econet 2013 ar.pdf
TRANSCRIPT
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Annual Integrated Report
2013
Inspiring Innovations
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Unless the Lord bui lds the house, they labour in vainwho bui l t i t . Unless the Lord guards the c ity, thewatchman stays awake in vain.
Psalm 127 NKJV
An Integrated Report tel ls the overal l story of the organisat ion. I t is a report to stakeholders on the
strategy, performance, and act iv i t ies of the organisat ion in a manner that a l lows stakeholders to
assess the abi l i ty of the organisat ion to create and sustain value over the short, medium, and
long-term. An effect ive Integrated Report ref lects an appreciat ion that the organisat ions abi l i ty to
create and sustain value is based on f inancia l , socia l , economic, and environmental systems and by
the qual i ty of i ts relat ionships with i ts stakeholders. The Integrated Report should be wri tten in
clear and understandable language in order for i t to be a useful resource for stakeholders.
Integrated Reporting Committee of South Africa (IRC SA)
Our Commitment to Integrated ReportingIn our f i rst Integrated Report , we acknowledged that we had started on
a journey. The f i rst step was to lay a foundat ion for integrated report ing.
This is our second Integrated Report and we trust you wi l l perceive the
improvements over last year : more informat ion; greater ins ights;
improved transparency.
Disclaimer - Forward-looking statementAn Integrated Report inc ludes certa in for ward- looking statements. These forward- looking statements arenecessar i ly about the future and therefore incorporate degrees of uncert a inty. Consequently future actual resultsand performance may differ from these statements.
The forward- looking statements are current as of the date of publ icat ion of the Integrated Report. The Companymakes no representat ion that the information wil l be publ ic ly up dated after the release of the Integrated Report.
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Inspiring InnovationsEconets innovations are inspiring and life changing; we believe that technology that does
not change and improve lives is irrelevant. Hence we continuously search for transformingtechnologies to facilitate social transformation in existing and new markets. With the most
extensive coverage in Zimbabwe, Econet commands market leadership, delivering value and
inspiring transformation across the country.
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Performance highlights
Revenue Composition
1 Earnings before interest, taxation, depreciation, impairment and amortisation
EBITDA for 2012 excludes once-off profit on disposal of investments.2 Profit after taxation
3 Average revenue per user per month
4 Capital expenditure
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The Group continues to grow shareholder value as illustrated by the metrics above. Through the authority of the
shareholders, the Group has made a number of prudent share buy-backs in an effort to retain value.
Over the period, the Group made significant efforts to grow shareholder value, which mainly included the following:
Securing long-term fundingIn the current financial year, the Group managed to secure substantial debt facilities, and continued to service ongoing
facilities. This has enabled the Group to continue in its infrastructure and resource development aimed at optimising
operations and remaining the network of choice in the country.
Investment in infrastructure and resourcesThe Group continues to invest in network infrastructure development aimed at increasing network coverage and improving
network quality. As at year end, the Groups total assets have surpassed the $1 billion mark. The Groups subscriber base
has also increased from 1.2 million in 2009 to 8 million subscribers. Investment in various systems that are aimed at
improving operational efficiencies and containing costs continues to be made.
The focus on customer experience through delivery of superior productsEcoCash, the Groups mobile money transfer and payment system continues to transform the lives of individuals across
the country. New functionalities have been added to the EcoCash system that are aimed at servicing the needs of our
customers. A wide range of solar products was also introduced in the year. The Group increased its mobile data coverage
in the year through setting up new base stations to enable users to access data facilities. We continue to leverage our
investment in fibre infrastructure to deliver exceptional quality and data speeds.
The acquisition of core investmentsThe Group acquired TN Bank Limited as a strategic investment after realising the need to accelerate the convergence of
mobile telephone and financial services in line with global trends. TN Bank Limited also holds the licence for EcoCash, a
key product in the Group.
Reducing investor uncertainty through the provision of value-relevant informationFollowing the publication of the Groups inaugural integrated annual report in 2012, the Group has continued in its efforts
to provide useful and valuable information to all stakeholders. To this end, this years annual integrated report has improved
in the quality of information provided, with a focus towards meeting the informational needs of key stakeholders. Throughdiligent adherence to the latest International Financial Reporting Standards and best practices in financial reporting, the
Group continued to provide improved disclosure of its activities in its annual reports, interim financial results publications,
as well as presentations to the market.
Th
eYearInPerspective
Shareholder value delivery report
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Share price movement from February 2009 to February 2013
Note:
The share price during the year has been adjusted for the 10 for 1 share split in February 2013.
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Summarised income statement ('000) 2013 2012 2011 2010
Revenue 694,844 611,116 493,491 362,776
EBITDA 305,344 290,894 242,746 179,285
Finance charges (28,600) (10,202) (8,061) (4,903)
Profit before tax 204,903 239,130 196,471 148,122
Taxation (64,965) (73,389) (55,502) (34,912)
Net Profit for the year 139,938 165,741 140,969 113,210
Summarised statement of financial position ('000)
Non-current assets 739,951 644,763 536,439 296,875
Current assets 275,158 167,664 101,073 95,794
Equity and reserves 492,883 382,793 290,477 165,486
Non-current liabilities 288,293 174,005 244,038 127,460
Current liabilities 233,933 255,629 102,997 99,723
Net debt 264,571 249,138 248,392 138,707
Capital expenditure (147,044) (216,010) (270,034) (160,148)
Performance per ordinary share (cents)
Basic earnings per share 9.0 10.0 8.3 6.6
Headline and diluted earnings per share 9.0 10.0 8.3 6.6
Net asset value per share 319 232 172 95
Profitability and returns (%)
EBITDA margin 44% 45% 49% 49%
Operating profit margin 20% 27% 29% 31%
Effective tax rate 32% 31% 28% 24%
Net profit margin 20% 27% 29% 31%
Notes:
1. 2012 EBITDA margin excludes once off profit on disposal of investments
Four-year trading view
Th
eYearInPerspective
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Inspiring Innovations
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Our business
Our Vision
To provide world-class telecommunications to all the people of Zimbabwe.
Our Mission
To 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:
Pioneering
We are a company committed to finding the best way forward in the fast-moving and highly competitive technology
field.
To remain leader in the field, we shall relentlessly pursue innovative solutions and constantly grow our knowledge base,
with an uncompromising passion for excellence.
Professionalism
In everything we do, both within Econet and in the community, we always work in a customer and objective-oriented
manner with clearly defined goals, in terms of quality of service. In all our professional areas and at all levels we carry
out our duties skilfully and diligently.
Personal
Internally we always remember that we are a company made up of individuals. These people are the Company. Each
one is an intrinsically valuable member of the organisation irrespective of their gender, race or position. We will always
show concern for each other in an atmosphere that is open and stimulates personal development, job satisfaction and
a sense of responsibility. We believe in working in teams, in effective and confident co-operation, in environments
where honesty, praise, constructive criticism and fair reward have their place.
Who we are inside the Company reflects who we are externally. Our relationship with our customers enthuses with
warmth and a genuine desire to meet their needs. We reach out to customers in a holistic and organic way that makes
them true stakeholders and willing participants in Econet Wireless.
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CorporateandLeadership
Corporate profile
EWZL - Zimbabwe holding companyThis annual integrated report incorporates the results of allthe subsidiaries and associates of Econet Wireless Zimbabwe
Limited. Econet Wireless Zimbabwe Limited (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 Zimbabwes
leading technology company. It is one of the largest quoted
companies in terms of market capitalisation and directly and
indirectly employs in excess of 15 000 people.
Subsidiary CompaniesEconet Wireless (Private) LimitedEconet Wireless (Private) Limited is EWZLs cellular network
operator with a base of 8 000 000 subscribers.
EW Capital Holdings (Private) Limited
EW Capital Holdings (Private) Limited is EWZLs 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) Limited
The Company is a leading provider of financial transaction,
switching, point of sale and value-added services that
exploit 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 enhancecustomer service, in partnership with one of the worlds
leading manufacturers of smart card-based point-of-sale
systems.
TN Bank LimitedTN Bank Limited offers commercial banking services in the
major centres of Zimbabwe. It is planned to play a pivotal
role in the Group, especially concerning EcoCash, for which
the Bank holds the banking licence neccessary for money
transfer services.
