TA Holdings Limited last week held its analyst and media briefing for the half-year ended June 2010 and told shareholders that the group is positioning its investments in the country to take advantage of the economic recovery.

Management also indicated that they would be exploiting offshore growth opportunities in the insurance and hotel sectors.

Currently, the group is negotiating with a potential financier for the refurbishment of their hotels in Zimbabwe and they are hoping to conclude these negotiations by year-end.

A successful deal would see the commencement of the refurbishment work in early 2011 with Cresta Lodge Harare being the target.

As for fertiliser manufacturer Sable Chemicals, management also said negotiations are on-going for a viable power tariff while the group is also looking to consider other less electricity-intensive options of obtaining hydrogen.

Commenting on the performance, analysts said indications are that they will at best break even at year-end while equity holders are likely to remain with an attributable loss at year-end.

The group’s operating units continue to recover slowly, with the notable increase in capacity utilisation for Sable coupled with prospects of refurbishment of their hotel properties that could see an improvement in average room rates.

Analysts believe that the group’s major hindrance is that of over-diversification and as such they are of the belief that TA should hasten its restructuring and strategic positioning plans to return to acceptable profitability levels.

In the half-year to June 30, 2010 TA posted a lukewarm set of results in which the group merely broke even.

Revenues for the first half amounted to US$23.6 million against group total expenses of US$22.4 million and incurred finance costs to the tune of US$235 131 and a share of losses in associate companies of US$578 022.

Profit before tax for the period was US$366 247 from which income tax obligations of US$195 544 were deducted giving the group a paltry profit for the period of US$170 703.

The group’s balance sheet weakened by some US$13 million from their December 31 position to US$156 million attributed to translation losses on conversion of Pula denominated balance sheets the reporting currency.

Likewise net asset value was down by a similar magnitude to US$56.6 million.

The group, however, closed in a positive cash and cash equivalents position of US$14.8 million.

TA’s Zimbabwe operations incurred an operating loss of US$760 000 as all local operations with the exception of Zimbabwe Fertiliser Company and AON posted losses for the half-year.

Sable remained their Achilles heel contributing US$1.2 million and capacity utilisation is at 36 percent on the back of an increase in electrolyters from four last year to 10 as at June 2010.

Volumes produced improved to 43 592 tonnes though this could have been bettered had it not been for the lower-than-budgeted for ammonia imports coupled with the exorbitant electricity tariffs at which the group would need to reach capacities of 45 percent – 50 percent for them to break even in this unit.

TA’s offshore operations remain lucrative buoyed by a stellar underwriting profit performance from Botswana Insurance company to the tune of US$1.4 million.
Botswana’s Stock Exchange-listed Cresta Morakanelo contributed a US$716 390 profit and was accounted for as an associate in the half-year.

bright.madera@zimpapers.co.zw
 

TA Holdings CEO Shingi Mutasa says he is excited about Zimbabwe’s growth prospects but urged government to reduce corporate tax to 10% to attract foreign capital.

Mutasa also called for clarity and predictability in policies as they form the nexus of capital attraction.

He said that although foreign direct investment is needed to revive the fragile economy, the government should be clear on policies that attract investment.
“International investment is needed in the country but it’s a commodity that needs to feel safe wherever it’s invited. Our government and politicians need to send right signals to attract capital,” Mutasa said.

Mutasa, who says he is a “proud capitalist” said indigenisation laws in other countries are attracting considerable investment as “capital follows the scent of profit”.

“Columbia is the drug capital of the world but it is managing to attract international capital. This is because investors have a perception of safety and high returns on their investment; we need to instil confidence in investors,” he added.

To attract investment, Mutasa said there is need for clarity on policies.

“But maybe we’re sending the wrong signals to markets... the Act (indigenisation) had a ‘land reform’ type tag and politicians are not too clear on our economic destination. We need proper laws,” he said.

On taxation, Mutasa said government is drawing taxes from a “small pool of taxable people which is not sustainable”.

“I call on government to adopt a 10% tax regime to make it comfortable to pay tax. This will also help in attracting foreign direct investment.”

Commenting on the controversial indigenisation and economic empowerment regulations, permanent secretary in the Ministry of Youth Development, Prince Mupazviriho, denied that regulations had a knock-on effect on the ZSE when they were published.

“Markets were reacting to misinformation emanating from the international press hence the uncertainty that prevailed then,” said Mupazviriho.

He said hordes of investors have made enquiries with some seeking guidance, resulting in “a semblance of stability” adding that “non-blue chips are performing better than listed companies”.

Before the regulations were amended, the stock exchange retreated as investors put on hold the release of new money into the market.

- Nqobile Bhebhe
 

It said it will also focus on recapitalising its Zimbabwean businesses during the current reporting season.

