting on environmental performance in line with International Finance Corporation and regulatory reporting requirements.

• Regular engagement with regulatory authorities to ensure effective stakeholder management.

Accidents Statistics 2013 to 2016 Comparative AnalysisThe reportable accidents and incidents increased by 40% from 2015 to 2016. The motor vehicles accidents and incidents were attributable to human error. The Vehicle Care Inquiry Committee continues to interrogate all vehicle accidents for mitigation of fleet risks. Efforts currently being focused on intensifying defensive driver trainings.

Risk Report (continued)

Statistical variables 2013 2014 2015 2016

Occupational fatalities - - - -Occupational injuries 2 14 5 4Environmental accidents 1 4 1 2Motor Vehicle accidents 67 85 39 77Other( Fires, Property damage) - - 3 5

Grand Total 70 103 48 88

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Stakeholder Management The Company continued to engage with its stakeholders in order to ensure that their needs and expectations are addressed for guaranteed business sustainability and growth. The initiatives that were undertaken in 2016 included the:• implementation of a software to ensure stakeholder registry,

interactions and reporting. • development of the differentiated Econet Wireless story

to ensure stakeholders have a better understanding of the business.

Identified Key Stakeholders Environmental and Social Focus for 2017The environmental and social management focus for the coming financial year will target the following strategic areas;• Environmental and social culture entrenchment • The finalisation of the differentiated Econet story and its

full implementation. • Evaluation and review of the Stakeholder management

programme. • Continuous implementation of the carbon footprint,

energy management systems and green business initiatives.

• The full implementation of Integrated Waste Management Systems.

Overlay services


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Since inception, the EcoCash subscriber base has been growing. Currently more than 5.5 million Zimbabweans are registered on the platform supported by over 21,000 agents countrywide. Customers are able to pay for their utility bills, pay for goods and services at one of the several registered EcoCash merchants, make secure online payments and pay at over 47 million MasterCard points worldwide with the Debit/Express Card, among other use cases.


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Corporate Social Investment

Econet Group acknowledges the tremendous support and goodwill it enjoys from the community in which it operates. As a result of this realization, Higherlife Foundation was formed with the sole mandate to drive the Group’s corporate social investment in the community.

Higherlife Foundation continues to strengthen its social impact investment through creating empowerment opportunities and supporting orphaned and vulnerable children by giving them access to education, improving the quality of education as well as lifelong development. Notable interventions for the year under review are as follows-

Access to EducationHigherlife Foundation has transformed and impacted the lives of over 200 000 disadvantaged scholars and academically gifted students between 1996 and 2015. From 2006 to 2015, over 1 000 academically gifted children have been supported through affording them scholarships for education from high school through to tertiary. Over 4 000 tertiary students supported to date and a total of 155 supported on international scholarships. The international tertiary colleges include: Harvard, Yale, Morehouse, Luther. With the country experiencing severe food shortages, over 4 000 beneficiaries and households received food support to enable children to remain in school impacting over 30 000 individuals in families of the beneficiaries. Nutritional packs were distributed to vulnerable households. The aim being to ensure that vulnerable children continue to attend school and complete their studies successfully.

Quality of EducationWe have set up 30 learning hubs countrywide, which offer improved learning opportunities to over 400 000 people. This has enhanced exposure to the ‘Internet of Things’ to communites which ordinarily would not have such access. The Higherlife Foundation has strategically transformed the quality of education via digital solutions. Since the introduction of digital solution, challenges such as lack of textbooks, higher teacher-pupil ratios and poor pass rates have been alleviated.

Lifelong developmentWe embarked on a drive to establish on-line mentorship platform through Higherlife Alumni. This strategy complements our access to education initiative. This platform created opportunities to beneficiaries to attain holistic personal development.

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Our Staff

Employee engagement is a key enabler to business performance. Econet believes and ensures that the people pillar of the business strategy is supported throughout the organisation. A bi-annual employee engagement survey is being used to motivate our people to contribute to organisational success, with an enhanced sense of own well-being.

Targeted interventions are derived from the engagement survey reports to ensure that employee engagement is being supported across all levels in the organisation. The launch of the Econet Games, a year-long internal sports league, has been designed to build and sustain teamwork and friendship across the country. Quarterly, Lady in Leadership Forums are being facilitated to supplement the career progression of our female management into executive positions. Frequent video clip messages from the executive team, and monthly news broadcasts are distributed to ensure unity in understanding and open communication. The organisation continues to support the Live to Love program whereby employees, their spouses and their children living with HIV and AIDS are offered medical support.

Econet maintains its employer of choice status through sustainable talent management interventions aimed at attracting, developing and retaining talent. In terms of talent resourcing, Econet applies multiple tools to attract and select talent including web based social media tools

in line with modern recruitment trends. The annual training and development calendar encompassing both classroom and e-learning interventions, is being executed to develop technical and soft skills across all identified areas of need. Career succession planning is an integral process to ensure the talent pipelines are highly profiled and developed for the future. An immensely competitive graduate trainee program is being facilitated across internal functions. The Econet Young Professionals program includes thirty high performers from all areas of the organisation who are below the age of thirty years. This program has been designed to stimulate broad business administration skills and thinking in our future leaders. The Millward Brown Cross Functional Teamwork initiative stimulates collaboration across skill sets and the execution of initiatives across the value chain. The International Employee Exchange program has been designed to stimulate knowledge sharing across the regions.

Through the performance management system, we have managed to create a culture of ownership, accountability and perseverance for results. The alignment of individual outputs to the overall performance of the value chain is a fundamental premise. Individual performance is monitored through customised bi-annual appraisals which are calibrated based on functional and business performance. Recognition and retention of individuals who deliver exceptional performance is a key outcome of the bi-annual performance management process.

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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.


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Econet Coverage Map - February 2016

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 centres and towns. 4G LTE service will continue to be rolled out to cover most of the urban centres of Zimbabwe.

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OTPR

INT

Bulawayo

Harare

Mutare

Gweru

Kwekwe

Kadoma

Masvingo

Beitbridge

Bindura

Chimanimani

Chipinge

Chiredzi

GokweHwange

Kariba

Nyanga

Rusape

Shurugwi

Zvishavane

Hwange Safari Lodge

Binga

Matopos

Victoria Falls

Bomani

Chinhoyi Caves

Chikomba

Chirumhanzu

Hurungwe

Mudzi

Zambara

Cashel Valley

HaunaNyazura

Odzi

Chiendambuya

Muzokomba

Nyangombe

Chikore

Stapleford

Zamuchiya

Fombe

Insuza

Nyamandlovu

Nkayi

Mtshabezi

Tamba

Syringa Shamba RangeNatisa

Siabuwa

Zezani

Kariyangwe

Sun Yet Sen

Sipepa Siganda

Ndolwane

Ngulumbi Hills

Gwelutshena

Dhlamini

Manoti

Nembudziya

Munyati

Sanyati

Charundura

Pakame

Mabasa

Tchoda

Nyama

BeatriceChakari

MadziwaMagunje

MarongoraMavhuradonha

Mukumbura

Murehwa

Mutoko

MvurwiSiyakobvu

Hwedza

Kutama

Kanyemba

Mudzi

Angwa Bridge

Bakasa

Mamina

Marirangwe

Trelawney

Tengwe

Chundu

Lustleigh

Nhowe

Chikombedzi

Chambuta

Jerera

Rutenga

Malipati

Chikwanda

Mwenezi

Sese

Nehanda BC

ChisumbanjeSarahuru

Mutero

Maitengwe

3G COVERAGE

2G COVERAGE

4G COVERAGE

It is hereby certified in terms of the Companies Act

(Chapter 24.03) that Econet Wireless Zimbabwe Limited

has for the year ended 29 February 2016 lodged with the

Registrar of Companies all such returns required by the

Act and that all the returns are correct and up to date.

C. A. Banda

GROUP COMPANY SECRETARY

23 May 2016

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C. A. BANDA | Group Company Secretary

Certificate by the Group Company Secretary

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FINANCIAL REPORTING

Directors’ Responsibility for Financial Reporting 46

Independent Auditors’ Report 47

Consolidated Statement of Financial Position 48

Consolidated Statement of Comprehensive Income 49

Consolidated Statement of Changes in Equity 50

Consolidated Statement of Cash Flows 51

Notes to the Financial Statements 52

Policy Notes to the Consolidated Financial Statements 90

Infrastructure,Innovation,

Cost optimisation &Social responsibility


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Directors’ Responsibility for Financial Reporting

The Directors are required by company law to prepare and present financial statements for each financial year and to ensure that these provide a true and fair view of the Group’s financial performance. Econet Wireless Zimbabwe Limited and its subsidiary companies’ independent external auditors, Deloitte & Touche, 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. Directors are satisfied that appropriate accounting policies and applicable accounting standards have been followed.

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 29 February 2016. They further confirm that they are of the opinion that the Group has adequate financial resources to remain as a going concern in the forthcoming year.

The financial statements set out on pages 48 to 110 were approved by the Board of Directors on 23 May 2016 and signed on its behalf by:-

Dr J MyersCHAIRMAN


R. ChimanikireFINANCE DIRECTOR

23 May 2016

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P O Box 267 Deloitte & ToucheHarare West BlockZimbabwe Borrowdale Office Park Borrowdale Road Harare

Tel: +263 (0)8677 000261 +263 (0)8644 041005 Fax: +263 (0)4 852130 www.deloitte.com

Report of the Independent Auditorsto the Members of Econet Wireless Zimbabwe LimitedREPORT ON THE FINANCIAL STATEMENTSWe have audited the accompanying consolidated financial statements of Econet Wireless Zimbabwe Limited and its subsidiaries (the “Group”), which comprise the consolidated statement of financial position as at 29 February 2016, the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and the notes, comprising a summary of significant accounting policies and other explanatory information set out on pages 48 to 110.

Directors’ responsibility for the financial statementsThe Directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and the Companies Act (Chapter 24:03) and relevant statutory instruments (SI 33/99 and SI 62/96). This responsibility includes; designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor’s responsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

OpinionIn our opinion, the financial statements present fairly, in all material respects, the financial position of the Group as at 29 February 2016, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards and in the manner required by the Companies Act (Chapter 24:03).

Report on other legal and regulatory requirementsIn our opinion, the financial statements have, in all material respects, been properly prepared in compliance with the disclosure requirements of the Companies Act (Chapter 24:03) and the relevant statutory instruments (SI 33/99 and SI 62/96).

Deloitte & ToucheChartered Accountants (Zimbabwe)Harare

23 May 2016

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All figures in US$ Note 2016 2015ASSETSNon-current assetsProperty, plant and equipment 11 695,554,976 736,320,233 Investment property 13 5,419,906 4,167,267 Intangible assets 14 133,224,299 140,776,068 Deferred tax asset 15.1 10,896,633 19,000,816 Goodwill 43.3 6,090,632 6,090,632 Investment in associate 17.1 39,331,536 29,816,203 Financial instruments: -Held-to-maturity investments 16 19,231,953 40,177,977 -Available-for-sale investments 18 2,440,125 3,173,882 -Loans and advances - long term portion 23.6 43,952,830 20,676,622 -Other receivables - long term portion 22 - 12,954,603 Total non-current assets 956,142,890 1,013,154,303

Current assetsAssets classified as held for sale 12 461,842 - Inventories 21 11,903,108 18,533,606 Financial instruments: -Held-to-maturity investments 16 34,861,056 - -Trade and other receivables 22 78,865,239 88,334,541 -Financial assets at fair value through profit or loss 20 1,026,402 408,820 -Loans and advances 23.6 13,928,070 40,821,466 -Cash and cash equivalents 32.4 99,715,542 95,238,733 Total currents assets 240,761,259 243,337,166

Total assets 1,196,904,149 1,256,491,469

EQUITY AND LIABILITIES

Capital and reservesShare capital and share premium 24.2 40,763,691 40,763,691 Retained earnings 614,225,287 614,111,627 Other reserves 26 2,545,732 5,894,089 Equity attributable to owners of Econet Wireless Zimbabwe Limited 657,534,710 660,769,407

Non-controlling interest 4,362,294 4,525,321 Total equity 661,897,004 665,294,728

Non-current liabilitiesDeferred tax liability 15.2 112,220,626 120,458,424 Financial instruments - long-term interest-bearing debt 30 112,343,137 165,757,698 Non-current provisions 28 3,487,561 1,386,349 Total non-current liabilities 228,051,324 287,602,471

Current liabilitiesDeferred revenue 29 17,833,806 18,381,526 Provisions 28 2,500,087 3,689,911 Financial instruments: -Trade and other payables 27 134,166,854 133,492,941 - Short-term interest bearing debt 30 110,734,999 98,175,726 - Deposits due to banks and customers 31.1 31,222,056 41,635,843 Income tax payable 10,498,019 8,218,323 Total current liabilities 306,955,821 303,594,270

Total liabilities 535,007,145 591,196,741 Total equity and liabilities 1,196,904,149 1,256,491,469