Pentamed Investments (Private) Limited
EWZL 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) Limited
Mutare Bottling Company operates the Coca-Cola franchise
in the Eastern Region of Zimbabwe.
Associate CompanyData Control and Systems (1996) (Private) Limited t/aLiquid Telecom Zimbabwe
Liquid is a registered internet access provider in Zimbabwe
and is a leading data, voice and Internet Protocol provider in
the country. The Company supplies wholesale and retail fibre-optic and satellite services throughout Zimbabwe.
Econet Wireless Zimbabwe
Limited (EWZL; listed on
Zimbabwe Stock Exchange)
Econet Wireless (Private)
Limited (EWPL; cellular
network operator)
EW Capital Holdings
(Private) Limited (EWCH;
group investment vehicle)
TN Bank Limited
(commercial bank)
Pentamed Investments
(Private) Limited
(holding company)
Mutare Bottling Company
(Private) Limited
(MBC; Coca-Cola franchise)
Data Control and Systems
(1996) (Private) Limited t/a
Liquid Telecom Zimbabwe
98.60%
84.30%
63%
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Chairmans statement to shareholders
DR J. MYERS - Chairman of the Board
IntroductionThrough pursuing inspiring innovations and continuedinvestment in human capital, systems and technology,Econet continues to maintain its market leadershipposition. The Company is changing lives and transformingthe communities for the better by providing products andservices that address the needs of people across thecountry in line with its vision to provide telecommunicationservices to all people in Zimbabwe. The countrys mobilepenetration rate improved from 15% in 2010 to almost100% for the period under review, largely as a result ofthe increase in Econet Wireless subscriber base. TheCompanys extensive network coverage has allowedaccess to telecommunication and other services topreviously marginalised communities resulting in atransformational impact on those communities. Econetmade significant strides in providing access to internetservices by making internet access ubiquitously availablethrough its extensive data-enabled network resulting in the
internet penetration rate increasing to about 35%.
Investment ReviewSince inception the business has invested over US$1billion in the Zimbabwean economy, making it one of thelargest investors in the country. Further investment wasmade in the year under review in network infrastructure toimprove coverage and bring more capacity, particulary fordata services. This investment resulted in an increase to8 million subscribers; a growth of 25% from the previousyear.
The investment in network infrastructure is complementedby an extensive distribution network which has made theCompanys products and services easily accessible to its
subscribers across the country. This distribution networkconsists of over 100 different locations where there iseither a company owned shop, an exclusive franchise ora dealer. This investment has had a profound effect onemployment as it has created an extensive network thatdeals directly and indirectly with the Companys productsand services.
The business identified an opportunity in the financialservices sector where most of the people in the countrydid not have access to bank accounts or a means to dofinancial transactions easily and responded by launching
EcoCash; which to date has been a highly successfulintervention with over 2.1 million customers. Internationally,there has been a trend towards convergance of mobiletelecommunications and financial services. The Companyacquired TN Bank Limited as it realises the strategic rolefinancial services will play in its future growth. Mobilemoney services in Zimbabwe require a banking licence andthis investment allows the Company to be firmly in controlof the future growth prospects of its financial services-related innovations.
The Company continues to research into areas in whichtechnology can be used to address needs that areunique to Zimbabwe and Africa. Its innovations in solardevices has brought power and phone charging solutions
to communities that previously were not addressed byconventional power solutions. Innovation is a core valueof the Company and it will continue to drive its investmentphilosophy.
Operations ReviewEcoCash subscribers increased by 62% from 1.3 millionto 2.1 million subscribers. The agency network thatsupports the EcoCash business witnessed a growthof 242% to close at over 3,000 agents thereby creatingfurther employment opportunities and improving thenational payments system. Under the EcoCash serviceoffering, new services were introduced which include: billpayments, bulk payments, merchant services, as well asbanking-related facilities. The provision of banking-relatedservices necessitated the integration of most of thebanks in Zimbabwe onto the EcoCash platform. Throughthis intergration new features such as the bank to walletfunctionality that allows banked customers to transfermoney from their bank account to their mobile wallet werelaunched. Further to this the EcoCash debit card whichfacilitates payments to retailers and other merchants was
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CorporateandLeadership
500 academically talented students on a full scholarshipbasis.
to be the Partner of Choice in allprogrammes aimed at responding to national healthcarecrisis, such as cholera and typhoid, aswell as building and maintaining capacity in the nationalhealthcare delivery system.
Licence RenewalThe Econet Wireless Zimbabwe operating licence wasissued, as a 15 year licence in July 1998, and was scheduledto expire on the 9th of July 2013. The original licence, as
is standard international practice, set out guidelines tobe followed for the renewal process. It also stipulated alicence renewal fee of $100 million.
I am pleased to advise that the operating licence has nowbeen formally renewed by government, on substantiallythe same terms and conditions as the previous period,save for the fact that the licence period was extended to20 years, and the renewal fee, was set at $137.5 million.
All operators will be required to pay the same licence feeon renewal of their licences.
OutlookEconet Wireless is inspired to change the world of itscustomers through relevant innovations that addresscustomer needs. Having made a significant investment innetwork capacity and coverage in the past few years theCompany will continue to focus on improving its customerservice platforms, distribution network, and furtherenhance its internet service delivery capabilities. Researchand innovation in services that address the needs infinancial services, farming, health and education sectorswill continue so that the Company remains on the cuttingedge of new and inspiring innovations.
AppreciationI would like to extend my appreciation to the outgoingChairman Mr. Tawanda Nyambirai, for the guidance andleadership during his tenure. His invaluable contribution overa period spanning years in the Companys history is greatly
appreciated. I extend my appreciation to our customers,shareholders, strategic partners, and regulatory authoritiesfor their unwavering support during the year under review.I would also like to thank management and staff fortheir commitment in creating value for all stakeholders. Iacknowledge the tremendous support that I received fromfellow Board members who provided insightful wisdomand direction which has propelled the Company to yetanother level of success.
DR J. MYERSCHAIRMAN OF THE BOARD
14 May 2013
introduced. These innovations introduce a greater level ofconvienence to our subscribers and makes the technologyrelevant for their day to day lives.
Another first by the Company was the introduction of theexciting Buddie Zone, a service that allows customersto receive exciting dynamic discounts for voice calls. Thisinnovative concept has allowed for network resources tobe more optimally utilised.
Broadband continues to gain popularity due to its highspeed, excellent quality and the most extensive coverageof any operator in Zimbabwe. Data subscribers increasedby 52% from 2.1 million to 3.2 million in the year under
review.
The Green Kiosk initiative continued in the year underreview. Under this initiative traders have the opportunityto merchandise airtime, accessories, lanterns and otherproducts. This is yet another example of how the Companyis transforming the lives of ordinary people by giving smalltraders an opportunity to retail the Companys productsand creating for them unique opportunities to better theirlives. At the same time this initiative allows the provision offree solar powered phone charging solutions to subscriberswho have limited or no access to grid power.
Financial PerformanceRevenue for the year ended 28 February 2013 was
US$694.8 million, an increase of 14% compared tothe previous year. Earnings Before Interest, Taxation,Depreciation and Amortisation (EBITDA) recorded amargin of 44%. Depreciation and amortisation increasedby 54% to US$71.6 million in line with growth of the assetbase. Finance charges increased due to finalisation of themulti-creditor facilities in the year under review.
Total assets surpassed the US$1,0 billion mark as ofreporting date, registering a growth of 25% from last year.The debt to equity ratio improved to 54%, from 65% as at28 February 2013. The Group increased its investment inTN Bank Limited from 45% (an associate as at half year) to98.6% (a subsidiary). This investment has been accountedfor as a subsidiary from the date control was assumed, on31 January 2013.
Shareholders approved a 10 (ten) to 1 (one) ordinary sharesplit at an Extraordinary General Meeting held on 28February 2013.
Corporate Social InvestmentThe Company has introduced a more sustainable wayof assisting the marginalised members of our society.The Company set up the Higher Life Foundation, whichconsists of the following Trusts:
orphaned children into History Makers with aleadership mindset for global impact. There are currentlyover 41 000 History Makers who are
benefiting through the Capernaum Trust.
