Zimnat in solid FY16 performance as insurance segment lifts Masawara Plc

Zimnat in solid FY16 performance as insurance segment lifts Masawara Plc

Insurance24 reporter

HARARE, Masawara Plc‘s insurance segment recorded a positive outturn in 2016 which propelled the Group to an after tax profit of $58 000 from a loss position of $4.7 million in 2015.

Masawara Plc is an investment holding company focused on acquiring interests in companies based in Zimbabwe and the Southern African region.

In Zimbabwe, the group’s insurance units include Zimnat Lion, Zimnat Life, Grand Reinsurance and Minerva Risk Advisors Private Limited.  Outside Zimbabwe, the group’s insurance businesses include the Botswana Insurance Company Limited and Lion Assurance Company (Uganda).

The group’s financials for the year ended 2016 shows that all the insurance companies except for LAC registered a growth in gross written premium when compared to the prior year. And all companies achieved underwriting profits for the year.

During the period, the cluster achieved profit after tax of $13,762 compared to $9,092 in 2015. Zimnat Lion Insurance Company Limited (Zimbabwe) registered an after tax profit of $2,54mln compared to $194 000 in prior year.

Zimnat Life Assurance Company at $4, 70 mln was above 2015 level of $3,31mln while Grande Reinsurance Company contributed $1,64mln to Group after tax profit. Profit for Minerva Risk Advisors Private Limited increased to $1,89mln up from $780 000 in 2015.

Botswana Insurance Company Limited and Assurance Company (Uganda) contributed $1.39mln and $1.6mln respectively towards the Insurance cluster profit.

Meanwhile, the insurance businesses registered a 36% growth in profit before tax (“PBT”) during the first quarter of 2017 and management expect another profitable year for this segment.

Zimnat Lion, Zimnat Life, Grand Reinsurance and BIC will continue to focus on the growth of gross written premium through an increase in market share.

Director Maureen Erasmus said the Zimbabwean Insurance businesses are expected to benefit from the rebranding that took place during the second quarter of 2017 representing the partnership with Sanlam Emerging Markets.

Erasmus on other hand said it is expected that the Group’s investment in LAC will be fully disposed of during 2017.

Masawara’s portfolio apart from the insurance businesses also comprises of significant interests agro-chemical and hospitality sectors across sub-Saharan Africa; a significant interest in Joina City, a premium, multi-purpose property, located in Harare’s Central Business District, providing rental property for retail, entertainment and office space.

Additionally, the Group also has a non-controlling interest in Telerix Communications (Private) Limited (“Telerix”) and iWayAfrica Zimbabwe (Private) Limited (“iWayAfrica”), Zimbabwean broadband internet service providers.

During the year under review, the Zimbabwe hotels experienced increased levels of competition which resulted in lower profit being recorded for the current year as pressure was placed on both occupancy levels and rates.

The outside Zimbabwe hotels recorded an increase in profitability compared to the prior year in local currency, as a result of an increase in revenue. Construction of a new hotel in Maun, Botswana that began during 2015 was completed in 2017.

The agro chemicals segment is comprised of Sable and Zimbabwe Fertiliser Company Limited (“ZFC”) and the Group has a 22.5% interest in ZFC and accounts for it as an associate. The Group has a 50.6% interest in Sable, which is accounted for as a subsidiary. Sable commenced production under the full importation model in November 2016.

The revenues earned by the business therefore remained subdued resulting in a loss after tax of $4.7 mln from $2 million in 2015. The loss after tax for 2015 reflects the results of Sable’s operations from 25 June 2015.

During the year under review Joina City did not make any payments to the shareholders as a decision was taken to reinvest the business’ resources into refurbishing parts of the building.

Debtors’ collections continue to improve with the percentage of debtors over revenue declining by 12% from previous year.

Despite the decline in occupancy, revenue increased by 3% due to a change in the anchor tenant and the office section occupancies continue to be a challenge, as some companies chose to move out of the city centre, and management is not expecting the trend to change.  Alternative uses for some of the vacant office space are being sought.

The Group did not recognize its share of losses of Telerix Communications (Private) Limited (“Telerix”) for the year, after the Group’s investment in Telerix was fully impaired during the year ended 31 December 2012.

During the current year Dandemutande Investments continues to generate profit at an EBITDA level however, due to the level of finance costs, was still incurring a loss after tax.

Meanwhile it is anticipated that the economic conditions in Zimbabwe will continue to be challenging in the year ahead and management will focus on defending the Group’s financial and market position, finding opportunities to grow in the environment and employ various initiatives to increase market share and profitability.