Dr J. Myers D. Mboweni R. ChimanikireCHAIRMAN OF THE BOARD CHIEF EXECUTIVE OFFICER F INANCE DIRECTOR

23 May 2016

Consolidated Statement of Financial Position As at 29 February 2016

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Consolidated Statement of Comprehensive Income For the year ended 29 February 2016

All figures in US$ Note 2016 2015

Revenue 2 640,988,500 746,182,640

Cost of sales and external services sold (216,804,706) (245,866,765)

Gross profit 424,183,794 500,315,875

Other income 8 8,993,617 6,590,029 Share of profit of associate 17.2 9,515,333 9,048,017 General administrative expenses (127,566,500) (137,170,693)Marketing and sales expenses (37,579,676) (41,401,294)Network expenses (34,929,723) (47,971,645)Other expenses (4,197,126) (3,765,725)

Profit before net finance costs, taxation, depreciation and amortisation 238,419,719 285,644,564

Depreciation, amortisation and impairment (136,555,767) (126,289,195)

Profit before net finance costs and taxation 4 101,863,952 159,355,369

Finance income 6 2,826,627 1,064,612 Finance costs 7 (36,229,396) (37,076,496)

Profit before taxation 68,461,183 123,343,485

Income tax expense 9 (28,260,817) (53,135,878)

Profit for the year 40,200,366 70,207,607

Other comprehensive (loss)/incomeItems that may be reclassified subsequently to profit or loss:Fair value (loss)/gain on available -for- sale investments 5 (723,533) 208,631

Total comprehensive income for the year 39,476,833 70,416,238

Profit for the year attributable to:Equity holders of Econet Wireless Zimbabwe Limited 40,363,393 70,256,228 Non-controlling interest (163,027) (48,621)

40,200,366 70,207,607

Total comprehensive income attributable to:Equity holders of Econet Wireless Zimbabwe Limited 39,639,860 70,464,859 Non-controlling interest (163,027) (48,621)

39,476,833 70,416,238

Basic earnings per share (dollars) 10 0.03 0.04

Diluted earnings per share (dollars) 10 0.03 0.04

Consolidated Statement of Changes in Equity For the year ended 29 February 2016

Attributed to the equity holders of Econet Wireless Zimbabwe Limited

Total

Share capital

and share premium

Retained earnings

Otherreserves

(Note 26)

Total All figures in US$ 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 - (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

Profit for the year - 40,363,393 - 40,363,393 (163,027) 40,200,366

Other comprehensive loss - - (723,533) (723,533) - (723,533)Fair value loss on available-for-sale investments - - (733,757) (733,757) - (733,757)Taxation effect of other comprehensive loss - - 10,224 10,224 - 10,224

Total comprehensive income - 40,363,393 (723,533) 39,639,860 (163,027) 39,476,833

- (40,249,733) (2,624,824) (42,874,557) - (42,874,557)Utilisation of treasury shares - 2,201,664 - 2,201,664 - 2,201,664 Purchase of treasury shares - (40,065,949) - (40,065,949) - (40,065,949)Dividend - (4,981,117) - (4,981,117) - (4,981,117)Transfer to regulatory reserves - 1,617,656 (1,617,656) - - - Reclassification - 978,013 (980,312) (2,299) - (2,299)Revaluation loss on property, plant and equipment - - (26,856) (26,856) - (26,856)

Balance at 29 February 2016 40,763,691 614,225,287 2,545,732 657,534,710 4,362,294 661,897,004

Non-controlling

interest


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Consolidated Statement of Cash FlowsFor the year ended 29 February 2016


Operating activities

Cash generated from operations 32.2 244,681,258 226,962,021

Income tax paid 32.3 (25,565,711) (51,421,332)

Net cash flows from operating activities 219,115,547 175,540,689

Investing activities

Finance income (77,562) 984,551 Acquisition of intangible assets 14 (1,507,228) (6,841,825)Acquisition of financial assets at fair value through profit or loss 20 (626,255) (332,635)Acquisition of investment property 13 - (494,567)Acquisition of held-to-maturity investments (13,100,000) (30,722,081)Repayments on held-to-maturity of investments 16,089,157 2,360,205 Net cash inflow on acquisition of subsidiary 43.1 - 120,631 Incorporation of subsidiary - 300,000 (Decrease)/increase in deposits due to banks and customers (10,413,787) 22,272,479 Increase in loans receivable (450,000) - Increase in loans and advances (732,212) (12,393,019)Purchase of property, plant and equipment: - to expand operating capacity (81,340,595) (118,545,457)Proceeds on disposal of property, plant and equipment 326,487 175,702

Net cash used in investing activities (91,831,995) (143,116,016)

Financing activities

Finance costs (36,436,678) (36,593,731)Dividends paid (4,834,306) (29,815,016)Share (buy-back)/disposal (40,065,949) 34,721,172 Proceeds from borrowings 30 45,267,660 120,963,640 Repayment of borrowings 30 (86,737,470) (97,793,026)

Net cashflows used in financing activities (122,806,743) (8,516,961)

Net increase in cash and cash equivalents 4,476,809 23,907,712

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

Cash and cash equivalents at the end of the year 32.4 99,715,542 95,238,733

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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 Operations Econet Wireless (Private) Limited provides cellular network services which form the main business of the Group. Financial Services Steward Bank Limited provides retail, corporate, and investment banking services in the key economic centres of

Zimbabwe. EcoCash provides mobile money services, while Transaction Payment Solutions (Private) Limited provides financial transaction switching, point of sale and value added services that exploit the convergence of banking, information technology and telecommunications. Econet Life provides funeral cover.

Beverages Mutare Bottling Company (Private) Limited provides beverages to both individual and corporate clients. Investments and Administration Included in this segment is EW Capital Holdings (Private) Limited which is the investment vehicle through which

the Group holds investments listed on the Zimbabwe Stock Exchange and Econet Wireless Zimbabwe Limited, the Group’s holding company.

Reporting 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 Financial StatementsFor the year ended 29 February 2016

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1 OPERATING SEGMENTS (continued)

Segment information for the year ended 29 February 2016

Cellular Network

Operations Financial Services

Beverages

Investments and

administration

All other

Segments Segment

Total

Adjustments and

eliminations

Group Total

Revenue from external customers* 530,397,733 84,149,335 15,453,241 - 1,939,099 631,939,408 - 631,939,408

Revenue from transacting with other operating segments of the same entity - 407,054 - - - 407,054 (407,054) -

Interest income from banking operations - 9,049,092 - - - 9,049,092 - 9,049,092 Total revenue 530,397,733 93,605,481 15,453,241 - 1,939,099 641,395,554 (407,054) 640,988,500Depreciation (117,474,402) (3,786,882) (1,541,015) - (13,876) (122,816,175) - (122,816,175)

Amortisation and impairment of intangibles (9,106,462) (293,911) - - - (9,400,373) - (9,400,373)

Impairment of property, plant and equipment (3,897,675) (441,544) - - - (4,339,219) - (4,339,219)

Finance income 6,042,211 5,538,479 47,131 - 2,150 11,629,971 (8,803,344) 2,826,627

Finance costs (44,708,393) (77,688) (1,139,870) - - (45,925,951) 9,696,555 (36,229,396)

Share of profit of associate - - - 9,515,333 - 9,515,333 - 9,515,333

Income tax expense (23,104,405) (5,966,335) 699,445 - 110,478 (28,260,817) - (28,260,817)

Segment profit/(loss) 16,653,443 16,372,298 (492,975) 7,703,075 (1,235,827) 39,000,014 1,200,352 40,200,366

Acquisition of segment non-current assets*** (75,677,957) (12,564,535) (625,410) - (821,255) (89,689,157) - (89,689,157)

Segment assets** 1,207,705,127 293,443,624 30,002,439 193,637,230 2,328,895 1,727,117,315 (530,213,166) 1,196,904,149

Segment liabilities 480,674,819 203,505,629 19,172,513 238,650,301 3,969,358 945,972,620 (410,965,475) 535,007,145

*Revenue for all other segments includes medical aid subscriptions and gas operations. **Included in segment assets is an amount of $39 331 536 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 2015

Cellular Network

Operations Financial Services

Beverages

Investments and

administration

All other

Segments Segment

Total

Adjustments and

eliminations

Group Total

Revenue from external customers 647,534,217 71,402,995 19,150,946 - 832,406 738,920,564 - 738,920,564

Revenue from transacting with other operating segments of the same entity

- 1,040,886 - - - 1,040,886 (1,040,886) -

Interest income from banking operations - 7,262,076 - - - 7,262,076 - 7,262,076 Total revenue 647,534,217 79,705,957 19,150,946 - 832,406 747,223,526 (1,040,886) 746,182,640Depreciation (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)

Impairments of property, plant and equipment & intangible assets

(713,818) (2,808,159) - - - (3,521,977) - (3,521,977)

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) (972,234) 197,822 (11,496) (10,039) (53,135,878) - (53,135,877)

Segment profit(loss) 64,642,643 (183,279) 241,189 9,045,328 (679,952) 73,065,929 (2,858,322) 70,207,607

Acquisition of segment non-current assets (116,105,283) (6,112,138) (2,269,245) - (1,395,886) (125,882,552) - (125,882,552)

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

Included in segment assets is an amount of $29 816 203 pertaining to an investment in associate accounted for using the equity method.

Notes to the Financial Statements (continued)For the year ended 29 February 2016

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1 OPERATING SEGMENTS (continued)

All figures in US$ Note 2016 2015Reconciliation of profit

Segment profit 39,000,014 73,065,929

AdjustmentsRevenue (407,054) (1,040,887)Cost of sales 11,090,311 6,416,934 Operating expenses 2,505,212 1,863,447 Other expenses (12,881,330) (8,568,333)Investment expense/(income) 893,213 (1,529,483)

Group profit 40,200,366 70,207,607

Reconciliation of assets

Segment operating assets 1,727,117,315 1,679,908,772 Investment in subsidiaries (127,881,312) (127,881,312)Inter-company receivables and investments (402,331,854) (295,535,991)

Group operating assets 1,196,904,149 1,256,491,469

Reconciliation of liabilities

Segment operating liabilities 945,972,620 874,006,767 Inter-company payables and bank deposits (410,965,475) (282,810,026)

Group operating liabilities 535,007,145 591,196,741

2 REVENUE

Revenue is made up of:Revenue from rendering of services:-Local airtime 268,359,683 362,375,773 -Interconnection fees and roaming 92,727,414 117,477,421 -Data and internet services 113,172,736 104,156,844 -Value added services and SMS 50,996,280 50,268,297-Other service revenue (mobile money, life premiums and connected car) 77,230,656 61,069,854 Revenue from sale of goods (beverage sales, handset sales, accessories) 29,452,639 43,572,375 Interest income from banking operations 3 9,049,092 7,262,076

640,988,500 746,182,640

3 NET INTEREST INCOME FROM BANKING OPERATIONS

3.1 Interest income from banking operationsLoans and advances to customers 9,049,092 7,262,076

3.2 Interest expense from banking operationsInterest on deposits due to banks and other customers (1,210,169) (1,225,129)

Net interest income from banking operations 7,838,923 6,036,947

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4 PROFIT FROM OPERATIONS BEFORE NET FINANCE COSTS


Profit for the year before net finance costs is arrived at after taking the following income/(expenditure) into account:Impairment reversal on trade and other receivables 22 2,919,642 11,683,306 Impairment of loans and advances to customers 23.4 (2,249,400) (3,166,091)Impairment of investment (449,999) -

Auditors remuneration- Group audit fees (1,022,500) (1,166,076)

Depreciation and impairment of property, plant and equipment 11 (123,257,719) (115,812,011)

Amortisation and impairment of intangible assets 14 (9,400,373) (9,505,214)

Profit/(loss) on disposal of property, plant and equipment 13,365 (55,882)

Write-off of property, plant and equipment 11 (3,897,675) (747,283)Write-off as a result of the network modernisation 11 (82,856,083) - Fair value adjustment arising from network mordenisation 11 84,279,099 - Other write-off of property, plant and equipment (5,320,691) (747,283)

Employee benefits (64,291,952) (77,378,784)- Short-term benefits (56,709,455) (72,012,473)- Termination benefits (6,208,972) - - Post-employment benefits (1,373,525) (5,366,311)

Compensation of directors and key management: (7,755,337) (8,582,589)- For services as directors (1,336,222) (1,434,815)- For management services 33.3 (6,419,115) (7,147,774)

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

2016 2015

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)/gain on available-for-sale financial assets (733,757) 10,224 (723,533) 210,738 (2,107) 208,631

Other comprehensive (loss)/income, net of tax (733,757) 10,224 (723,533) 210,738 (2,107) 208,631

6 FINANCE INCOME

All figures in US$ 2016 2015

Interest earned from bank deposits 760,580 592,443 Interest earned from other receivables 1,753,290 - Interest from held-to-maturity investments 312,757 472,169

2,826,627 1,064,612

7 FINANCE COSTS

Interest on loans and bank overdrafts (36,229,396) (37,076,496)

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


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8 OTHER INCOME


Sundry income 1,135,603 185,030 Other bank income 6,365,882 6,503,605 Fair value adjustment on investment property 13 352,639 (83,874)Foreign exchange gains/(losses) 1,139,493 (14,732)

8,993,617 6,590,029

Other bank income is mostly comprised of bank fees and commissions charged to customers for transacting.