Scholarship Fund which so far has supported over
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IntroductionThe exceptional track record that has been achieved so far
demonstrates that the fundamental pillars that are required
to build, develop and sustain a robust and profitable
business are in place. As the economic environment
continues to improve and disposable incomes increase,
new opportunities for growth will be created. The Group
is well positioned to take advantage of these opportunities.
Operations reviewContinued growth
Econet Wireless Zimbabwe registered 14% growth in
revenues in the year ended February 2013. This continuedgrowth was despite a subdued economic environment.
The focus of the business remained on growing sustainable
value for all stakeholders by developing products and
services that meet the needs of customers and ensuring
that the pricing of these products reflects a sustainable
value proposition; having regard to the high capital nature
investments required in the telecommunications industry.
Chief Executive Officers operations review
DOUGLAS MBOWENI- Chief Executive Officer
Exciting products and services
Notable developments in the business during the year
under review include the launch of exciting and innovative
products such as the Buddie Zone initiative which is
aimed at ensuring that we derive maximum benefit from
our investment in the network through enhancing the
customers appetite to make voice calls based on certain
dynamic criteria. Other exciting products and services
developments are outlined below.
Mobile Money Transfers
EcoCash, the Mobile Money Transfer (MMT) System,
launched several exciting features that were an
unprecedented success. The continued roll out of point-
of-sale machines and the interface between point-of-sale
terminals and the mobile wallet brings with it unparalleled
convenience for our customers. In addition, the continued
integration with all major banking institutions of the
EcoCash platform as well as the extensive agent network
makes EcoCash the most integrated, widely accessible and
most convenient financial transaction service in Zimbabwe
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products and services. We believe that this continued
investment demonstrates our commitment to ensuring
that our customers get the best quality of service.
Brand quality
Our brand surveys continued to show that our brand is
highly visible, well recognised, respected and appreciated.
Our brand is founded on strong principles that embody a
pioneering approach to business, which means we will
always relentlessly pursue new ways of doing things
in a very fast moving field. We continue to defend and
protect our leading market share position and revenue
growth through new innovations, aggressive promotions
that create a heightened brand awareness and a positive
disposition towards the Econet brand.
Going ForwardOur focus continues to be on providing world-class
services that are relevant to our customers. We aim to
provide a platform for continued economic growth whilst
transforming our communities in a way that goes beyond
the normal corporate social responsibility practices. The
licence renewal has provided a new lease of life for usto plan and execute our strategic priorities. We welcome
the future with confidence that we are poised for some
exciting opportunities as the economy continues on its
current path to recovery.
D. MBOWENI
CHIEF EXECUTIVE OFFICER
14 May 2013
today. The acquisition of TN Bank Limited is another
exciting development which will propel the success of
EcoCash. EcoCash has been cited as the second fastest
growing MMT service after the world renowned M-PESA
system that operates in Kenya. The fact that this feat
has been achieved in just under 18 months of operation
is a significant achievement. Our vision is to continue to
innovate and provide Mobile Phone-based Applications.
Roaming services
Continued rollout of post-paid, data and prepaid roaming
with international partners remained a key priority.
Campaigns to increase customer awareness of roaming as
a mass-market offering continued.
Data services
Our data service continues on an exceptional growth curve.
Our investment in fibre technology and our superior data
coverage has resulted in a growth rate of over 50% in our
data subscribers. Our data speeds are amongst the fastest
in Africa and our coverage is superior to our competitors.
Network quality and customer service
The network is truly a world-class network which has a
quality and performance that we constantly benchmark
with other leading operators in the region and on a global
scale. Our network performance has been well above
international benchmark performance and our continued
focus in this area will result in a network that is far superior
to many other operators. To complement the network
quality and performance initiatives, significant investment
has been made to upgrade call centre facilities and capacity
as well as the retail and customer services footprint. This
has enhanced our customer points of presence as well
as our responsiveness to customer enquiries about our
CorporateandLeadership
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Board of Directors
Dr James MyersChairman of the Board ofDirectors (W.E.F 12-12-2012)
Mr Strive MasiyiwaExecutive director
Mr Craig FitzgeraldNon-executive director
Mr Douglas MboweniExecutive director -Chief Executive Officer
Mrs Sherree ShereniIndependent non-executive(Appointed 15-05-2013)
Mrs Tracy MpofuNon-executive director
Mr Kris ChirairoExecutive director -Finance director
Ms Beatrice MtetwaNon-executive director
Mr Godfrey GomweIndependent non-executive
(Appointed 15-05-2013)
Mr Martin EdgeIndependent non-executive
(Appointed 06-06-2013)
Mr John PattisonRetired (31-08-2012)
Mr Tawanda NyambiraiRetired (12-12-2012)
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Mr Godfrey Gomwe
Godfrey is Chief Executive of Anglo Americans globalThermal Coal business. Until 31 August 2012, he was
Executive Director, Anglo American South Africa Limited.
He was previously Head of Group Business Development,
Africa for Anglo American Plc and prior to that, Finance
Director and Chief Operating Officer of Anglo American
South Africa. He is Chairman of Tshikululu Social
Investments and a former non-executive director of Kumba
Iron Ore Ltd and Anglo Platinum Ltd. Before moving to
South Africa in 2003, he was Chairman and CEO of Anglo
American Zimbabwe. He is a past President of the Institute
of Chartered Accountants of Zimbabwe and past Senior
Vice President of the Chamber of Mines of Zimbabwe. Hehas held many Directorships in both listed and unlisted
companies.
He is currently on the board of Thebe Investment
Corporation (Pty) Ltd where he is Chairman of Thebe
Mining Resources Limited, Chairman of the Remuneration
Committee as well as a member of the Investment
Committee. He currently serves on the Executive Council
of the Chamber of Mines of South Africa. Godfrey has a
Bachelor of Accountancy degree from the University of
Zimbabwe, is a Chartered Accountant (Zimbabwe), and
holds a Masters degree in Business Leadership from theUniversity of South Africa.
Mr Martin Edge
Martin Edge brings the experience gained from a financialcareer focused on both Africa and the telecommunications
sector. Until mid-2012 he was a Managing Director with
Standard Chartered Bank in Johannesburg.
Martin has practised as a corporate finance advisor
since 1985, working for nine years at Hambros Bank in
London, four years as head of TMT Advisory at HSBC
in Johannesburg and 7 years as Director and Head of
Corporate Finance at First Africa, which was acquired by
Standard Chartered in 2009. In between, he spent three
years working at CCAfrica (& Beyond), a leading African
luxury tourism group, as its Finance Director and CorporateFinance Director.
Martin has advised on some of the largest corporate
finance transactions in Africa for clients such as Econet,
Anglogold, MTN, Vodacom, Bharti Airtel and McDonalds.
He has served on many private company Boards in Africa
and is a Trustee of two trusts within the Macmillan Africa
group.
Martin graduated with an honours degree in Philosophy,
Politics and Economics from the University of Oxford, and
is a UK Chartered Accountant. He has lived in South Africasince 1995.
Mr John Pattison (retired 31-08-12)
Mr Tawanda Nyambirai (retired 12-12-12)
BOARD OF DIRECTORS (continued)
Notes
Audit Committee
C. Fitzgerald*
K. V. Chirairo
D. Mboweni
T. P. Mpofu (Mrs)
P. J. Campbell
M. Harris (Mrs)
Investments Committee
C. Fitzgerald*
K. V. Chirairo
D. Mboweni
T. P. Mpofu (Mrs)
Dr J. Myers
B. Mtetwa (Ms)
P. J. Campbell
M. Harris (Mrs)
Loans Committee
C. Fitzgerald*
K. V. Chirairo
D. Mboweni
T. P. Mpofu (Mrs)
P. J. Campbell
M. Harris (Mrs)
Related Party Committee
P. J. Campbell*
Dr J. Myers
B. Mtetwa (Ms)
*Chairman
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The Directors have pleasure in presenting their report for
the year ended 28 February 2013. In the report Group
refers to Econet Wireless Zimbabwe Limited and its
subsidiary companies.
Principal Activities and Operations Review
The Groups core business continued to be the provision
of cellular services, provision of internet access services,
transaction processing services and mobile banking
services. Econet continued to consolidate its position
as the market leader in the telecoms industry, including
EcoCash mobile banking services. A detailed review of
the Groups operations, results and principal activities
during the year and the likely future activities are given in
the Chairmans Report and the Chief Executive Officers
Operations Review.
