CONFIDENTIAL INTERNAL MEMORANDUM

HERITAGE INSURANCE GROUP LIMITED

TO

Mr. T. Manwa, Mr. C. Huni, Mr. D. Chitiyo, Mr. X. Ndiweni, Ms. A. Mutanha, Mr. T.
Chibika, Ms. M. Chitiyo, Mr. C. Mambariza, Mr. M. Choruwa, Mr. T. Tsatsa, Mrs. B.
Chikurunhe, Mr. D. Bhebhe, Mr. P. Dzamara, Mr. G. Phiri, Mr. T. Machaya, Mr. D.
Runanga, Mr. N. Kandenga, Mr. S. Mashingaidze, Miss. T. Masamvu, Ms R. Zidya, Mr.
N. Gundani, Mr. M. Madziwo, Mr. J. Nhema

CC

Mr. T. Chinyani (MD HIC), Mr. G. Mutero (MD HLL), Mr. T. Chibare (CEO GMIB)

FROM :

Mr. M. Moyo (Finance Manager)

DATE :

31 October 2014

SUBJECT:

2015 BUDGET PREPARATION

Please be advised that we are about to get the 2015 strategy workshops underway in a few days time. As
part of the strategy planning for 2015, you are required to produce your budgets for the year.
2015 is envisaged to be a turnaround year for the economy, giving us hope for improved business and greater
opportunities, although at a slow pace.
The budgeting process for 2015, will need to be premised upon the following drivers:

Sustainable and collectable Revenues

Cost Containment
Profit generation

The following key factors and their impacts must be incorporated in the budgets:o
o
o
o
o
o

Inflation apply average impact of 3.5%

GDP projection for 2014 at 3.1%
New legislation (if any)
Industry growth achieved and projected for 2014 (differ by sector)
NECs salary expectations
Market interest rates

The structure of the budget must be two pronged, firstly it must work off a 2014 base for all controllable budget
inputs and secondly it must establish a zero base approach for the revenue budget. All operational costs
budgeted must were possible register a decline and not an increase as management take control of the cost
drivers.
Composition of the budget
a. Revenue Budget
A revenue budget must be produced showing total figures on a month by month basis. The revenues
budgeted must be supported by a detailed analysis of assumptions used to arrive at the monthly revenue
levels, these must show for continuing business sources, the level of contribution by source/ client adding
up to the annual revenue budget. All periodic revenue fluctuations must be explained. The revenue
budget must also reflect a growth element.
1

b. Detailed Profit & loss budget

A detailed profit and loss budget must be compiled showing month by month analyses. This must include
lines for direct costs e.g. reinsurance expenses, claims expenses, commission expenses, commission
income, claims recoveries, purchases and detailed operating expenses. The Profit & loss statement must
show the detailed operating expenses and the operating profit expected to be generated by the unit.
c.

CAPEX Budget
A quarterly capital expenditure budget must be prepared showing full details of assets to be acquired
including allocation of those assets. Also include a proposed related asset disposal schedule where
necessary.

Please take cognisance of the fact that any deviations from budget will require board approval, therefore the
budget must comprise all projected activities to be embarked on in 2015. Please use the budget templates
that are in circulation to prepare your budgets.
Timeline
The timeline for submission of completed budgets are shown in the below table, also included are the board
meeting dates. Your submission due date is Submission to Finance marked in RED.
Please do not hesitate to contact me should you require further clarification.

Mirirai Moyo
FINANCE MANAGER

DELIVERABLES TIMETABLE
Company

Budget Board
Meeting

Board Pack
Distribution

Glenrand MIB
Donhodzo Fun
Heritage Health
Heritage Life
Heritage Ins

21 Nov
25 Nov
26 Nov
27 Nov
28 Nov

13 Nov
17 Nov
18 Nov
19 Nov
20 Nov

Budget
Submission
to MD/CEO
11 Nov
14 Nov
17 Nov
17 Nov
17 Nov

Budget
Submission
to Finance
10 Nov
13 Nov
14 Nov
14 Nov
12 Nov

Strategy

6 Nov
10 12 Nov
10 12 Nov
10 12 Nov
4 5 Nov