9 INCOME TAX EXPENSE

Current income tax (22,014,714) (27,604,970) Deferred tax (415,410) (10,862,746) Withholding tax (5,830,693) (14,668,162) Income tax expense (28,260,817) (53,135,878)

Tax rate reconciliation

Profit before taxation 68,461,183 123,343,485

Reconciliation of tax charge:

Normal tax at 25.75% (17,628,755) (31,760,947)

Effect of share of profit from associate 2,450,198 2,329,864

Net dis-allowable expenses (7,251,567) (9,036,633) Tax from operations (22,430,124) (38,467,716)

Withholding tax (5,830,693) (14,668,162)

Income tax expense (28,260,817) (53,135,878)

10 EARNINGS PER SHARE

Profit for the year attributable to ordinary shareholders 40,363,393 70,256,228

Adjustment for capital items (gross of tax):

(Profit)/loss on disposal of property, plant and equipment (13,365) 55,882 Write off of property, plant and equipment 3,897,675 747,283 Impairment of property, plant and equipment and intangible assets 460,378 2,774,694

Tax effect on adjustments (1,118,757) (921,299)

Headline earnings attributable to ordinary shareholders 43,589,324 72,912,788

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.

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10 EARNINGS PER SHARE (continued) Number of shares

2016 2015

Weighted average number of ordinary shares for the purposes of basicand diluted earnings per share 1,551,431,509 1,581,784,694 Basic earnings per share (dollars) 0.03 0.04 Headline earnings per share (dollars) 0.03 0.05 Diluted basic earnings per share (dollars) 0.03 0.04 Diluted headline earnings per share (dollars) 0.03 0.05

11 PROPERTY, PLANT AND EQUIPMENT (PPE)

All figures in US$ Land and Buildings

Cellular

Network Equipment

Office Equipment

Beverage Plant and

Equipment Vehicles

Work-in-progress

(WIP) TotalAt CostAt 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

Additions 479,176 2,127,540 2,988,741 1,272,277 134,164 79,080,031 86,081,929 Write offs - (236,478,453) (57,615) - - (4,744,970) (241,281,038)

Disposals - - (1,903,835) - (512,963) - (2,416,798)Reclassification (5,359,954) - (51,212) 51,212 (164,196) - (5,524,150)Fair value adjustment on PPE - 84,279,099 - - - - 84,279,099 Revaluation of PPE (26,856) - - - - - (26,856)Transfer from investment property 1,200,000 - - - - - 1,200,000 Transfer from WIP 1,191,973 87,932,804 5,958,882 190,717 - (95,274,376) - Transfers from /(to) intangible assets - 3,435,774 - - -

(1,632,084) 1,803,690

Transfers to assets held for sale - - - (1,181,615) (72,116) - (1,253,731)Transfers from inventories - - - 1,600,177 - - 1,600,177 Transfers from other receivables - - - - - 187,645 187,645

At 29 February 2016 47,699,764 863,325,552 72,627,813 25,432,564 12,827,201 57,985,942 1,079,898,836

Accumulated depreciation & impairment

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)


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11 PROPERTY, PLANT AND EQUIPMENT (continued)

Accumulated depreciation & impairment (continued)

All figures in US$ Land and Buildings

Cellular

Network Equipment

Office Equipment

Beverage Plant and

Equipment VehiclesWork-in-progress Total

At 28 February 2015 (10,198,786) (368,134,105) (28,918,259) (5,002,557) (6,674,929) - (418,928,636)Charge for the period (1,511,109) (106,352,000) (12,602,133) (1,082,423) (1,268,510) - (122,816,175)Write offs - 153,057,588 46,676 - - - 153,104,264 Reclassification 3,981,850 - - - 5,882 - 3,987,732 Disposals - - 1,820,669 - 283,007 - 2,103,676 Transfer from intangible assets - (2,145,066) - - - - (2,145,066)Transfers to assets held for sale - - - 755,242 36,647 - 791,889 Impairment (44,981) - (396,563) - - - (441,544)

At 29 February 2016 (7,773,026) (323,573,583) (40,049,610) (5,329,738) (7,617,903) - (384,343,860)

CARRYING VALUEAt 29 February 2016 39,926,738 539,751,969 32,578,203 20,102,826 5,209,298 57,985,942 695,554,976 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

11.1 Network equipment & software Included in cellular network equipment additions is an amount of $27 million (2015: $24 million) relating to network software

that is classified as part of Property, plant and equipment as it is integral to the network equipment. 11.2 Debt collaterisation and borrowing costs Debt is collateralised over network equipment. The carrying amount of the related debt is US$ 207 million (2015: US$

242.5 million). Refer to note 30 for the breakdown of loan facilities with collateralised debt. The amount of borrowing costs capitalised during the year ended 29 February 2016 is US$ 3,7 million (2015:Nil). The rate used to determine the amount of borrowing costs eligible for capitalisation was 15% (2015: Nil) which is the effective rate of the specific borrowings.

11.3 Change in estimate IAS 16 - Property, Plant and Equipment requires the review of the residual value and the useful life of an asset at least at

each financial year end. The Group revised the estimated useful life of computer equipment with effect from 1 June 2015. The revisions were accounted for prospectively as a change in accounting estimate and as a result, the depreciation charges of the Group for the current financial year end have been increased by $2,537,598 which results in a decrease in future depreciation expense by the same amount.

11.4 Network modernisation The cellular network operations segment carried out a network modernisation exercise during the year. This resulted in a

write off of current network equipment amounting to $82,9 million and a fair value gain for the year ended 29 February 2016 of $84.3 million on the new equipment as a result of exchange of equipment which had commercial substance.

11.5 Impairment of assets During the financial year ended 29 February 2016, the financial services segment closed some of its branches and, as a

result, certain leasehold improvements such as partitioning and furniture and fittings became unusable. The recoverable amount of the assets was therefore determined to be nil and hence an impairment of $395,595 (2015: $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. Other equipment with a value of $5.3 million was also written off during the year ended 29 February 2016.

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12 ASSETS CLASSIFIED AS HELD FOR SALE During the year, the Beverages segment reclassified some assets to “assets held for sale” in line with Directors’ intentions.

No impairment was recognised on reclassification of the affected assets as at 29 February 2016. The Directors expect that the fair value less costs to sell will be higher than the carrying amount.


Assets related to old bottling plant 426,373 - Motor vehicles 35,469 -

461,842 -

13 INVESTMENT PROPERTY

Opening balance 4,167,267 3,656,586

Additions - 495,270Transfer from loans and advances 2,100,000 - Disposal - (703)Gain/(loss) on fair value of investment property 352,639 (83,874)Transfer (from)/to property, plant and equipment (1,200,000) 99,988

Closing balance 5,419,906 4,167,267

Investment property pertains to commercial and residential properties leased to third parties. The Group’s investment properties were valued by an independent professional valuer at 29 February 2016 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$45 253

(2015: US$53 000) and costs amounted to $7 843 (2015: US$12 634).

Description of valuation techniques used and key inputs to valuation on investment property:

Valuation technique Significant observable inputs Range (weighted average)Office property Implicit investment approach

(Refer below)Comparable rentals per month, per square metre (sqm)

$5 - $9

Residential stands Market value of similar properties Comparable rate per sqm $20 - $26(Refer below)

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 rentals and capital values are inter- related. Hence given the income produced by a property, its capital value can therefore 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 29 February 2016. The rentals are then annualised and a capitalisation factor was applied to arrive at 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.

A change in the significant observable inputs will result in a corresponding direct impact of the fair values of investment property.


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14 INTANGIBLE ASSETS

All figures in US$

Operating

licence

Computer software

and other TotalCOST

At 28 February 2014: 137,500,000 16,475,026 153,975,026 Additions - 6,841,825 6,841,825 Transfer from property, plant and equipment - 44,695 44,695 At 28 February 2015: 137,500,000 23,361,546 160,861,546

Additions - 1,507,228 1,507,228 Reclassification from work in progress - 1,632,084 1,632,084 Transfer to property, plant and equipment - (3,435,774) (3,435,774)At 29 February 2016: 137,500,000 23,065,084 160,565,084

ACCUMULATED AMORTISATION AND IMPAIRMENTAt 28 February 2014: (4,583,333) (5,996,931) (10,580,264)Amortisation and impairment (6,875,000) (2,630,214) (9,505,214)

At 28 February 2015: (11,458,333) (8,627,145) (20,085,478)

Amortisation and impairment (6,875,000) (2,525,373) (9,400,373)Transfer to property, plant and equipment - 2,145,066 2,145,066 At 29 February 2016: (18,333,333) (9,007,452) (27,340,785)

CARRYING AMOUNTAt 28 February 2015: 126,041,667 14,734,401 140,776,068 At 29 February 2016: 119,166,667 14,057,632 133,224,299

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 29 February 2016 the computer software had an average remaining useful life of three and a half years. The cellular segment holds a cellular operating licence with a carrying amount of US$119,2 million (2015: US$126,0 million) which will be fully amortised in seventeen years (2015: eighteen years).

Software integral to an item of hardware equipment is classified as property, plant and equipment (refer to note 11).

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

equipment

Deferred revenue

Provisions and other Total

15.1 Deferred tax asset

At 28 February 2014 6,542,597 (531,422) 8,740,712 4,486,570 19,238,457

Credit to profit for the year 485,450 (1,456,425) (1,427,660) 2,154,714 (243,921)Acquisition of subsidiaries - 6,280 - - 6,280

At 28 February 2015 7,028,047 (1,981,567) 7,313,052 6,641,284 19,000,816

Credit to profit for the year 3,906,272 1,355,630 (7,313,052) (6,053,033) (8,104,183)

At 29 February 2016 10,934,319 (625,937) - 588,251 10,896,633

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15 DEFERRED TAX (continued)

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 $945 456 (2015 - $2 775 947).

All figures in US$

Assessed

losses

Property, plant and

equipment

Deferred revenue


15.2 Deferred tax liability

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

Charge to profit for the year - (8,227,574) - - (8,227,574)Charge to other comprehensive income - - - (10,224) (10,224)

At 29 February 2016 - 113,627,405 - (1,406,779) 112,220,626

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

All figures in US$

Assessed

losses

Property, plant and

equipment

Deferred revenue


15.3 Net deferred tax asset/ (liability)

At 28 February 2014 6,542,597 (110,339,916) 8,740,712 4,457,572 (90,599,035)

Credit /(charge) to profit for the year 485,450 (13,502,910) (1,427,660) 3,582,374 (10,862,746)Charge to other comprehensive income - - - (2,107) (2,107)Acquisition of subsidiaries - 6,280 - - 6,280

At 28 February 2015 7,028,047 (123,836,546) 7,313,052 8,037,839 (101,457,608)

Credit /(charge) to profit for the year 3,906,272 9,583,204 (7,313,052) (6,053,033) 123,391 Charge to other comprehensive income - - - 10,224 10,224

At 29 February 2016 10,934,319 (114,253,342) - 1,995,030 (101,323,993)

16 HELD-TO-MATURITY INVESTMENTS

All figures in US$ 2016 2015Opening balance 40,177,977 11,736,041 Additions 27,100,000 30,722,081 Repayments received on maturity (16,089,157) (2,752,314)Interest accrued 2,904,189 472,169 Closing balance 54,093,009 40,177,977

Long-term held-to-maturity investments 19,231,953 40,177,977 Short-term held-to-maturity investments 34,861,056 - Total 54,093,009 40,177,977

Held-to-maturity investments include treasury bills with a carrying amount of US$47 422 948 (2015: $33 699 847) and investments with local financial institutions amounting to US$6 670 061 (2015: US$6 478 130). The treasury bills and investments yield interest at a rate of 6.8% and 7.332% per annum respectively. The short term portion of the investments are contracted to be repaid within the next year.