New Developments
The Group acquired control of TN Bank Limited towards the
end of the year. This acquisition is expected to strengthen
Group activities, particularly its EcoCash mobile money
service and increase its penetration of rural markets. The
full effects of this acquisition will be felt through the Group
in the coming years.
Several new products were launched during the year,
particularly under the Buddie banner.
Human Capital
The Directors are pleased to report that the Groups staff
continued to demonstrate commitment and dedication in
all aspects of the business. As a result, the Group has beenable to continue achieving the high levels of performance
and market leadership it enjoys.
From the Directors
Various initiatives, which are elaborated on in the Human
Capital Report, were embarked on during the year, aimed
at achieving continuous improvement in the Groups
performance. The Directors are confident that these
initiatives will bring about the intended benefits.
Consolidated Results
The Groups financial results during the year are fully
covered in the Chairmans Report.
Dividends
In order to allow the business to focus on achieving the
targets of the various initiatives it has embarked on, the
Board considered it prudent not to declare a dividend for
the year.
Share Capital
Due to new developments in terms of investment
expectations, in particular the wish to reach more
investors, the Board recommended the sub-division of the
Groups shares at the rate of ten (10) shares for every one
(1) existing share.
At an Extraordinary General Meeting held on 28 February
2013 shareholders approved the share sub-division.
The special resolutions implementing the sub-division
and amending the relevant provisions in the Companys
Memorandum and Articles of Association, were adopted.
The notes to the annual financial statements provide
further details on the share capital of the Company.
The new shares were listed on the Zimbabwe StockExchange on 1 March 2013.
CorporateandLeadership
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Share Buy-back
The cost of shares bought back during the year was
US$31.9 million (2012: US$28.4 million). Total treasuryshares on hand as at 28 February 2013 were 75 981 050
(2012: 105 444 310).
During the year the Company cancelled 82 574 590 shares
which represents approximately 5% of the issued share
capital as part of its strategy to return value to shareholders.
It is the intention of the Company to cancel the shares on
hand at an appropriate time.
Directors
In accordance with Article 81 of the Companys Articles of
Association, at least one third of the directors must retire
and seek re-election at each annual general meeting. The
following directors retire by rotation and, being eligible,
offer themselves for re-election: Mr Craig Fitzgerald, Ms
Beatrice Mtetwa and Mr Kris Chirairo.
Mr Tawanda Nyambirai retired from the Board on 12
December 2012 and Dr James Myers succeeded him as
chairman on the same date.
Mr John Pattison, executive director for Customer
Services, retired from the Companys employ with effect
from 31 August 2012.
In terms of section 89.2 of the Articles of Association, the
following directors, who were appointed after the reporting
date, are to be confirmed as independent non-executive
directors: Mr Godfrey Gomwe, Mrs Sherree Shereni and
Mr Martin Edge.
At the Annual General Meeting shareholders will be
asked to approve payment of the directors fees, the re-
appointment of the retiring directors and the confirmationof newly appointed directors.
Directors Interests
The beneficial interests of the directors in the shares of
the Company are shown on note 26.6 of the financial
statements.
Register of Members
The register of members of the Company is open for
inspection to members and the public, during business
hours, at the offices of the Companys transfer secretaries,
First Transfer Secretaries (Private) Limited.
Borrowing Powers
The details of the Groups borrowing powers are set out in
Note 40 of the financial statements.
Capital commitments
Details of the Groups capital commitments are set out in
Note 41 of the financial statements.
Pension Fund
The Groups pension fund scheme is administered by a
Board of Trustees. The Trustees manage the assets of
the pension fund, which are held separately from those
of the Group. The assets and funds of the scheme are
administered in accordance with the rules of the pension
fund.
FROM THE DIRECTORS (continued)
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An audit of the fund had established that the fund was
significantly undercapitalised. An exercise is currently
underway to find the best means of recapitalising the fund.
Corporate Social Investment
Contributing to the countrys economic and social
development remains a key component of the Groups
culture. Through various initiatives and activities the
Group fulfilled this commitment during the year. Further
discussion on the Groups activities can be found in the
section on Community and Trusts.
Donations to Political Parties
The Group does not, as a matter of policy, contribute to any
political party.
Auditors
Ernst & Young Chartered Accountants (Zimbabwe)
continued in office as the Groups auditors during the
year. At the annual general meeting, shareholders will be
requested to approve the remuneration of the auditors for
the year ended 28 February 2013.
Going concern
The Directors have satisfied themselves that the Group
is a going concern as it has adequate financial resources
to continue in operational existence for the foreseeable
future.
The Groups Annual Report and other corporate publications
are available on the corporate website www.econet.co.zw.
By order of the Board
Dr J. Myers
CHAIRMAN
D. Mboweni
CHIEF EXECUTIVE OFFICER
C. A. Banda
GROUP COMPANY SECRETARY
14 MAY 2013
CorporateandLeadership
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The Board of Directors and BoardCommittees
Composition and appointmentFollowing the retirements of Messrs John Pattison and
Tawanda Nyambirai on 31 August 2012 and 12 December
2012 respectively, the Board comprised seven directors
made up of three executive and four non-executive
directors. A non-executive director chairs the Board. The
offices of the Chairman and Chief Executive Officer are
separate.
To strengthen the independence of the Board of Directors,
three new independent non-executive directors are being
appointed: Anglo Thermal Coal CE Godfrey Gomwe, Coca-
Cola Africa Foundation Programme Director Sheree Gladys
Shereni and Martin Edge, former Managing Director of
Standard Chartered Bank.
The non-executive directors are drawn from a wide range
of fields, bringing broadly-based business knowledge and
experience to the deliberations of the Board. The election
to the Board of non-executive directors is subject to
confirmation by shareholders.
In terms of the Companys Articles of Association and
the Companies Act (Chap 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 27 July 2012, the following
directors were re-elected: Mr Tawanda Nyambirai who
subsequently retired on 12 December 2012, Mr John
Pattison who subsequently retired on 31 August 2012, and
Dr James Myers.
Accountability and delegated functions
The Board has the ultimate responsibility of upholdingand promoting the Groups strategic and sustainable
development. To achieve these goals the Board focuses
on the following key areas:
- reviewing and approving the Groups overall strategy
- reviewing and approving the Groups capital expenditure
- reviewing and approving the Groups major
investments and acquisitions and safeguarding the
Groups assets
- monitoring and ensuring observance of good
governance in the Group
Governance Statement
- reviewing financial, operational and compliance
controls
- reviewing and monitoring risk management procedures
and assessing their effectiveness
- reviewing and approving the Groups budget and
maintaining proper accounting records
- reviewing and approving annual financial statements
and all notices to shareholders and stakeholders.
The Board is ultimately accountable to shareholders for the
performance of the business. Directors are responsible for
the preparation of financial statements for each financial
period which give a true and fair view of the state of affairs
of the Group as at the end of the financial period.
To achieve this, the directors ensure the maintenance of
adequate internal controls and procedures for financial
reporting on the Group and that financial managers conduct
themselves with integrity and honesty and in accordance
with ethical standards of their profession.
The Board is also ultimately responsible for communicating
with the investor community. This communication is done
through the Chief Executive Officer, the Financial Director
and the Chairman, who organise regular briefing meetingswith analysts, institutional investors and the media. The
outcome of the meetings is communicated to the Board
from which it learns of shareholders and investors
opinions and perceptions of the Group.
Access to Executives
All directors have full and unfettered access to management
and the Group Company Secretary for information required
to discharge their responsibilities fully and effectively.
Whenever they deem it necessary the directors are
entitled, at the Groups expense, to engage independent
advisors for expert or independent professional advice inthe furtherance of their duties.
Directors interests
In compliance with good corporate governance, directors
are required each year to declare in writing whether they
have any material interest in any contract of significance
with the Group or any of its subsidiaries, which could give
rise to a related conflict of interests. Directors are also
required to disclose their other business interests. None
of the directors had a material interest in any contract of
significance to which the Group was a party during the
year, other than their service contracts.
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Governance
Board CommitteesThe Board retained its three committees to assist it in
discharging its duties and responsibilities. The Audit
Committee has a sub-committee, the Related Party sub-
committee. The committees and the role they play are
fundamental to good corporate governance in the Group.
The committees operate within defined terms of reference
set by the Board. Regular reports of committee business
and activities are given to the Board and minutes are
circulated to all directors. The Board committees share
with the main Board the authority to take independent
professional advice at the Groups expense when deemed
necessary to do so. The committees are chaired by non-
executive directors. They submit reports to the main Board
on the committees deliberations and findings.
Audit Committee
The Committees main responsibilities include the
reviewing of the Groups internal controls and internal
audit functions. It reviews the plans, principles, policies
and practices adopted in the preparation of the Groups
financial information. It also reviews, in conjunction with
management, procedures relating to financial and capital
expenditure controls.
Together with external auditors the Committee reviews
the scope and results of the audit. The Committee also
takes note of new legislation and new internationalreporting standards and ensures that these are adopted
by the business.
The Committee oversees the Groups risk management
policies and procedures and ensures these are fully
implemented and observed. The Board, through the
Committee, has since established a process of identifying,
evaluating and managing the significant risks faced by the
Group. The Committee meets regularly with the Groups
external and internal auditors and executive management
to consider risk assessment.
The Audit Committee has a sub-committee in the form of
the Related Party Sub-Committee.
The external auditors and the Chief Risk Officer have
unrestricted access to the committee and its chairman and
attend audit committee meetings.
Investments Committee
The Investments Committees main responsibility is to
review the Groups existing and proposed investments
and advise the Board on the viability or otherwise of the
investments. It provides the Board with reports on the
performance or potential performance of the investmentsso that the Board can take informed decisions on those
investments.
Loans Committee
The Loans Committees role remained the same and that
is to review the Groups major loans obligations, both local
and foreign, and put forward recommendations on the
servicing of these obligations. The Committee appraises
the Board of the Groups performance in terms of meeting
its loan obligations and compliance with the covenants
attaching to those obligations.
Related Party Transactions Sub-Committee
The Related Party Transactions Sub-Committee is a
sub-committee of the Audit Committee. Its function is
to review all transactions between the Company and its
related parties. The sub-committee reports to the Audit
Committee.
Investor Relations
The Group continues to recognise the importance of
communicating with the various stakeholders. To this
end the Group holds analyst briefings at which investors
and analysts are briefed on the Groups performance up
to the end of that period. The communication offers the
Group the opportunity 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 Groups half-year results
and the other after the release of the full year results, at
which a full briefing of the Groups performance is given.
Employment and equity practices
The Group has in place policies and procedures to achieve
good behaviour and conduct among its employees. In
line with best practice the Group has adopted as part of
its culture observance by its directors and employees of
the highest standards of ethical behaviour. Directors and
employees are expected to conduct themselves with
integrity and professionalism, with a view to achieving
excellence in customer satisfaction, quality of products
and services, and generally maintain the good name of thebusiness. A whistle-blowing programme is also in place
to encourage employees to report any concerns, including
any suspicion of violation of the Groups financial reporting
or environmental procedures.
The Group is committed to equality of opportunity. Career
development and promotion of disabled people is, as
far as possible, the same as that of other employees.
All employees are accountable for adherence to equal
opportunity and anti-discrimination policies.
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The Group recognises the need to continuously develop
skills and, accordingly, efforts towards providing employees
with opportunities for growth and development are
promoted, and in the process achieve team effectiveness.
Human capital development remains part of the Groups
growth strategy.
The Group also recognises its obligation to comply with
health and safety legislation and through training and
communication, encourages employees to create and
secure a safe and healthy working environment
Environmental Awareness
Sending of e-waste back to suppliers is an initiative being
pursued but authority to return imported equipment has
still not been received from the relevant authorities.
Directors and Employees dealings in shares
The Group complies with the Zimbabwe Stock Exchange
listing rules in relation to transactions by directors and
employees in securities issued by the Group. Directors
and employees or their nominees or members of their
immediate family are prohibited from dealing, either
directly or indirectly, in the Groups securities at any
time when they are in possession of unpublished, price-
sensitive information regarding the Companys business or
activities.
The Group operates a closed period prior to the publication
of its interim and annual results. No director or employee
of the Company may deal in the securities of the Company
during the closed period. In terms of policy, directors and
employees who wish to transact in the shares of the Group,
even outside of the Groups closed or blocked period,
are required to obtain the clearance of the Chairman.
Independence of Auditors
The Groups Audit Committee confirms the independence
of the Auditors, Ernst & Young Chartered Accountants
(Zimbabwe), who are engaged by the Group for audit-
related services. Ernst & Young Chartered Accountants
(Zimbabwe) have indicated their willingness to continue in
office as auditors of the Group. A resolution to re-appoint
them as auditors for the ensuing year will be proposed at
the 2013 Annual General Meeting, members can either
appoint them for the ensuring year or pass a resolution to
appoint another firm of auditors. Whenever necessary the
Group calls upon the services of other firms to assist with
non-audit management consultancy work.
By order of the Board
Dr J. Myers
CHAIRMAN OF THE BOARD
D. Mboweni
CHIEF EXECUTIVE OFFICER
K.V. Chirairo
FINANCE DIRECTOR
14 MAY 2013
GOVERNANCE STATEMENT (continued)
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Enterprise Risk Management (ERM)The risk management division within Econet Wireless
Zimbabwe Limited (EWZL) is headed by the Chief Risk
Officer who reports directly to the Audit Committee
Chairman and administratively to the CEO. The risk
management process is integrated within the day-to-day
activities of Econet Wireless Zimbabwe Limited (EWZL).
The Group has developed a system of risk management
and internal control that delivers:
documented risk communication strategies.
profile.
The risk division structure comprises of four independent
and objective units: Internal Audit, Revenue Assurance and
Fraud Management, Corporate Risk, Safety Health and
Environment.
The risk division system involves regular reporting of risks
to the Board which assists the Board in fulfilling its risk
management responsibilities.
Commitment by Management
Management demonstrates its commitment to the
process by investing in the necessary technology, human
resources and processes. A competitive human resources
complement makes up the Risk team. These skills and
technologies are augmented by robust processes which are
well documented and tailored to align with organisationalprocesses.
Risk communication
Interactions with various governance groups occurred
as planned during the year. Within these interactions
risk issues are discussed as part of the agenda. The risk
division meets regularly with functional divisions on a
monthly basis to discuss emerging risk issues and to make
follow-ups on previously identified risk issues. The division
attends and submits a Quarterly Risk Report to the Audit
Committee of all its activities for information as well as to
guide the Committee in decision making.
Risk report
Risk mitigation activities
Internal Audit
The Group has an internal audit department which monitors
and reports on internal control systems. The internal audit
department adopts a risk-based audit approach guided by
extensive risk assessment of business issues, particularly
those issues identified by the Audit Committee and senior
management.
Whenever necessary, the Group calls upon the services
of independent expert firms to assist with non-audit
management consultancy work. These outsourcing
arrangements add to the objectivity and independence of
the internal audit work undertaken.
Internal control and risk management
During the year, internal audit efforts were focused on:
performance.
The planned audit assurance plan for the year was ninety
percent (90%) fulfilled. The internal audit function has
implemented an audit grading system which is used to
gauge the performance of individual auditable units or
areas against expectations and compares performance to
previous audits.
Focus will continue to be on the improvement of the
quality and maturity of internal audit coverage through
a combination of increasing allocation of resources
within the internal audit department in addition to the
continued outsourcing arrangements for some internal
audit assignments. This will be measured in terms of the
total number of man hours that the audit team will spend
in the auditing activity for the various functions as well
as measuring against target deliverables for outsourced
arrangements.
In 2013-14, the internal audit department intends to focus
primarily on the following inherent fraud risk categoriesfrom both a fraud risk and an internal audit perspective:
Mobile Money, Procurement, Inventory, Treasury,
Customer Services and Network Services
Peopleand
community
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On a quarterly basis the risk appetite of the business is
reviewed and risk efforts are revised where appropriate, in
line with changing priorities.
Revenue Assurance
The New Product and Value Added Services (VAS)
Assurance function carry out all new product and existing
product assessment activities. This ensures that all new
product risks are addressed before launch and that existing
products are continuously monitored.