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17 INVESTMENT IN ASSOCIATE

17.1 The Group has a 51% interest in Data Control & Systems (1996) (Private) Limited T/A Liquid Telecom Zimbabwe, 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:

Associate’s summarised statement of financial positionAll figures in US$ 2016 2015

Non-current assets 183,968,178 158,558,581 Current assets 36,925,856 35,269,098 Current liabilities (50,493,722) (48,222,473)Non-current liabilities (96,220,180) (90,082,590)Equity 74,180,132 55,522,616 Proportion of the Group’s ownership 51% 51%Group's ownership 37,831,867 28,316,534

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

Carrying amount of the investment 39,331,536 29,816,203

Associate’s revenue and profit:

Revenue 84,130,419 74,095,310 Cost of sales (21,409,247) (14,366,543)Administrative expenses (31,010,878) (29,843,323)Finance costs (5,505,093) (5,522,299)Profit before tax 26,205,201 24,363,145 Tax expense (7,547,685) (6,621,928)Profit for the year (continuing operations) 18,657,516 17,741,217

Group’s share of profit for the year 9,515,333 9,048,020

Reconciliation of carrying amount of investment in associate Opening balance 29,816,203 20,768,186 Share of profit of associate 9,515,333 9,048,017 Closing balance 39,331,536 29,816,203

17.2 Share of profit of associate Share of profit of Data Control & Systems (1996) (Private) Limited 9,515,333 9,048,017

18 AVAILABLE-FOR-SALE INVESTMENTS

Opening balance 3,173,882 3,329,214 Disposals - (366,070)Fair value (loss)/gain (733,757) 210,738

Closing balance 2,440,125 3,173,882

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

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19 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 hierarchyThe 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 liabilitiesLevel 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectlyLevel 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 29 February 2016

Investment property 5,419,906 - - 5,419,906 Financial assets at fair value through profit or loss 1,026,402 54,000 972,402 - Available-for-sale financial assets 2,440,125 2,440,125 - -

8,886,433 2,494,125 972,402 5,419,906

During the reporting period ended 29 February 2016, 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.

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 74,452 334,368 - Available-for-sale financial assets 3,173,882 3,173,882 - -

7,749,969 3,248,334 334,368 4,167,267

During the reporting period ended 28 February 2015, 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.

20 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS


Opening balance 408,820 76,853 Additions 626,255 332,635 Acquisition of subsidiaries - 2,072 Fair value loss (8,673) (2,740)Closing balance 1,026,402 408,820

Investments held at fair value through profit or loss comprise of equity investments as well as money market investments. The fair value of the equity investments is based on the Zimbabwe Stock Exchange published share prices.

21 INVENTORIES


Merchandise at net realisable value 8,181,226 10,622,118 Spares, stationery and other 3,721,882 7,911,488

11,903,108 18,533,606

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$24 337 231 (2015: US$29 835 702).

During 2016, US$ 1 217 945 (2015: US$ 382 391) was recognised as an expense for inventories carried at net realisable value. This is recognised in cost of sales. Inventories written off during the course of the year amounted to US$2 161 994 (2015: US$723 214).


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22 FINANCIAL INSTRUMENTS: TRADE AND OTHER RECEIVABLES


Trade receivables and other receivables 53,079,998 59,837,628 Interconnect debtors 30,773,931 39,666,016 Intergroup receivables 9,970,576 6,709,805 Impairment losses recognised (14,959,266) (17,878,908)

78,865,239 88,334,541 There is a concentration of credit risk associated with interconnect debtors.

Interconnect debt is split between current and non-current as follows:Receivable within 1 year 30,773,931 39,666,016 Receivable after a year - 12,954,603

30,773,931 52,620,619

Impairment losses recognisedPertaining to prior year balances (17,878,908) (29,562,214)Impairment reversed during the year 2,919,642 11,683,306

(14,959,266) (17,878,908)

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. At the end of the year, all the impaired trade receivables were aged as follows:

All figures in US$ 2016 2015Ageing of impaired trade receivables60 days 496,595 - 90+ days. 14,462,671 17,878,908

14,959,266 17,878,908

Ageing of trade and other receivables that are past due but not impaired30 days 3,379,565 6,144,566 60-90 days 3,257,072 4,001,324 90+ 20,160,794 26,642,863 Total 26,797,431 36,788,753

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.

The Group considers the trade and other receivables past due to be recoverable and thus has not impaired these amounts.

23 LOANS AND ADVANCES TO BANK CUSTOMERS


23.1 Total loans and advances to bank customersCorporate lending 38,845,767 47,152,417 Small-to-medium enterprise lending 2,492,097 291,602 Consumer lending 19,235,686 18,618,158

60,573,550 66,062,177

Less: Allowance for impairment losses (2,285,276) (6,130,123)Less: Suspended interest (2,029,972) (1,726,018)

56,258,302 58,206,036

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23 LOANS AND ADVANCES TO BANK CUSTOMERS (continued)


23.2 Maturity analysis

Due within 1 yearLess than one month 2,296,603 39,836,416 1 to 3 months 1,359,985 2,768,796 3 to 6 months 1,698,924 672,577 6 months to 1 year 11,265,208 2,107,766 Gross loans and advances due within 1 year 16,620,720 45,385,555

Less: Allowance for impairment losses (2,285,276) (6,130,123)Less: Suspended interest (2,029,972) (1,726,018)Total due within 1 year 12,305,472 37,529,414

Due after 1 year1 to 5 years 42,151,361 15,419,488 Over 5 years 1,801,469 5,257,134 Gross loans and advances due after 1 year 43,952,830 20,676,622

Total gross loans 60,573,550 66,062,177

Total loans net of impairment losses 56,258,302 58,206,036

23.3 Sectorial analysis of utilisations

2016 2015 US$ % US$ %

Mining 331,895 1% 2,772,970 4%Manufacturing 28,927,409 48% 32,640,655 49%Agriculture 2,823,439 5% 3,900,345 6%Distribution 829,015 1% 2,413,259 4%Services 7,659,810 12% 5,725,605 9%Individuals 20,001,982 33% 18,609,343 28%

60,573,550 100% 66,062,177 100%

There is a material concentration of loans and advances in the manufacturing category constituting 48% (2015: 49%) of gross loans and advances.

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

All figures in US$ Furniture book lending

Corporatelending

SMElending

Consumerlending Total

At 28 February 2014 15,546,072 2,259,184 1,339,669 1,005,613 20,150,538 Net impairment (reversal)/charge for the year (85,585) 1,551,840 137,037 1,562,799 3,166,091 At 28 February 2015 15,460,487 3,811,024 1,476,706 2,568,412 23,316,629

Net impairment charge/(reversal) for the year 476,893 (420,439) (421,260) 2,614,206 2,249,400Loans and advances written off (15,937,380) (3,276,352) (667,388) (3,399,633) (23,280,753)At 29 February 2016 - 114,233 388,058 1,782,985 2,285,276


23.5 Loans and advances relating to furnitureGross furniture loans 1,622,598 18,752,539 Allowance for credit losses - (15,460,487)Net furniture loans 1,622,598 3,292,052


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23 LOANS AND ADVANCES TO BANK CUSTOMERS (continued)


23.6 Total loans and advancesTotal loans and advances to bank customers 23.1 56,258,302 58,206,036 Loans and advances relating to furniture 23.5 1,622,598 3,292,052

57,880,900 61,498,088

The amount above is broken down into current and non-current as follows:Non-current portion 43,952,830 20,676,622 Current portion 13,928,070 40,821,466

57,880,900 61,498,088

24 SHARE CAPITAL

Group and company

Authorised3 000,000,000 (2015: 3 000,000,000)Shares consisting of:-2 000,000,000 (2015: 2 000,000,000)Ordinary shares of $0.001 each 2,000,000 2,000,000 - 1 000,000,000 (2015: 1 000,000,000)Class "A" ordinary shares of $0.001 each 1,000,000 1,000,000

3,000,000 3,000,000

24.1 Issued and fully paid1 640 021 430 (2015: 1 640 021 430)Shares consisting of: 909 325 280 (2015: 909 325 280) 909,325 909,325 Ordinary shares of $0.001 each -730 696 150 (2015: 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 Directors, subject to the Companies Act (24:03) and the Memorandum and Articles of Association.

24.2 Movement in share capital and share premium

Number of shares

Share capital

US$

Share premium

US$TotalUS$

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

Balance at 29 February 2016 1,640,021,430 1,640,021 39,123,670 40,763,691

24.3 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.

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24 SHARE CAPITAL (continued)

24.4 Share buy-backs Under the authority granted at the Annual General Meeting of 31 July 2015 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.

Treasury shares with a market value of US$40 065 949 (2015: US$32 859 424) were bought back from the market and from

the holding company, Econet Global Limited (EGL). Proceeds from disposal of treasury shares for the year ended 29 February 2016 amounted to US$ nil (2015: US$53,580,596). Treasury shares on hand at 29 February 2016 were 217,584,436 (2015: 61,162,109). The cost of the share buy-backs (treasury stock) has been debited to reserves.

24.5 Issue of shares During the year, as part of the Group restructuring exercise, the Group retrenched more than 100 employees. A total of

7,863,088 shares were offered to the retrenched employees from the previously bought back shares of the company. The value of the retrenchment benefit was determined on a basis agreed with the employees and the share price as at 30 September 2015 was used to derive the total number of shares to be issued. The total effect of the transaction on the profit or loss for the period was $2,201,664 and an equivalent amount affected the equity of the Group.

The employees are not entitled to deal in the shares until after the expiry of 24 months from 31 October 2015.

25 DIRECTORS’ SHAREHOLDING

At 29 February 2016, 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.

29 February 2016 Ordinary shares

S.T. Masiyiwa* 13,277 C. Fitzgerald 10,699,010 D. Mboweni 7,014,684 T.P. Mpofu 10,380,580 K Chirairo 4,080 J. Myers 20,851 S. Shereni 2,200 Total 28,134,682

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 S. Shereni 2,200 Total 28,207,169

*Mr. S.T. Masiyiwa is a beneficial shareholder of Econet Global Limited. Econet Global Limited holds directly or indirectly 630,673,303 shares (2015: 630 579 551 shares) in Econet Wireless Zimbabwe Limited.


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26 OTHER RESERVES

All figures in US$ OtherAvailable-for

sale Total

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

Transfer to regulatory reserves (1,617,656) - (1,617,656))Reclassification (980,312) - (980,312)-Revaluation loss on property, plant and equipment (26,856) - (26,856)Fair value loss on available-for-sale investments - (733,757) (733,757)Deferred tax arising out of reserves - 10,224 10,224

Balance at 29 February 2016 2,602,706 (56,974) 2,545,732

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.

27 TRADE AND OTHER PAYABLES


Local trade accounts payable 65,506,937 48,478,069 Foreign trade accounts payable 4,253,244 17,598,645 Short term inter-group payables 18,068,948 19,954,822 Other payables 46,337,725 47,461,405

134,166,854 133,492,941

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.

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28 PROVISIONS Provisions comprise of the following:

All figures in US$

Provision for dismantling

cost (i)Employee

benefits (ii) Total

Balance at 28 February 2014 1,110,197 3,933,576 5,043,773 Unwinding of interest 166,530 - 166,530 Additional provision 109,622 - 109,622 Reduction as a result of payments/settlements - (243,665) (243,665) Balance at 28 February 2015 1,386,349 3,689,911 5,076,260 Unwinding of interest 138,635 - 138,635 Reduction as a result of payments/settlements - (1,488,385) (1,488,385) Additional provision raised 160,133 2,101,005 2,261,138 Balance at 29 February 2016 1,685,117 4,302,531 5,987,648

Split between current and non-currentAs at 29 February 2016Current - 2,500,087 2,500,087 Non-current 1,685,117 1,802,444 3,487,561

1,685,117 4,302,531 5,987,648

As at 28 February 2015Current - 3,689,911 3,689,911 Non-current 1,386,349 - 1,386,349

1,386,349 3,689,911 5,076,260

(i) The provision for dismantling costs represents the present value of the Directors’ best estimate of the future cash outflow of economic benefits that will be required under the Group’s obligation to restore the environment in which the Group’s network equipment is located to its original state after its useful lives. It is an environmental requirement that after decommissioning

of the network equipment, the land be restored to its original state as much as possible. (ii) The provision for employee benefits represents annual leave and vested long service award entitlements accrued.

The vested long service award entitlement amount represents the present value of the Directors’ best estimate of the future cash outflow of economic benefit that will be required under the Group’s obligation to pay for the loyalty of its employees in service in line with the Group’s policy.

29 DEFERRED REVENUE


Deferred prepaid airtime 17,833,806 18,381,526

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. Deferred revenue will be recognised within the next 12 months.