The Service Risk function minimises revenue leakage
through reviewing the switch to billing and charging
processes in order to facilitate complete and accurate
billing of all call events on the network. Partner andproduct management activities ensure revenue collection
is maximised.
The Network Fraud Section ensures fraudulent activities
are timeously detected and investigated. Adequate
preventive measures are proactively implemented to plug
any fraud leakages.
Corporate Risk
The business has a Corporate Risk department whose
function is to implement an Enterprise Risk Management
programme within the business.
In 2013-14, the Corporate Risk department intends to
focus primarily on the following areas:
the business
Management Systems ImplementationWe are continuously improving our environmental
and social performance in an effort to attain excellentstandards, particularly in the following areas:
- Risk assessment system reviews and improvements.
- Independent consultants are engaged to perform
environmental and social impact assessments (EIAs)
on all sensitive sites for new projects.
- New GSM sites are outsourced to reputable companies
with adequate technical capabilities, environmental and
social management standards
- Coastal and Environmental Services of South Africa
has been appointed (through deutsche investitions-
und Entwicklunggesellschaft mbH, Kln (DEG)) to
assist Econet Wireless in the review, development
and implementation of an Environmental and Social
Management system based on International Finance
Corporation ( IFC) performance standards.
Occupational Safety and Health (OHS)Econet Wireless has a SHE policy which clearly defines our
commitment to providing a safe and healthy work place for
all staff members. The following strategic interventions are
being consistently implemented to ensure best practicesand legal compliance:
clothing and equipment
delegated responsibility for the implementation of
recommendations.
through competent authorities.
emergency care in case of accidents.
with statutory requirements.
effective knowledge, skills and attitudes necessary for
implementation of programmes.
assessments to ensure work and health compatibility.
the impact of HIV/AIDS through the company-funded
Live to Love programme
Environmental HealthEconet Wireless has defined its Resources Efficiency and
Pollution Prevention commitment designed to minimise
and reduce the level of waste, to improve pollution
prevention, and to enhance resource conservation. These
strategic initiatives included the following:
RISK REPORT(continued)
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Peopleand
community
Resource Efficiency Programmes:
Challenge:Currently Zimbabwe has electricity challenges
forcing the use of stand-by generators to minimise network
down time. This has resulted in the increased use of diesel
and therefore carbon emission concerns.
Response: Econet Wireless is investing in solar power
solutions in order to supplement generator power in
selected rural towers. In urban centres green hybrid
power solutions with deep cycle batteries, have been
implemented to reduce running time for generators
thereby reducing their run-hours, minimising the use of
non-renewable energy.
Prevention of Green House Gasses (GHG):
Challenge: Greenhouse gas emissions from generators.
Response:(i) The Company has upgraded its procurementprocesses to ensure the acquisition of EU-certified low
emission generators.
(ii) Programmes to monitor greenhouse gasses in
compliance with local legislation were carried out and
results submitted to the Environmental Management
Agency. Results achieved were in the blue zone, indicating
normal acceptable levels.
Waste-Management and Recycling:
Challenge:Disposal of hazardous substances.
Response:The Company has developed and implemented
procedures on the management of hazardous substances
Reforestation and rehabilitation:
Challenge:Construction sites often require deforestation
and some environmental modification which must be
rectified.
Response: (i) The Company ensures that, during tower
construction, there is minimisation of interference
with vegetation such as cutting down of trees and,
where vegetation is removed, the business carries out
reforestation and rehabilitation.
(ii) The business has embarked on a project to put eco-
friendly towers such as lamp posts and monopoles
consistent with Good International Industry Practice.
Future Programmes for 2013-14Econet Wireless is currently strengthening the SHE system
consistent with International Finance Corporation (IFC)guidelines and performance standards. This entails the
development of the Environmental and Social Management
System (ESMS) manual and its implementation. The focus
will be on reviewing the existing SHE policy, conducting a
gap analysis and development of a risk register based on
detailed risk profiling of the business in order to align with
the IFC requirements.
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The Group remains committed to the principles of good
corporate governance. In addition to observing generally
accepted best practice standards, the Group applies and
complies with the principles enunciated in the King Code,
the listing rules of the Zimbabwe Stock Exchange, and the
Companies Act (Chapter 24:03). The Group recognises
that implementation of, and compliance with, all legal and
statutory requirements is in the best interests of the Group
and is crucial to the sustainable growth of the business.
Employee Benefits
Retirement funding
All full-time employees are members of the Groups
defined contribution pension fund and of the compulsory
defined benefit National Social Security Authority (NSSA)
fund. The Groups fund requires 5% of pensionable
earnings from the employee which is matched with 7%
of pensionable earnings by the Group. The NSSA fund
requires 3.5% of pensionable earnings, up to a ceiling of
$700 per month from employees and the same from the
Group.
Incentives
In acknowledgement of the importance of incentivising
employees, the Group is in the process of enhancing its
incentive schemes and linking them to performance.
Remuneration
Industrial Relations
The Group seeks to achieve the highest level of good
industrial relations as evidenced by no industrial action by
employees against Group companies.
At the reporting date, there had been no industrial action
during the year and there was none in progress at that date.
Directors Remuneration
The Board oversees remuneration matters which are
confirmed by the shareholders.
Executive Remuneration
Executive remuneration is deemed to be an important
element in the sustainability of the Group and is linked to
the nature and responsibilities of the executives position as
well as on market benchmarks and individual performance.
Non-executive Remuneration
Non-executive directors remuneration is subject to
shareholder approval.
Remuneration of directors and other members of key
management during the year is disclosed in note 34.3 of
the financial statements.
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Our people and our community
Human Capital (HC)Econet Wireless attained employer of choice status
through its strong employer brand equity in the market.
We are competitive in attracting and retaining talent both
locally and abroad as evidenced by our strong leadership
team, and our exceptionally low staff attrition rate of
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person for the year, a figure slightly above the international
benchmark of five (5) training days per staff member per
year according to the Chartered Institute of Personnel
Development (CIPD).
Our objective is to achieve at least eight (8) training days
per staff member per year.
Learning Return-on-Investment methodology
We have implemented a Learning Return-on-Investment
Methodology to ensure that we validate the added value
of people development initiatives.
To support this initiative, we have partnered with leading
service providers in developing and implementing training
and development interventions.
Achievements
100% pass rate on a public exam administered by the
Zimbabwe Institute of Management.
substantive positions within the various divisions.
trainee chartered accountants to go through their
articled clerk training under the supervision of qualified
chartered accountants within Econet.
100 % pass rate in their final qualifying examination.
overall student nationally.
Objectives for 2013-14
through training the entire organisation and conductingexternal customer satisfaction surveys.
business Performance Management System in line
with the newly implemented Paterson Job Evaluation
System.
line with business strategic objectives and target 1:1
cover ratio for identified critical positions.
culture - consistent with our pioneering value.
to manage head count in the FY 2013-14 in line with the
business strategic objectives.
Age Distribution
The Age Distribution graph shows that the organisations
manpower lies between the range of 26 to 45 years. The
young vibrant workforce has assisted the business in
achieving its strategic objectives through professionalism
and pioneering.
Deliverable - Continuous employee engagement
The CEO embarks on roadshows so as to reach out to
all staff members. Econet Wireless believes it is vital to
keep staff informed about issues that affect the Group
and themselves. As a result, the Group has established a
range of communication processes that will ensure open
and effective two-way communication throughout the
Group. We aim to achieve an Engagement index of over
70% as this is considered a good result for high performing
organisations.