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30 FINANCIAL INSTRUMENTS: INTEREST-BEARING DEBT


Opening balance 263,933,424 240,280,045 Additions during the year 45,267,660 120,963,640 Net repayments (86,737,470) (97,793,026)Accrued Interest 614,522 482,765 Closing balance 223,078,136 263,933,424

Long term portion 112,343,137 165,757,698 Short term portion 110,734,999 98,175,726

223,078,136 263,933,424

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 29 Feb 16

Securityterms

$US $US $US $US $US $US $US

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

75,000,000 64,741,635

59,210,527

10,071,158 15,602,266 15,602,266 - 11.4%

Guarantee by Econet Global Limited

African Export and Import Bank/ Econet 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 39,900,000 2,784,608 - - - 5.0% Guarantee by Econet Global Limited

China Development Bank 11-May-12 135,000,000 125,171,774 95,271,882 9,843,288 39,743,180 31,846,779 7,896,401 6.4% Guarantee by Econet Global Limited

Industrial Development Corporation 28-Sep-12 20,000,000 17,151,454 12,000,000 2,288,605 7,440,059 3,608,054 3,832,005 6.4% Guarantee by Econet Global Limited

PTA 15-Jan-13 20,000,000 19,820,000 20,000,000 180,000 - - - 6.2% Guarantee by Econet Global Limited

PTA 4-Apr-13 8,800,000 8,190,051 3,601,118 2,690,647 7,279,580 1,558,648 5,720,932 10.0% Equipment Purchased

Ericsson Credit AB 30-Jun-14 14,763,973 14,763,973 11,811,178 3,049,037 6,001,832 6,001,832 - 7.4% Guarantee by Econet Global Limited

Ericsson Credit AB 30-Jun-14 50,562,449 49,388,819 18,529,076 8,339,767 39,199,510 15,297,761 23,901,749 4.4% Guarantee by Econet Global Limited

China Development Bank 30-Jun-14 93,000,000 90,712,044 - 596,306 91,308,350 20,678,222 70,630,128 5.7% Guarantee by Econet Global Limited

Coca Cola International 22-Aug-15 360,000 360,000 - 1,922 361,922 - 361,922 3.3% Unsecured

Sub Total 485,386,422 454,855,142 287,763,781 39,845,338 206,936,699 94,593,562 112,343,137 7.1%

Bank working capital facility 22-Jul-13 21,500,000 21,482,994 5,341,557 - 16,141,437 16,141,437 - 8.0% Unsecured

Total 506,886,422 476,338,136 293,105,338 39,845,338 223,078,136 110,734,999 112,343,137

The weighted average interest rate on long-term borrowings for the Group as at 29 February 2016 was 7.1% (2015: 7.3%). In addition to the all inclusive rate of borrowing of 7.1% the Group pays guarantee fees of 6% per annum to Econet Global Limited 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 Global Limited Econet Wireless (Private) Limited and Econet 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) Ltd 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

2014 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. 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.

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30 FINANCIAL INSTRUMENTS: INTEREST-BEARING DEBT (CONTINUED)

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 1.53. Total liabilities/total assets ratio less than or equal to 0.674. Shareholders’ funds/total assets ratio greater 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 Group was in compliance with such covenants as at 29 February 2016.

Inter-creditor and Security Sharing Agreement In terms of the agreements for the multi-creditor loan facility between the 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 mobilise 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:• An Econet Wireless (Private) Limited (EWPL) Notarial General Covering Bond (NGCB);• The Security Agent to be the loss payee on proceeds of All-Risk Insurance policy covering the EWPL assets;• A charge over escrow accounts established as part of the facility agreements; and• Econet Global Limited and Mr. S.T. Masiyiwa (in his personal capacity) have provided irrevocable guarantees to the

lenders participating in the Inter-creditor and Security Sharing Agreement.

31 DEPOSIT DUE TO BANK AND CUSTOMERS


31.1 Due to customers

Current account 10,396,703 23,711,243Term deposit 20,825,353 17,924,600

31,222,056 41,635,84331.2 Maturity analysis of deposits

Less than 1 month 16,700,723 23,711,2431 to 3 months 14,521,333 17,924,600

31,222,056 41,635,843

31.3 Sectoral analysis of deposit

2016 2015 US$ % US$ %

Financial 353,198 1.1% 4,077,478 9.8% Transport and telecommunications 12,274,528 39.3% 4,738,484 11.4% Mining 48,803 0.2% 17,355 0.1% Manufacturing 203,211 0.6% 554,742 1.3% Agriculture 84,500 0.3% 181,461 0.4% Distribution 310,145 1.0% 417,577 1.0% Services 3,896,976 12.5% 14,455,715 34.7% Government and parastatals 2,465,565 7.9% 4,223,936 10.1% Individuals 10,983,686 35.2% 12,032,189 28.9% Others 601,444 1.9% 936,906 2.3%

31,222,056 100% 41,635,843 100%


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32 CASH FLOW INFORMATION

32.1 Cash generated from operations before working capital changesAll figures in US$ Note 2016 2015Profit before tax 68,461,183 123,343,485

Adjustments for:Depreciation and impairment of property, plant and equipment 11 123,257,719 115,812,011 Write off of property, plant and equipment 4 &11 3,897,675 747,283 Amortisation and impairment of intangible assets 14 9,400,373 9,505,214 Impairment of goodwill 43.3 - 224,685 Bad debts written off 10,192,720 303,936 Bad debts recovered (1,136,364) -(Profit)/loss on disposal of property, plant and equipment (13,365) 55,882 Fair value gains on financial assets 458,672 2,740 Impairment reversal of trade receivables (2,919,642) - Share based payments 2,201,664 -Increase in other provisions - 48,506 Impairment of loans and advances 2,249,400 3,166,091 Share of profit of associate 17.1 (9,515,333) (9,048,017)Gain/(loss) on fair value of investment property (352,639) 83,874 Net finance costs 6 & 7 33,402,769 36,011,884 (Decrease)/increase in deferred revenue 29 (547,720) 4,272,470 Inventory write-off 21 3,379,939 1,105,605 Increase in provision for inventory write-off 805,341 860,138

Cash generated from operations before working capital changes 243,222,392 286,495,787

32.2 Adjustments for working capital changesDecrease in inventories 845,041 5,404,107 Increase in trade and other receivables (824,665) (34,227,663)Increase/(decrease) in trade and other payables 527,102 (30,986,362)Increase in provisions 911,388 276,152

1,458,866 (59,533,766)

Cash generated from operations 244,681,258 226,962,021

32.3 Income tax paidOpening balance of liability 8,218,323 17,366,523 Add: current taxation charge for the year 9 22,014,714 27,604,970 Add: withholding taxes 9 5,830,693 14,668,162 Less: closing balance of liability (10,498,019) (8,218,323)

25,565,711 51,421,332

32.4 Cash and cash equivalentsShort term investments 520,368 875,104 Bank balances and cash 99,195,174 94,363,629

99,715,542 95,238,733 Included in cash and cash equivalents is the following:Reserved and restricted cash balances 75,154,008 69,030,205

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

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33 RELATED PARTY TRANSACTIONS


33.1 Transactions

Transactions with Members of Econet Global Limited Group:Purchase of goods and services from the parent (39,842,771) (45,171,694) Sales of goods and services to fellow subsidiaries 45,460,173 53,868,337Sales of goods and services to associate 1,151,578 1,181,520Purchases of goods and services from associate (40,951,784) (41,210,466)Purchases of goods and services from fellow subsidiaries (52,538,115) (62,085,371)

Other related partiesTransactions with Econet Wireless Group Pension Fund - (4,250,505)

33.2 BalancesAmounts owed to the parent (11,021,526) (4,286,313)Amounts receivable from the parent 800,000 800,000Amounts owed to fellow subsidiaries (5,258,052) (4,114,764)Amounts receivable from fellow subsidiaries 10,048,253 5,903,067Amounts owed to associate (1,996,671) (1,449,340)Amounts receivable from associate 3,580,259 - Amounts owed by Econet Wireless Group Pension Fund 4,145,258 4,145,258Net amount receivable 297,521 997,908

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

Short-term-benefits-for management services 6,419,115 7,147,774 For services as directors 1,336,222 1,434,815

7,755,337 8,582,589

Terms of balances with fellow subsidiaries Included in amounts receivable from members of the Econet Global Limited Group are balances accruing interest at 10-12%.

Terms and conditions of transactions with related parties The sales to and purchases from related parties are made on terms equivalent to those that prevail in arm’s length transactions,

wherever possible. For the year ended 29 February 2016, the Group has not recorded any impairment of receivables relating to amounts owed by related parties (2015: US$ Nil). This assessment is undertaken each financial year through examining the financial position of the related parties and the market in which the related parties operate.

Guarantees by Econet Global Limited Details of guarantees provided by the parent company are disclosed in note 30.

34 GROUP EMPLOYEE BENEFITS

Econet Wireless Group Pension Fund Contributions are made to the defined contribution scheme through monthly deduction by the Group 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 Group’s obligation

under the scheme are limited to specific contributions legislated from time to time.


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35 FINANCIAL RISK MANAGEMENT

35.1 Capital risk managementThe Group’s objectives when managing capital are:• to safeguard the entity’s ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders, and• to provide an adequate return to shareholders by pricing products and services commensurately with the 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.

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


Total debt (i) 30 223,078,136 263,933,424 Less: cash and cash equivalents 32.4 (99,715,542) (95,238,733)Net debt 123,362,594 168,694,691

Total equity (ii) 661,897,004 665,294,728

Adjusted debt-to-capital ratio 19% 25%

(i) 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 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, meet 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.

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35 FINANCIAL RISK MANAGEMENT (continued)

35.3 Interest rate risk management (continued) 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.

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 7.1% (2015: 7.3%).

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)2016If interest rate goes up by 2% to 9.1% 25,043,924 18,247,922 (6,796,002) (1,749,971) (5,046,031)If interest rate goes down by 2% to 5.1% 11,451,919 18,247,922 6,796,003 1,749,971 5,046,032

2015If 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

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 cellular

network segment. Refer to note 22. 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.


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35 FINANCIAL RISK MANAGEMENT (continued)

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

2016Bank and cash balances - 7,546 595,511 1,425,864 91,488,749 3,465 93,521,135 Short term deposits - - - - - 520,368 - 520,368 Closing balance - - 7,546 595,511 1,425,864 92,009,117 3,465 94,041,503

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 - 875,104 Closing balance 2,168 495 14,132 741,017 599,645 93,865,729 15,546 95,238,732

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 29 February 2016

Interest-bearing debt 16,141,437 22,842,373 71,751,189 112,343,137 223,078,136 Trade and other payables - 134,166,854 - - 134,166,854 Deposits due to banks and other customers 16,700,723 14,521,333 - - 31,222,056

32,842,160 171,530,560 71,751,189 112,343,137 388,467,046

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 - 133,492,941 - - 133,492,491 Deposits due to banks and other customers 23,711,243 17,924,600 - - 41,635,843

45,194,237 172,002,734 56,107,539 165,757,698 439,061,758

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

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36 DISCLOSURES IN RESPECT OF BANKING SUBSIDIARY

36.1 Statement of financial position for Steward Bank LimitedAll figures in US$ 2016 2015ASSETSCash and cash equivalents 24,553,452 23,755,668 Financial assets at fair value through profit or loss 279,755 14,538,537 Loans and advances to customers 56,258,302 59,547,175 Loans and advances relating to furniture loans 1,622,598 3,292,051 Financial assets held to maturity 45,834,053 33,699,848 Other receivables 13,511,567 5,032,108 Investment properties 4,647,906 3,430,267 Property and equipment 4,866,821 3,959,860 Intangible assets 6,222,347 5,692,934 Deferred tax asset 10,896,185 11,687,315

168,692,986 164,635,763

EQUITY AND LIABILITIESDeposits due to banks and customers 92,649,977 87,685,312 Loans and borrowings 3,565,302 8,840,300 Provisions 223,340 788,389 Other liabilities 3,362,879 3,815,499 Equity 68,891,488 63,506,263

168,692,986 164,635,763

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. 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 credit

worthiness 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.


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36.2 Risk management (continued)

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.

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.

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Analysis of maximum exposure to credit risk and collateral or other credit enhancements held

Fair value of collateral and credit enhancements held

All figures in US$

MaximumExposure toCredit Risk

ListedSecurities

Letters ofcredit

/Guarantees Property Other Total

NetExposure toCredit Risk

At 29 February 2016:Financial assets:Cash and cash equivalents 21,866,417 - - - - - 21,866,417 Financial assets at fair value through profit or loss

279,755 - - - - - 279,755

Loans and advances to customers 62,196,147 - - 4,249,697 485,250 4,734,947 57,461,200 Financial assets held to maturity 45,834,053 - - - - - 45,834,053 Other receivables 13,511,567 - - - - - 13,511,567

Total credit risk exposure 143,687,939 - - 4,249,697 485,250 4,734,947 138,952,992

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 89,350,088 - - 4,414,697 744,250 5,158,947 84,191,141 Financial assets held to maturity 33,699,848 - - - - - 33,699,848 Other receivables 5,032,108 - - - - - 5,032,108

Total credit risk exposure 161,271,572 - - 4,414,697 744,250 5,158,947 156,112,625

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 29 February 2016:Individuals 14,579,760 963,493 787,569 1,888,175 1,782,985 20,001,982 Mining 248,755 14,773 - 68,367 - 331,895 Manufacturing - - 28,831,958 - 95,451 28,927,409 Agriculture 2,116,166 228,498 - 90,717 388,058 2,823,439 Distribution 532,412 96,480 - 185,582 14,541 829,015 Services 3,913,672 - 543,787 3,198,110 4,241 7,659,810

21,390,765 1,303,244 30,163,314 5,430,951 2,285,276 60,573,550


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Credit quality per industrial sector (continued)

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 19,950,482 Mining 89,133 2,159,276 - - 524,561 2,772,970 Manufacturing 26,122,567 52,145 - 5,711,818 754,125 32,640,655 Agriculture 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

Commitments and guarantee To meet the financial needs of customers, the Bank enters into various irrevocable commitments giving rise to 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.


Financial guarantees - 40,313,388 Commitments to lend 231,681 -

231,681 40,313,388

Included in Financial Guarantees at 28 February 2015 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 ManagementLiquidity 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.

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Liquidity Risk and Funding Management (continued)

The key ratios during the year were, as follows:2016 2015

At 29February

Maximumduring period

Minimumduring period

At 28February

Maximumduring period

Minimumduring period

Advances to deposits ratio 67% 105% 62% 105% 105% 72%Net liquid assets to customer liabilities ratio 80% 80% 55% 56% 57% 50%

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.

All figures in US$On

demandLess than3 months

3 months to 1 year

1 to 5 years

Over 5 years Total

At 29 February 2016:

Financial assets:Cash and cash equivalents 24,553,452 - - - - 24,553,452 Financial assets at fair value through profit or loss 279,755 - - - -

279,755

Loans and advances to customers 2,296,603 1,359,985 12,964,132 42,151,361 1,801,469 60,573,550 Loans and advances relating to furniture loans 1,622,598 - - - - 1,622,598 Financial assets held to maturity 3,304,921 10,588,507 27,562,383 4,378,242 - 45,834,053 Other receivables 13,511,567 - - - - 13,511,567 Total undiscounted financial assets 45,568,896 11,948,492 40,526,515 46,529,603 1,801,469 146,374,975

Financial liabilities:Deposits due to banks and customers 71,824,624 20,825,353 - - - 92,649,977 Loans and borrowings 1,499,500 682,623 1,203,092 180,086 - 3,565,301 Total undiscounted financial liabilities 73,324,124 21,507,976 1,203,092 180,086 - 96,215,278

Net undiscounted financial assets/(liabilities) (27,755,228) (9,559,484) 39,323,423 46,349,517 1,801,469 50,159,697


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36 DISCLOSURES IN RESPECT OF BANKING SUBSIDIARY (continued)

36.2 Risk management (continued) Analysis of financial assets and liabilities by remaining contractual maturities (continued)



3 months to 1 year

1 to 5 years

Over 5 years Total


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 67,403,316 Loans 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

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 to 5 years

Over 5 years Total


Commitment to lend 231,681 - - - - 231,681 Total commitments and guarantees 231,681 - - - - -


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

The Bank expects that not all of the 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.

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.

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Interest rate sensitivity (continued)

At 29 February 2016 At 28 February 2015Change in

interest rates%

Sensitivity of profit or loss

US$

Change in interest rates

%

Sensitivity of profit or loss

US$Currency:USD +6 2,389,437 +6 3,914,104USD +4 1,592,958 +4 2,609,402USD +2 796,479 +2 1,304,701USD -2 (796,479) -2 (1,304,701)USD -4 (1,592,958) -4 (2,609,402)USD -6 (2,389,437) -6 (3,914,104)

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 to 5 years

Non-interestbearing Total

TOTAL POSITION

At 29 February 2016

Assets:Cash and cash equivalents - - - - 24,553,452 24,553,452 Financial assets at fair value through profit or loss - - - - 279,755 279,755 Loans and advances to customers 2,296,603 1,359,985 12,964,132 37,836,114 1,801,469 56,258,303 Loans and advances relating to furniture loans 1,622,598 - - - - 1,622,598 Financial assets held to maturity 3,304,921 10,588,507 27,562,383 4,378,242 - 45,834,053 Other receivables - - - - 13,511,567 13,511,567 Investment properties - - - - 4,866,821 4,866,821 Property and equipment - - - - 4,647,906 4,647,906 Intangible assets - - - - 6,222,347 6,222,347 Deferred tax asset - - - - 10,896,184 10,896,184

7,224,122 11,948,492 40,526,515 42,214,356 66,779,501 168,692,986 Liabilities and equity:Deposits due to banks and customers 71,824,624 20,825,353 - - - 92,649,977 Loans and borrowings 1,499,500 682,623 1,203,092 180,086 - 3,565,301 Provisions - - - - 223,340 223,340 Other liabilities - - - - 3,362,880 3,362,879 Equity - - - - 68,891,488 68,891,488

73,324,124 21,507,976 1,203,092 180,086 72,477,708 168,692,986

Interest rate repricing gap (66,100,002) (9,559,484) 39,323,423 42,034,270 (5,698,207) - Cumulative gap (66,100,002) (75,659,486) (36,336,063) 5,698,207 - -


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Interest rate repricing and gap analysis (continued)



3 months to 1 year

1 to 5 years

Non-interestbearing Total

TOTAL POSITION

At 28 February 2015Assets: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 2,768,796 672,577 2,107,766 14,161,620 59,547,175 Loans and advances relating to furniture loans 3,292,051 - - - 3,292,051 Financial assets held to maturity - - 15,522,683 18,177,165 - 33,699,848 Other receivables - - - - 5,032,109 5,032,109 Investment properties - - - - 3,959,860 3,959,860 Property and equipment - - - - 3,430,267 3,430,267 Intangible 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 - - - 87,685,312 Loans 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 3,815,499 Equity - - - - 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) - -

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.

36.2.4 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.

36.2.5 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.

36.2.6 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.

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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$ 29 February2016

28 February2015

Share capital 4,077 4,077 Share premium 106,317,629 106,317,629 Retained earnings (42,379,882) (48,042,962)Deferred tax asset (10,896,184) (11,687,314)

53,045,640 46,591,430

Less: Capital allocated for market and operational risk (2,399,213) (2,400,917) Advances to insiders (12,070,475) (1,774,997)Guarantees to insiders* - (88,389)Tier 1 capital 38,575,952 42,327,127

Tier 2 capital 4,949,664 5,227,519 Non-distributable reserve - 26,856 Portfolio provisions 4,949,664 5,200,663

Total Tier 1 and 2 capital 43,525,616 47,554,646

Tier 3 capital (sum of market and operational risk capital) 2,399,213 2,400,917

Total Capital Base 45,924,829 49,955,563

Total risk weighted assets 124,996,437 141,325,266

Tier 1 ratio 31% 30%Tier 2 ratio 4% 4%Tier 3 ratio 2% 2%Total capital adequacy ratio 37% 35%RBZ minimum requirement 12% 12%

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 6,328,596 6,241,007

38.3 Non-cancellable lease commitmentsNot later than one year 5,631,821 5,983,462 Later than one year and not later than five years 10,524,491 17,951,563 Later than five years 776,119 624,786

16,932,431 24,559,811


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

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

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; and - 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 COMMITMENT


Authorised and contracted for 18,577,352 72,378,031 Authorised and not contracted for 1,500,000 3,325,270

20,077,352 75,703,301 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 No subsidiaries were acquired in the financial year ended February 2016. 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

acquisitionAssetsProperty, 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 Non controlling-interest - 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.

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43 ACQUISITION OF SUBSIDIARIES (continued)

43.1 Acquisition of Steward Health (Private) Limited (continued)

All figures in US$

Fair valuerecognised on

acquisitionPurchase consideration Consideration paid: Paid 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

43.2 Acquisition of additional interest in Transaction Payment Solutions (Private) LimitedOn 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 shareholders 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 2014 6,090,632 Acquisition of subsidiary 224,685 Impairment of goodwill (224,685)

As at 28 February 2015 6,090,632 Acquisition of subsidiary - Impairment of goodwill -

As at 29 February 2016 6,090,632

The Group performed its annual impairment test as at 29 February 2016 and 28 February 2015. 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 10.6% (2015: 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 assumption: - 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 12.6% (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.


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44 EVENTS AFTER THE REPORTING DATE

Zimbabwe is currently experiencing liquidity shortages as a result of a continued negative balance of payments position over several years which has depleted its nostro account balances. In the face of insufficient nostro account balances, it has become increasingly difficult for local companies to make payments outside Zimbabwe. The Group currently has foreign debt amounting to US$ 206.9 million as at 29 February 2016, as well as obligations to its foreign equipment vendors and other foreign suppliers. The Directors continue to monitor this situation and its impact on the Group and have been reviewing various strategies to ensure that the Group is able to meet its obligations as they fall due.

45 APPROVAL OF FINANCIAL STATEMENTS The financial statements were approved by the board of Directors and authorised for issue on 23 May 2016.

46 COMPANY STATEMENT OF FINANCIAL POSITION

All figures in US$ Note 2016 2015ASSETS

Non-current assetsProperty, plant and equipment 622,500 622,500 Investment in subsidiaries 47.1 127,881,312 127,881,312 Available-for-sale investments - - Investment in associate 17.1 39,331,536 29,816,203 Long term intercompany receivable 47.2 1,886,351 1,886,351 Total non-current assets 169,721,699 160,206,366

Current assetsOther receivables 4,296,057 4,296,056 Cash and cash equivalents 567,449 501,669 Total currents assets 4,863,506 4,797,725

Total assets 174,585,205 165,004,091

EQUITY AND LIABILITIES

EQUITYShare capital and reserves (52,452,353) (12,654,949)

LIABILITIES

Non current liabilitiesIntercompany payables 47.3 226,206,817 177,242,771

Current liabilitiesOther payables 830,741 416,269

Total equity and liabilities 174,585,205 165,004,091

Note Amounts advanced to the Company by Econet Wireless (Private) Limited, its subsidiary, for the purposes of funding payments

are accounted for as intercompany loans. This has resulted in the Company reporting a negative equity position.

Dr. J. Myers D. Mboweni R. Chimanikire CHAIRMAN OF THE BOARD CHIEF EXECUTIVE OFFICER FINANCE DIRECTOR 23 May 2016

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47 INVESTMENTS AND LOANS IN SUBSIDIARIES

All figures in US$ Percentage 2016 2015

COMPANY

47.1 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 26,209 (Computer data processing service provider)

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

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

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

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

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

Total investments in subsidiaries 127,881,312 127,881,312

On 27th 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.


47.2 Inter-company receivablesPentamed Investments (Private) Limited 1,886,351 1,886,351

47.3 Inter-company payablesEconet Wireless (Private) Limited (209,594,919) (160,630,873)Econet Wireless Capital Holdings Limited (16,611,898) (16,611,898)

(226,206,817) (177,242,771)

Net investments and loans in group companies (96,439,154) (47,475,108)

47.4 Parties related to the company Parent The parent company of Econet Wireless Zimbabwe Limited is Econet Global Limited which is based in Mauritius. Fellow subsidiaries Liquid Telecommunications Operations Limited Worldstream (Pty) Ltd Solarway FZE Batoka Hospitality (Private) Limited Econet Renewable Energy Systems Econet Services International Associate Liquid Telecom Zimbabwe


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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 IFRS 2 Share based payments

AB IAS 1 (Revised) Significant assumptions and key sources of estimation uncertainty

Policy Notes to the Consolidated Financial StatementsFor the year ended 29 February 2016

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A GENERAL INFORMATION

A.1 THE COMPANY Econet Wireless Zimbabwe Limited (“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 Global Limited (previously reported as 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 BASIS OF PREPARATION

B.1 Statement of compliance The Group’s financial statements have been

prepared in accordance with International Financial Reporting Standards (IFRS); International Accounting Standards (“IAS”); the International Financial Reporting Interpretations Committee (IFRIC). 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 Compliance with legal and regulatory requirements These Group’s financial statements have been prepared

in accordance with the accounting policies set out below, and comply with the modified disclosure requirements of the Companies Act (Chapter 24:03) and the relevant statutory instrument (SI33/99 and SI 62 /96) and the Banking Act (Chapter 24:20).

B.3 Use of estimates and judgments The preparation of the consolidated financial statements

in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. Information about the significant areas of accounting judgement; estimations and assumptions in applying accounting policies that have the most significant effect on the amounts recognised in these consolidated financial statements are described in Note AB.

B.4 Basis of consolidation The consolidated financial statements comprise of the

financial statements of the Company and its subsidiaries as at 29 February 2016. Control is achieved when the Company 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 Company has:• Power over the investee (i.e. existing rights that give

it the current ability to direct the relevant activities of the investee);

• Exposure, or rights, to variable returns from its involvement with the investee; and

• The ability to use its power over the investee to affect its returns.

When the Company has less than a majority of the voting or similar rights of an investee, the Company considers all relevant facts and circumstances in assessing whether it has power over an investee, including:• The contractual arrangement with the other vote

holders of the investee;• Rights arising from other contractual arrangements;• The Company voting rights and potential voting

rights; and • any additional facts and circumstances that indicate

that the Company has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings.

The Company 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 Company obtains control over the subsidiary and ceases when the Company 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 Company gains control until the date the Company 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 Company loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, non-controlling interest and other components

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of equity while any resultant gain or loss is recognised in profit or loss. Any investment retained is recognised at fair value.