Deliverable - Reward management philosophy
The business will continue to pay market competitive
remuneration in line with our Total Cost to Employer
remuneration model. Our objective is to pay above the 75th
percentile of the market, as a way of attracting and retaining
talent locally, regionally and internationally. The business
shall always seek to ensure that it does not lose talent on
the basis of remuneration. The strong reward philosophy
has played a pivotal role in the significant progress made
by the business in retaining staff as evidenced by the low
attrition rate of
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Corporate social investment Community and Trusts
Higher Life FoundationAs part of its community involvement and bringingcommunity transformation, Econet Wireless hasestablished the Higher Life Foundation which activelymanages the three corporate responsibility vehicles.
marginalised children
socially responsible and academically gifted students.
of the nation
1. Capernaum TrustThe Trust was established in 1996 with the vision oftransforming the lives of the disadvantaged and orphanedchildren into history makers with a leadership mind-setfor Global Impact. Since inception, Capernaum Trust haspositively changed the lives of more than 70 000 childrenin Zimbabwe.The Trust provides a holistic approach in the care of thechildren including scholarships, needs-based food andhealth support, and counselling services.There are visits which are conducted on a regular andplanned basis. All the students under this program areprofiled and known by name and face under the Knowyour Flock banner.During the year, the Trust embarked on an innovativeproject of establishing and resourcing 15 state-of-the-art Academic Resource Centres and libraries in selectedschools across Zimbabwe. These Centres are equippedwith internet facilities, computers and e-learning facilities.In addition, a wide selection of study books coveringprimary, secondary and tertiary levels were also distributedto the Resource Centres.
2. National Healthcare Trust ZimbabweThe Trust was established in 2008 with the objective ofbeing the Partner of choice in all programmes aimed atresponding to national health care crisis such as cholera,as well as building and maintaining capacity in the nationalhealthcare delivery system.
In the period under review, the NHT significantlycontributed to health delivery systems in Zimbabwethrough: responding to a typhoid crisis; health informationsystems development; mobile health solutions; healthinfrastructure development; human resources for healthdevelopment; special surgical procedures and other healthdelivery related activities.
Of special mention is the College of Health Sciences,University of Zimbabwe project- Virtual Learning Hall. TheNational Health Care Trust continued to support the VirtualLearning Hall it established in the previous year at theCollege of Health Sciences with bandwidth for effectiveand efficient connectivity. To date the facility has eleven (11)regular partnering universities in France, England, UnitedStates of America, South Africa, Germany, India, Tanzaniaand the Netherlands. Over 500 students have accessedthe learning hall for lectures and research seminars insubjects ranging from Anatomy, Physiology, Dentistry,Pharmacy, Veterinary Sciences, Computer Sciences, andBiochemistry. Over 52 lectures have been held excludingshort courses, seminars and once-off lectures. The
lectures are stored for later access by students on theserver that came with the video conferencing equipmentand are available through the University of Zimbabwewebsite.
Another important project to highlight is the Mobile HealthClinics initiative- The Trust piloted Mobile Health Solutionswhere integrated primary healthcare services wereprovided through the use of a mobile health clinic. Nine (9)medical outreach clinic sessions were carried out.
3. The Joshua Nkomo Scholarship FundThe scholarship fund was established in 2005 to supportacademically gifted and socially responsive students on a
full scholarship basis. The vision of the JNSF is to promoteand equip students who demonstrate high academicexcellence and community involvement to help themtransform their communities and the nation at large. Over700 students are currently benefiting from this prestigiousand transformational scholarship scheme.
The scholarships are awarded to students drawn fromall provinces of Zimbabwe based on their record ofeducational performance and community leadership.Leadership and mentoring courses are periodically heldto equip the students with skills. A numbers of thesestudents ,Joshualites, have been enrolled in internationaluniversities such as Yale, Harvard, Massachusetts Instituteof Technology, Columbia & University of Pennsylvania.
PeopleandCommunity
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Econet is getting everyone connected everywhere. Econet has the widest voice anddata coverage as a result of the massive investment in network infrastructure.
Inspiring Innovations
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Directors responsibility for financial reporting
The Board of Directors is responsible for the integrity and objectivity of the financial statements and related information
contained in this annual report. The Board considers that the financial statements have been prepared in accordance with
applicable accounting standards and is satisfied with the integrity of the information provided. The Groups independent
external auditors, Messrs Ernst & Young Chartered Accountants (Zimbabwe), have audited the financial statements and
their report appears on page 48 of this annual report.
In the discharging of this responsibility, the Directors ensure that the Group maintains effective systems of internal
control. The systems seek to provide reasonable assurance as to the accuracy and reliability of the financial systems as
well as safeguard and maintain accountability over the Groups assets.
The Directors have reviewed the performance and financial position of the Group up to the point of signing of the financial
statements and are satisfied that it is a true reflection of the Groups position. The Board has concluded that the Group
has adequate resources to continue as a going concern for the foreseeable future.
The financial statements set out on page 49 to 129 were approved by the Board of Directors on 14 May 2013 and signed
on its behalf by:
Dr J. Myers D. Mboweni K. V. Chirairo
CHAIRMAN OF THE BOARD CHIEF EXECUTIVE OFFICER FINANCIAL DIRECTOR
14 MAY 2013
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In my capacity as the Group Company Secretary, I hereby confirm, in terms of the Companies Act (Chapter 24:03), that,
for the year ended 28 February 2013, Econet Wireless Zimbabwe Limited has lodged with the Registrar of Companies all
such returns as are required of a public company in terms of the Companies Act and that all such returns are, to the best
of my knowledge and belief, true and correct and up to date.
C. A. Banda
GROUP COMPANY SECRETARY
14 MAY 2013
Certificate by the Group Company Secretary
CHARLES A. BANDA- Group Company Secretary
FinancialStatements
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Consolidated Statements of Financial PositionAs at 28 February 2013
All figures in US$ Note 2013 2012
ASSETSNon-current assets
Property, plant and equipment 12 690,805,885 605,846,714Investment property 13 951,517 411,000
Intangible assets 14 9,492,568 7,991,004
Deferred tax asset 15.1 5,642,613 2,686,315
Goodwill 44.1 6,090,632 -
Investment in associate 18.1 14,061,120 8,974,389
Financial instruments:
-Held-to-maturity investments 17 9,896,415 14,161,138
-Available-for-sale investments 19 3,010,797 4,692,566
Total non-current assets 739,951,547 644,763,126
Current assets
Inventories 22 14,443,786 12,054,662
Financial instruments:
-Trade and other receivables 23 63,105,361 54,763,082
- Financial assets at fair value through profit or loss 21 58,006 52,976
- Loans and advances to bank customers 24.1 119,321,627 -
- Cash and cash equivalents 33.4 78,229,628 100,792,971
Total current assets 275,158,408 167,663,691
Total assets 1,015,109,955 812,426,817
EQUITY AND LIABILITIES
Capital and reserves
Share capital and share premium 26.2 35,697,496 33,124,930
Retained earnings 453,138,968 345,478,251
Other reserves 27 568,775 1,342,726
Equity attributable to owners of Econet Wireless Zimbabwe Limited 489,405,239 379,945,907
Non-controlling interests 3,477,998 2,847,008
Total equity 492,883,237 382,792,915
Non-current liabilities
Deferred tax liability 15.2 85,493,429 70,667,055
Financial instruments - Long-term interest-bearing debt 31.1 202,799,895 103,338,155
Total non-current liabilities 288,293,324 174,005,210
Current liabilities
Provisions 29 - 3,466
Deferred revenue 30 10,127,617 10,515,168
Financial instruments:
-Trade and other payables 28 118,871,498 90,661,877
- Short-term interest-bearing debt 31 61,771,039 145,800,362