C ADOPTION OF NEW AND REVISED STANDARDS AND INTERPRETATIONS

C.1 Application of new and revised standards and interpretations – Adopted

In the current year, the Group adopted the following new and revised IFRSs and annual improvements to IFRSs. The nature and the impact of each new standard and amendment is described below:

Amendments to IFRSs that are mandatory effective for the year ended 31 December 2015.

Amendments to IAS 19 Defined Benefit Plans: Employee Contributions

IAS 19 requires an entity to consider contributions from employees or third parties when accounting for defined benefit plans. Where the contributions are linked to service, they should be attributed to periods of service as a negative benefit. These 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. This amendment is effective for annual periods beginning on or after 1 July 2014. This amendment is not relevant to the Group, since none of the entities within the Group has defined benefit plans with contributions from employees or third parties.

Annual improvements 2010 – 2012 cycle

IFRS 2 Share-based Payment This improvement is applied prospectively and clarifies

various issues relating to the definitions of performance and service conditions which are vesting conditions. The clarifications are consistent with how the Group has identified any performance and service conditions which are vesting conditions in previous periods. Thus, these amendments did not impact the Group’s financial statements or accounting policies.

IFRS 3 Business Combinations The amendment is applied prospectively and clarifies that

all contingent consideration arrangements classified as liabilities (or assets) arising from a business combination should be subsequently measured at fair value through profit or loss whether or not they fall within the scope of IAS 39. This is consistent with the Group’s current accounting policy and, thus, this amendment did not impact the Group’s accounting policy.

IFRS 8 Operating Segments The amendments are applied retrospectively and clarify

that:• An entity must disclose the judgements made by

management in applying the aggregation criteria in

paragraph 12 of IFRS 8, including a brief description of operating segments that have been aggregated and the economic characteristics (e.g., sales and gross margins) used to assess whether the segments are ‘similar’

• 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 Group has not applied the aggregation criteria in IFRS 8.12. The Group has presented the reconciliation of segment assets to total assets in previous periods and continues to disclose the same in Note 1 in this period’s financial statements as the reconciliation is reported to the chief operating decision maker for the purpose of his decision making.

IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets

The amendment is applied retrospectively and clarifies in IAS 16 and IAS 38 that the asset may be revalued by reference to observable data by either adjusting the gross carrying amount of the asset to market value or by determining the market value of the carrying value and adjusting the gross carrying amount proportionately so that the resulting carrying amount equals the market value. In addition, the accumulated depreciation or amortisation is the difference between the gross and carrying amounts of the asset. This amendment did not have any impact to the revaluation adjustments recorded by the Group during the current period.

IAS 24 Related Party Disclosures The amendment is applied retrospectively and 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. This amendment is not relevant for the Group as it does not receive any management services from other entities.

IFRS 13 Fair Value Measurement – Portfolio exception

The amendment is applied prospectively and clarifies that the portfolio exception in IFRS 13 can be applied not only to financial assets and financial liabilities, but also to other contracts within the scope of IAS 39. The Group does not have financial assets, financial liabilities and other contracts that meet this criteria.

Annual improvements to IFRSs 2011 – 2013 Cycle.

IFRS 3 Business Combinations The amendment is applied prospectively and clarifies that

all contingent consideration arrangements classified as liabilities (or assets) arising from a business combination should be subsequently measured at fair value through profit or loss whether or not they fall within the scope of IAS 39. This is consistent with the Group’s current accounting policy and, thus, this amendment did not impact the Group’s accounting policy.

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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.

C.2 New and revised IFRSs that are not mandatory effective (but allow for early adoption) for the year ended 31 December 2015.

The standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Group’s financial statements are disclosed below. The Group intends to adopt these standards, if applicable, when they become effective.

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 IFRS 15 was issued in May 2014 and establishes a five-

step model to account for revenue arising from contracts with customers. Under IFRS 15, revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer.

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; changes in contract asset and liability account balances between periods and key judgements and estimates.

The new revenue standard will supersede all current revenue recognition requirements under IFRS. Either a full retrospective application or a modified retrospective application is required for annual periods beginning on or after 1 January 2018, when the IASB finalises their amendments to defer the effective date of IFRS 15 by one year. Early adoption is permitted. The Group plans to adopt the new standard on the required effective date using the full retrospective method. During 2015, the Group performed a preliminary assessment of IFRS 15, which is subject to changes arising from a more detailed ongoing analysis. Furthermore, the Group is considering the clarifications issued by the IASB in an exposure draft in July 2015 and will monitor any further developments.

Amendments to IFRS 11 Joint Arrangements: Accounting for Acquisitions of Interests

The amendments to IFRS 11 require that a joint operator accounting for the acquisition of an interest in a joint operation, in which the activity of the joint operation constitutes a business, must apply the relevant IFRS 3 principles for business combinations accounting. The amendments also clarify that a previously held interest in a joint operation is not re-measured on the acquisition of an additional interest in the same joint operation while joint control is retained. In addition, a scope exclusion has been added to IFRS 11 to specify that the amendments do not apply when the parties sharing joint control, including the reporting entity, are under common control of the same ultimate controlling party.

The amendments apply to both the acquisition of the initial interest in a joint operation and the acquisition of any additional interests in the same joint operation and are prospectively effective for annual periods beginning on or after 1 January 2016, with early adoption permitted. These amendments are not expected to have any impact on the Group.

Amendments to IAS 16 and IAS 38: Clarification of Acceptable Methods of Depreciation and Amortisation

The amendments clarify the principle in IAS 16 and IAS 38 that revenue reflects a pattern of economic benefits that are generated from operating a business (of which the asset is part) rather than the economic benefits that are consumed through use of the asset. As a result, a revenue-based method cannot be used to depreciate property, plant and equipment and may only be used in very limited circumstances to amortise intangible assets. The amendments are effective prospectively for annual periods beginning on or after 1 January 2016, with early adoption permitted. These amendments are not expected to have any impact to the Group given that the Group has not used a revenue-based method to depreciate its non-current assets.


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Amendments to IAS 27: Equity Method in Separate Financial Statements

The amendments will allow entities to use the equity method to account for investments in subsidiaries, joint ventures and associates in their separate financial statements. Entities already applying IFRS and electing to change to the equity method in its separate financial statements will have to apply that change retrospectively.

For first-time adopters of IFRS electing to use the equity method in its separate financial statements, they will be required to apply this method from the date of transition to IFRS. The amendments are effective for annual periods beginning on or after 1 January 2016, with early adoption permitted. These amendments will not have any impact on the Group’s consolidated financial statements.

Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

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, 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. These amendments must be applied prospectively and are effective for annual periods beginning on or after 1 January 2016, with early adoption permitted. These amendments are not expected to have any impact on the Group.

Amendments to IFRS 10, IFRS 12 and IAS 28 Investment Entities: Applying the Consolidation Exception

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.

Annual Improvements 2012-2014 Cycle These improvements are effective for annual periods

beginning on or after 1 January 2016. They include:

IFRS 5 Non-current Assets Held for Sale and Discontinued Operations

Assets (or disposal groups) are generally disposed of either through sale or distribution to owners. The

amendment clarifies that changing from one of these disposal methods to the other would not be considered 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. This amendment must be applied prospectively.

IFRS 7 Financial Instruments: Disclosures(i) Servicing contracts 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 the arrangement against the guidance for continuing involvement in IFRS 7 in order to assess whether the disclosures are required. The assessment of which servicing contracts constitute continuing involvement must be done retrospectively. However, the required disclosures would not need to be provided for any period beginning before the annual period in which the entity first applies the amendments.

(ii) Applicability of the amendments to IFRS 7 to condensed interim financial statements

The amendment clarifies that the offsetting disclosure requirements do not apply to condensed interim financial statements, unless such disclosures provide a significant update to the information reported in the most recent annual report. This amendment must be applied retrospectively.

IAS 19 Employee Benefits The amendment clarifies that market depth of high

quality corporate bonds is assessed based on the currency in which the obligation is denominated, rather than the country where the obligation is located. When there is no deep market for high quality corporate bonds in that currency, government bond rates must be used. This amendment must be applied prospectively.

IAS 34 Interim Financial Reporting The amendment clarifies 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 interim financial report (e.g. in the management commentary or risk report). 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. This amendment must be applied retrospectively.

These amendments are not expected to have any impact on the Group.

Amendments to IAS 1 Disclosure Initiative The amendments to IAS 1 Presentation of Financial

Statements clarify, rather than significantly change, existing IAS 1 requirements. The amendments clarify:• The materiality requirements in IAS 1• That specific line items in the statement(s) of profit or

loss and OCI and the statement of financial position may be disaggregated

• That entities have flexibility as to the order in which they present the notes to financial statements

• That the share of OCI of associates and joint ventures

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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 subtotals are presented in the statement of financial position and the statement(s) of profit or loss and OCI. These amendments are effective for annual periods beginning on or after 1 January 2016, with early adoption permitted. These amendments are not expected to have any impact on the Group.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

D FOREIGN CURRENCY TRANSACTIONS AND BALANCES

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 currencies other than Group entity’s functional currency (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 the 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 re-measured 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 and recognised at cost as determined on the acquisition, 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 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. This goodwill is subsequently tested for impairment at least on an annual basis and any resulting impairment is recognised immediately in the statement comprehensive income.

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.


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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 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 accumulated amortisation and accumulated impairment losses.

Internally generated intangible assets, 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 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.

Derecognition An intangible asset is derecognised: (a) on disposal; or (b) when no future economic benefits are expected from

its use or disposal.

Gains or losses arising from derecognition 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:

• The technical feasibility of completing the intangible asset so that the asset will be available for use or sale;

• The intention to complete and its ability and intention to use or sell the asset;

• How the asset will generate probable future economic benefits;

• The availability of resources to complete the asset; • The ability to measure reliably the expenditure attributable

to the intangible asset during development; and• Adequate technical, financial and other resources

to complete the development and to use or sell the intangible asset.

Subsequent to initial recognition of the development

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expenditure as an asset, the asset is carried at cost less 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.

Software integral to an item of hardware equipment is classified as property, plant and equipment

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 consist of interest and other costs that

an entity incurs in connection with the borrowing of funds. Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets 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 assets, until such time as the assets are substantially ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are expensed in the period in which they are incurred.

I PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment and land and buildings

are stated at cost, less 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 recognises such parts as individual assets with specific useful lives and depreciates them

accordingly. 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. Software integral to an item of hardware equipment is classified as property, plant and equipment.

All other repair and maintenance costs are recognised in profit or loss as incurred.

Assets in the course of construction for production or for other purposes not yet determined are carried at cost less any recognised impairment loss. Costs include professional fees and, for qualifying assets, borrowing costs. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for intended use.

Containers form part of fixed assets and comprise returnable bottles and crates which are sold and re-purchased at current deposit prices and are stated at net realisable value. Net realisable value represents the current deposit price that is payable to customers when containers are repurchased from them.

Write downs of containers to net realizable value are expensed over four years. Container breakages and losses are expensed in the period in which they occur. Any gains in net realisable value are recognised in the period in which they occur.

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 non-financial assets.)

Depreciation is recognised so as to write off the cost or valuation of assets (other than freehold land) less their residual values over their useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis. Depreciation is charged to profit or loss.

Depreciation is not provided on freehold land and capital projects under development.

Other assets are depreciated on such bases as are deemed appropriate to reduce book values to estimated residual values over their useful lives as follows:-• Buildings - 40 years• Network equipment - 3 to 25 years• Beverage plant and equipment - 25 years• Office equipment - 4 to 10 years• Motor vehicles - 4 to 5 years

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.


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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 derecognition of the asset, calculated as the difference between the sales 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 properties held to earn rentals

and/or for capital appreciation (including property under construction for such purposes). 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 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:• Disclosures for significant assumptions Note AB• Property, plant and equipment Note 11• Goodwill Note 43

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 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 at the reporting date 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 in the statement of comprehensive income. Impairment losses relating to goodwill cannot be reversed in future periods.

Intangible assets with indefinite useful lives are tested for impairment annually at the reporting date at the CGU level, as appropriate, and when circumstances indicate that the carrying value may be impaired.

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L LEASES A lease is an agreement in which the lessor conveys

to the lessee, in return for payment, the right to use an asset for an agreed period of time.

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.

A lease is classified at the inception date as a finance lease or an operating lease.

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. The Group does not have any finance leases.

Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.

In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

Group as a lessee Assets held under 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 unless they are directly attributable to a qualifying asset in which case they are capitalised in accordance with the Group’s policy on borrowing costs.

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 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.

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.

Merchandise, raw materials and consumable stores are valued at cost on a weighted average cost basis. Manufactured finished products and products in process are valued at raw material cost, plus labour and a portion of manufacturing overhead expenses,where appropriate.

Inventories are de-recognised when they are sold, and the carrying amount is recognised as an expense in the period in which the related revenue is recognised.

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.

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.


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TelecommunicationsN.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 revenueN.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.

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 written down 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.

N7.3 Banking fee and commission income 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; and • 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.

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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 (provided that it is probable that the economic benefits will flow to the Group), 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. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term.

P TAXATION

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.

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:• When the deferred tax liability arises 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 and

• In respect of taxable temporary 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:• When the deferred tax asset relating to the

deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss and

• In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it


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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.

Current and deferred tax for the period Current and deferred tax are recognised as income or as

an expense in profit or loss, except when they relate to items that are recognised outside profit or loss (whether in other comprehensive income or directly in equity), in which case the tax is also recognised outside profit or loss, or where they arise from the initial accounting for a business combination. In the case of a business combination, the tax effect is included in the accounting for the business combination.

P.3 Value Added Tax (VAT) Expenses and assets are recognised net of the amount

of VAT, except:• When the VAT incurred 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

• When receivables and payables are stated 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 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 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 contractual date) or an employee’s decision to accept voluntary redundancy in exchange for those benefits. 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.

Details regarding the termination benefits incurred by the Group during the year are set out in notes 4 and 24.5.

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R CURRENT AND NON CURRENT CLASSIFICATION The Group presents assets and liabilities in statement

of financial position based on current or non-current classification.

An asset is current when it is:• Expected to be realised or intended to be sold or

consumed in the normal operating cycle; or• Held primarily for the purpose of trading; or• Expected to be realised within twelve months after

the reporting period; or• Cash or cash equivalent unless restricted from being

exchanged or used to settle a liability for at least twelve months after the reporting period

The Group classifies all other assets that do not meet the definition above are classified as non-current.

A liability is current when:• It is expected to be settled in the normal operating

cycle or;• It is held primarily for the purpose of trading or;• It is due to be settled within twelve months after the

reporting period or;• There is no unconditional right to defer the settlement

of the liability for at least twelve months after the reporting period

The Group classifies all other liabilities that do not meet the definition above as non-current.

Deferred tax assets and liabilities are classified as non-current assets and liabilities respectively.

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:

• Disclosures for valuation methods, significant estimates and assumptions Notes AB, 13, 19 and 20

• Quantitative disclosures of fair value measurement hierarchy Note 19

• Investment properties Note 13.

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:• In the principal market for the asset or liability or;• In the absence of a principal market, in the 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 reassessing 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 re-measured or reassessed 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.


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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.

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. Financial assets and financial liabilities are recognised when a Group entity becomes party to the contractual provisions of the instrument.

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. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. 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:• Financial assets at fair value through profit or loss;• Loans and receivables;• Held-to-maturity investments; and• Available for sale financial assets.

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 any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the effect of discounting is immaterial. 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 22 and 23.

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.

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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 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:• The rights to receive cash flows from the asset have

expired or;• The Group has transferred its rights to 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:• Disclosures for significant assumptions Note AB• Trade receivables Note 22• Loans and advances Note 23

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 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.


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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.

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

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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 inter-segment transactions and transactions and balances that are not allocated to reporting segments.

AA SHARE-BASED PAYMENTS Employees of the Group were offered termination

benefits in the form of share-based payments, whereby employees rendered the services as consideration for equity instruments (equity-settled transactions).

Equity-settled transactions The cost of equity-settled transactions is determined by

the fair value at the date when the grant is made using an appropriate valuation model, further details of which are given in Note 24. That cost is recognised in employee benefits expense (Note 4), together with a corresponding increase in equity (other capital reserves), over the period in which the service and, where applicable, the performance conditions are fulfilled (the vesting period). The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest. The expense or credit in the statement of comprehensive income for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.

Service and non-market performance conditions are not taken into account when determining the grant date fair value of awards, but the likelihood of the conditions being met is assessed as part of the Group’s best estimate of the number of equity instruments that will ultimately vest. Market performance conditions are reflected within the grant date fair value. Any other conditions attached to an award, but without an associated service requirement, are considered to be non-vesting conditions. Non-vesting conditions are reflected in the fair value of an award and lead to an immediate expensing of an award unless there are also service and/or performance conditions.

No expense is recognised for awards that do not ultimately vest because non-market performance and/or service conditions have not been met. Where awards include a market or non-vesting condition, the transactions are treated as vested irrespective of whether the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.

When the terms of an equity-settled award are modified, the minimum expense recognised is the grant date fair value of the unmodified award, provided the original terms of the award are met. An additional expense, measured as at the date of modification, is recognised for any modification that increases the total fair value of the share-based payment transaction, or is otherwise beneficial to the employee.

Where an award is cancelled by the entity or by the counterparty, any remaining element of the fair value of the award is expensed immediately through profit or loss.

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share (further details are given in Note 10.

AB 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


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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:• Capital management Note 35• Financial risk management and policies Note 35• Sensitivity analysis disclosures Notes, 35.3 and 36.2

Judgements In the process of applying the Group’s accounting 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, as 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.

AB. 1 Property, plant and equipment - IAS 16 Property, plant and equipment represent a significant

proportion of the asset base of the Group, being 58% (59% 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.

Network modernisation The network cellar segment embarked on a network

modernisation project during the year. The transaction involved the swap out of old equipment for new equipment.

Significant judgements are made by directors in determining the extent to which the exchange transactions impact the future cash flows of the business, and thus if the transaction has commercial substance and the consequential accounting treatment.

In determining if the transaction has commercial substance directors assesses if:

a) The configuration (risk, timing and amount) of cash flows of the assets received differs from the configuration of the cash flows of the assets transferred; b) The entity-specific value of the portion of the entity’s operations affected by the transaction changes as a result of the exchange; and c) The difference in (a) or (b) is significant relative to the fair value of the assets exchanged.

The Directors therefore concluded that the swap had commercial substance, and thus the equipment acquired was recognised at fair value.

The fair value of the new equipment was ascertained as the cash consideration that would have been exchanged in an arm’s length and orderly transaction between willing market participants, had the new equipment been acquired for a cash consideration only.

AB.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.

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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:

AB.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.

AB.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.

For unique software products controlled by the Group, the useful 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.

AB.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 Cash Generating Unit (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.

AB.4 Provisions 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 22 for the basis of determining impairment loss provisions.

Provision for long service awards In accordance with IAS 37 - Provisions, Contingent

Liabilities and Contingent Assets, a constructive obligation exists within the Group for the payment of long service awards. This obligation is derived from the past practice of paying out awards and has thus created a constructive obligation.

IAS 19 - Employee Benefits, outlines the accounting treatment of long service awards payable to qualifying employees. The standard provides guidance on the determination of provisions such as the long service awards. The provision is determined by discounting to net present value the future cash flows for long service awards. In computing the obligation, the Group management have made the following assumptions:

• Staff retention period – 15 years (This represents the expected period employees are likely to stay employed by the Group. It takes into consideration past behaviour and external market research on behaviour patterns of certain age groups and their employment trends); and

• Discount rate – 10% based on the computed weighted average cost of capital.

AB.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.

AB.6 Deferred revenue Revenue for cellular network services is recognised

when the airtime is utilised by the customer. The unused air time as at 29 February 2016 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.


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AB.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.

AB.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.

AB 8.1 Impairment provisiona. Specific and portfolio provisions 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 23 for the carrying amount of loans and advances to customers and more information on the impairment of loans and advances to customers.

b. Regulatory provision The Reserve Bank of Zimbabwe requires the Bank to

provide provisions for impairments on loans. Where the regulatory provision is higher than the IAS 39, ‘Financial Instruments: Recognition and Measurement’ the excess is recognized as an appropriation of reserves.

c. Past due but not impaired loans Loans and advances where contractual interest or

principal payments are past due but the Group believes that impairment is not appropriate on the basis of the level of security/collateral available and/or the stage of collection of amounts owed to the Group.

AB.9 Taxation 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.

These losses relate to subsidiaries that have a history of losses, and may not be used to offset taxable income elsewhere in the Group. Further details on taxes are disclosed in Note 15.

AB.10 Share-based payments Estimating fair value for share-based payment

transactions requires determination of the most appropriate valuation model, which depends on the terms and conditions of the grant. This estimate also requires determination of the most appropriate inputs to the valuation model including the expected life of the share option or appreciation right, volatility and dividend yield and making assumptions about them. The Group initially measures the cost of cash-settled transactions with employees using a binomial model to determine the fair value of the liability incurred. For cash-settled share-based payment transactions, the liability needs to be remeasured at the end of each reporting period up to the date of settlement, with any changes in fair value recognised in the profit or loss. This requires a reassessment of the estimates used at the end of each reporting period. For the measurement of the fair value of equity-settled transactions with employees at the grant date, the Group uses the market price of the share at the grant date or the fair value of the services rendered as determined by the employment benefits contract.

ADMINISTRATION

Strategic Business Partnerships 112

Shareholder Analysis 113

Corporate and Advisory Information 114

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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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 29 February 2016

Consolidated Top 20

Rank Account Name Shares % of Total

1 ECONET GLOBAL LIMITED 492,325,748 30.02

2 STANBIC NOMINEES (PRIVATE) LIMITED - NNR 340,898,071 20.79

3 ECONET WIRELESS ZIMBABWE LIMITED 169,578,284 10.34

4 AUSTIN ECO HOLDINGS LIMITED - NNR 89,872,460 5.48

5 STANBIC NOMINEES (PRIVATE) LIMITED 86,346,396 5.26

6 OLD MUTUAL LIFE ASSURANCE COMPANY OF ZIMBABWE LIMITED 81,259,945 4.95

7 ECONET WIRELESS ZIMBABWE SPV LIMITED 48,475,095 2.96

8 EBENEZER TRUST 28,959,972 1.77

9 STANDARD CHARTERED NOMINEES (PRIVATE) LIMITED - NNR 23,893,789 1.46

10 STANDARD CHARTERED NOMINEES (PRIVATE) LIMITED 22,033,751 1.34

11 NORTHUNDERLAND INVESTMENTS (PRIVATE) LIMITED 22,020,090 1.34

12 AMRO INTERNATIONAL HOLDINGS LIMITED - NNR 15,033,962 0.92

13 MINING INDUSTRY PENSION FUND 11,318,349 0.69

14 HELLIKOP INVESTMENTS (PRIVATE) LIMITED - NNR 10,699,010 0.65

15 NATIONAL SOCIAL SECURITY AUTHORITY 10,454,285 0.64

16 PRESSFORTH INVESTMENTS (PRIVATE) LIMITED 10,317,570 0.63

17 ECONET EMPLOYEES BENEFICIARY TRUST 9,936,300 0.61

18 LOCAL AUTHORITIES PENSION FUND 8,430,062 0.51

19 COVERSITE (PRIVATE) LIMITED 7,014,684 0.43

20 CAPERNAUM TRUST ENDOWMENT FUND 6,218,472 0.38

OTHER SHAREHOLDERS 144,935,135 8.84

TOTAL ISSUED SHARES 1,640,021,430 100.00

Range Holders % of Holders Shares % of Shares 0 - 100 2,455 27.12 105,460 0.01 101 - 200 731 8.08 120,597 0.01 201 - 500 988 10.92 339,143 0.02 501 - 1,000 1,008 11.14 695,544 0.04 1,001 - 5,000 2,330 25.74 4,765,759 0.29 5,001 - 10,000 513 5.67 3,563,901 0.22 10,001 - 50,000 561 6.20 11,954,358 0.73 50,001 - 100,000 128 1.41 9,153,016 0.56 100,001 - 500,000 179 1.98 42,607,511 2.60 500,001 - 1,000,000 65 0.72 45,362,948 2.77 1,000,001 - 10,000,000 75 0.83 229,711,734 14.01 10,000,001 and above 18 0.20 1,291,641,459 78.76 Total 9,051 100.00 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 Road, Msasa, Harare, Zimbabwe

Telephone: +263-486124-5, +263-772 793 700, Fax:+263- 4-486183E-mail: [email protected], website: www.econet.co.zw

Group Company Secretary Charles Alfred BandaEconet Park, 2 Old Mutare Road, Msasa, Harare, Zimbabwe

Independent Auditors

Deloitte & Touche (Zimbabwe)Registered Public AuditorsWest Block, Borrowdale Office Park, Borrowdale Road, Borrowdale, P.O. Box 267, Harare, Zimbabwe

Principal Bankers

African Export-Import Bank Limited72 (B) EL Maahad EL-Eshleraky Street, Opposite Merryland Park, Roxy, Heliopolis, Cairo 11341, Egypt

Barclays BankKurima House, Nelson Mandela Avenue, P.O Box CY 881 Causeway, Harare Stanbic BankStanbic Centre, 59 Samora Machel Avenue, Harare, Zimbabwe

Steward Bank Limited2nd Floor, 101 Union Avenue Building,101 Kwame Nkrumah Avenue, Harare, Zimbabwe

CBZ Bank LimitedUnion House, 60 Kwame Nkrumah Avenue, Harare, Zimbabwe

Principal legal advisors

Mtetwa and NyambiraiLegal Practitioners2 Meredith Drive, Eastlea, Harare, Zimbabwe

Registrars and transfer secretaries

First Transfer Secretaries (Private) Limited1 Armagh Avenue, Eastlea, Harare, Zimbabwe


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Notes

Notes

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