- Deposits due to banks and customers 32.3 36,350,711 -
Income tax payable 33.3 6,812,529 8,647,819
Total current liabilities 233,933,394 255,628,692
Total liabilities 522,226,718 429,633,902
Total equity and liabilities 1,015,109,955 812,426,817
Dr J. Myers D. Mboweni K. V. Chirairo
CHAIRMAN OF THE BOARD CHIEF EXECUTIVE OFFICER FINANCE DIRECTOR14 May 2013
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inancialStatements
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Consolidated Statements of Comprehensive IncomeFor the year ended 28 February 2013
All figures in US$ Note 2013 2012
Revenue 2 694,843,608 611,115,533
Cost of sales and external services sold (182,955,954) (159,156,746)
Gross profit 511,887,654 451,958,787
Net interest income from banking operations 3.2 926,513 -
Net fees and commission income from banking operations 8 20,504 -
Other income 9 1,534,333 1,580,889
Gain on disposal of available-for-sale investments 19.1 - 11,693,274
Gain on disposal of interest in former subsidiary 43.3 - 2,941,972
Gain on financial assets at fair value through profit or loss 21 5,030 -514,374,034 468,174,922
Operating expenses
-General administrative expenses (140,686,551) (124,170,919)
-Marketing and sales expenses (17,961,279) (13,969,662)
- Network expenses (45,434,962) (35,450,814)
- Other expenses (4,947,261) (3,689,201)
Profit before interest, taxation, depreciation, impairment and amortisation 305,343,981 290,894,326
Depreciation and amortisation (71,563,248) (46,497,440)
Profit from operations 4 233,780,733 244,396,886
Finance income 6 2,653,217 2,105,472Finance costs 7 (28,600,048) (10,202,838)
Share of (loss)/profit of associate 18.3 (2,930,659) 2,830,389
Profit before taxation 204,903,243 239,129,909
Income tax expense 10 (64,965,023) (73,388,821)
Profit for the year 139,938,220 165,741,088
Other comprehensive income
Available-for-sale reserve recycled to profit or loss 19.1 - (3,885,824)
Loss on available-for-sale investments 19 (781,769) (696,996)
Taxation effect of other comprehensive income 5 7,818 159,652
Other comprehensive income for the year, net of tax 5 (773,951) (4,423,168)
Total comprehensive income for the year 139,164,269 161,317,920
Profit for the year attributable to:
Equity holders of Econet Wireless Zimbabwe Limited 139,593,292 165,734,129
Non-controlling interests 344,928 6,959
139,938,220 165,741,088
Total comprehensive income attributable to:
Equity holders of Econet Wireless Zimbabwe Limited 138,819,341 161,310,961
Non-controlling interests 344,928 6,959
139,164,269 161,317,920
Basic earnings per share (dollars) 11 0.09 0.10
Diluted basic earnings per share (dollars) 11 0.09 0.10
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Consolidated Statements of Changes in EquityFor the year ended 28 February 2013
All figures in US$
Share capitaland sharepremium
Retainedearnings
Otherreserves Total
Non-controlling
interest Total
Balance at 28 February 2011 22,980,326 258,891,276 5,765,894 287,637,496 2,840,049 290,477,545
Profit for the year - 165,734,129 - 165,734,129 6,959 165,741,088
Other comprehensive income - - (4,423,168) (4,423,168) - (4,423,168)
Realisation to profit or loss on disposal of available-for-sale investment (Note 19.1)
- - (3,885,824) (3,885,824) - (3,885,824)
Fair value loss on available-for-sale investments - - (696,996) (696,996) - (696,996)
Taxation effect of other comprehensive income - - 159,652 159,652 - 159,652
Total comprehensive income - 165,734,129 (4,423,168) 161,310,961 6,959 161,317,920
Transactions with equity holders of EconetWireless Zimbabwe Limited
10,144,604 (79,147,154) - (69,002,550) - (69,002,550)
Issue of shares 10,144,604 - 10,144,604 - 10,144,604
Dividend in specie - (10,535,742) - (10,535,742) - (10,535,742)
Cash dividend - (40,160,937) - (40,160,937) - (40,160,937)
Share buy-back (Note 16.4) - (28,450,475) - (28,450,475) - (28,450,475)
Balance at 29 February 2012 33,124,930 345,478,251 1,342,726 379,945,907 2,847,008 382,792,915
Profit for the year - 139,593,292 - 139,593,292 344,928 139,938,220
Other comprehensive income - - (773,951) (773,951) - (773,951)
Fair value loss on available-for-sale investments - - (781,769) (781,769) - (781,769)
Taxation effect of other comprehensive income - - 7,818 7,818 - 7,818
Total comprehensive income - 139,593,292 (773,951) 138,819,341 344,928 139,164,269
Transactions with equity holders of EconetWireless Zimbabwe Limited
2,572,566 (31,932,575) - (29,360,009) 286,062 (29,073,947)
Issue of shares 1,684,577 - - 1,684,577 - 1,684,577
Cancellation of shares bought back (731,008) - - (731,008) - (731,008)
Share buyback (Note 16.4) - (31,932,575) - (31,932,575) - (31,932,575)
Acquisition of subsidiary - - - - 286,062 286,062
Disposal of treasury shares 1,618,997 - - 1,618,997 - 1,618,997
Balance at 28 February 2013 35,697,496 453,138,968 568,775 489,405,239 3,477,998 492,883,237
Other reserves - Other reserves are detailed in Note 27 and consist of reserves arising from the valuation of available-
for-sale financial assets. Where a revalued financial asset is sold the portion of the reserve that relates to that financial
asset is effectively realised and recognised in profit or loss. Where a revalued financial asset is impaired the portion of
the reserve that relates to that financial asset impairment is also recognised in profit or loss.
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Consolidated Statements of Cash FlowsFor the year ended 28 February 2013
All figures in US$ Note 2013 2012
Operating activities
Cash generated from operations 33.2 216,176,544 315,327,155
Income tax paid 33.3 (53,096,888) (36,465,392)
Net cash flows from operating activities 163,079,656 278,861,763
Investing activities
Finance income 2,653,217 1,834,505
Acquisition of intangible assets (Note 14) (565,570) (3,860)Acquisition of available-for-sale investments (134,406) (2,994,047)
Proceeds on disposal of available-for-sale financial assets - 5,285,524
Acquisition of held-to-maturity investments (1,872,598) (3,212,410)
Acquisition of associate 18.2 (20,000,000) -
Net cash inflow on acquisition of subsidiary 44.1 16,597,539 -
Purchase of property, plant and equipment - to expand operating capacity (147,043,725) (216,010,394)
Proceeds on disposal of property, plant and equipment - 2,326,522
Net cash outflow on disposal of interest in former subsidiary 43.2 - (1,639,442)
Net cash used in investing activities (150,365,543) (214,413,602)
Financing activities
Finance costs (33,359,941) (10,202,838)
Dividends paid - (36,371,846)
Share buy-back (25,413,484) (28,450,475)
Proceeds from borrowings 52,000,000 132,910,541
Repayment of borrowings (31,807,690) (56,231,257)
Issue of shares 3,303,659 -
Net cash flows (used in)/from financing activities (35,277,456) 1,654,125
Net (decrease) / increase in cash and cash equivalents (22,563,343) 66,102,286
Cash and cash equivalents at the beginning of the year 100,792,971 34,690,685
Cash and cash equivalents at the end of the year 33.4 78,229,628 100,792,971
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F
inancialStatements
Accounting Policy IFRS/IAS reference Content
note note
4-9, 39, 40 A IAS 1 Presentation of financial statements: General information and
functional currency
B IFRS 1 (revised) First-time adoption of IFRS
C IAS 8 Change in accounting policies, adoption of new and revised
Standards
37.2 D IAS 21 Effects of changes in foreign exchange rates
16,34,43,44,47 E IFRS 3, IAS 27 Business combinations, basis of consolidation
18 F IAS 28 Investment in associates14 G IAS 38 Intangible assets
12 H IAS 23 Borrowing costs
12, 25, 41 I IAS 16 Property, plant and equipment
13 J IAS 40 Investment properties
36 K IAS 36 Impairment of property, plant and equipment, investment property,
and intangible assets
38 L IAS 17 Leases
22 M IAS 2 Inventories
2, 3, 30 N IAS 18 Revenue
5, 10, 15 O IAS 12 Income taxes
35 P IAS 19, 26 Employee benefits and retirement benefits
26.6 Q IFRS 2 Share-based payment
17, 19, 20, 21, 23 R IAS 32, 37, 39, IFRS 7, 9 Financial instruments
24, 28, 31, 32, 36
37, 42
16 S IAS 32 Treasury shares
1 T IFRS 8 Operating segments
29 U IAS 37 Provisions
V IFRS 5 Non-current assets held-for-sale and discontinued operations
36, 37 W Financial Guarantees
37 X Fiduciary Assets
37.3 Y IAS 1 (Revised) Significant assumptions and key sources of estimation uncertainty
11 IAS 33 Earnings per share
34 IAS 24 Related party disclosures
45 IAS 10 Events after the reporting period
Notes to the Consolidated Financial StatementsFor the year ended 28 February 2013
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1 OPERATING SEGMENTS
The principal activities set out below are the basison 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 cellularnetwork services which form the main business of
the Group.
Banking operations
TN Bank Limited provides retail, corporate, andinvestment banking services in the key economic
centres of Zimbabwe.
Transaction processing s