To scale up production, TA Holdings plans to spend US$ 40 million over a four- year period refurbishing the ammonia electrolysis plant, Sable Chemicals.

The programme would be funded from a combination of debt and internal resources and this would give the plant an extended 10- year life span.

TA Holdings had failed to refurbish the plant over the last few years due to financial limitations, which had greatly compromised the ageing plant’s operational efficiency. The plant is over 20 years old.

Ammonia electrolysis is used for air separation processes that produce gaseous oxygen used extensively in the steel manufacturing industry, and hydrogen which is used in the production of nitrogenous fertilizer.

Announcing the group’s financial results for the year ending December 2009, TA Holdings Group Financial Director Bothwell Nyajeka said the group was pinning its hope on better profitability this year thereby returning Sable Chemicals to viability. Sable’s profitability had been largely compromised by high power tariffs, which resulted in higher costs of production because the firm‘s major cost center, the electrolysis ammonia plant, had been running on only four electrolytors out of 14.

“The key investment that is going to have significant impact on the group is Sable. We will look at what we can do to increase the amount of imported ammonia to reduce the local cost of ammonia production,” said Nyajeka.”We will continue lobbying government because fertilizer is key and strategic to agriculture in Zimbabwe.”

Nyajeka said the group only repair up to 10 electrolytors, as the remaining four required a complete overhaul.

“From next year we will spend US$ 40 million over four years on refurbishment of the electrolytors. We have only been undertaking routine repairs. We had seven units back online and on Saturday we had another one in operation, so we now have eight units back online,” Nyajeka said.

TA and Sable have made an arrangement with the government for a special power tariff regime ranging between US3c per kilowatt hour to US 4,5c, per kilowatt hour from January this year until next June, but the tariff system would rise in tandem with increasing output thereafter. Government also gave sable US$ 2, 7 million to cover electricity costs.

The Kwekwe based firm’s electrolysis ammonia plant was closed for three months last year because the firm could not sustain operations at the US7, 56c per kilowatt hour tariff rate that was being charges by ZESA then. When the plant was shut down last year, Sable had to rely on ammonia imports from South Africa, but this option could not be relied on due to supply inconsistencies related to logistical problems and the quantum required.

Sable’s viability could easily overturn the loss posted last year in TA’s operations.TA's Zimbabwe operations posted a US$2,4 million loss attributable to shareholders while foreign operations had been marginally profitable at US$1,7 million after turnover of US$42 million was chewed up by US$40 million in expenses.

The local operations” loss was due to US$ 1, 5 million deficit at Cresta Zimbabwe. Most of the conglomerate’s foreign operations achieved profitability, except Lion Assurance company of Uganda which recorded a US$238 000 loss. In Zimbabwe, TA has interests in Zimnat Lion, Grand Re, Cresta Zimbabwe, Zimbabwe Fertiliser Company, Aon Zimbabwe and FMI Securities.

The Zimbabwean conglomerate has interests in Cresta South Africa, Botswana Insurance company , Cresta Marakanelo in Botswana and management contracts for two new hotels in Nigeria while its subsidiary Trans Industry also secured a management contract with a Nigerian insurance firm.

During the period under review, the group generated cash of US$1,5 million from operations from operations, mainly from foreign investments. Cash balance as at December 2009 amounted to US13 million, US $ 11,7 in foreign and US 1,3 million was generated from Zimbabwe.

Zimbabwe will transform into Africa’s fastest growing economy in the next decade, a leading industrialist said last week, warning however, that the envisaged growth would hinge on the country’s ability to swiftly react to business opportunities that will sprout across the continent.

TA Holdings executive chairman, Shingi Mutasa, said the greatest weakness that had triggered the collapse of Zimbabwe’s economy was the “wait and see” attitude by government during times of great economic opportunities.

But with massive investments now lining up across Africa as global corporations angle up for business on the continent, prompt reaction to snatch up deals will be paramount, he said.

Mutasa said on Friday projections by his regional investment company had indicated that if these shortcomings were addressed, Zimbabwe will shake off problems emanating from its weak banking system, high unemployment, low capacity utilisation in industries, massive power blackouts and failing health and education delivery systems to be among Africa’s leading economies.

The usually quiet TA Holdings boss told scores of business executives and government officials at the Zimbabwe Institute of Management Manager of the Year Awards presentation that it was time government followed the example of companies like TA that defied the domestic recession to reinvest in Africa.
“Our role in the economic future of Africa is very significant,” Mutasa said.

“Africa in the next 10 to 15 years will have the strongest Gross Domestic Product growth in the world and Zimbabwe will become the fastest growing economy in that continent,” he told the gathering.

“Zimbabwe must begin to strategise and plan for the growth. Each country is looking at its resources and trying to look for how to exploit them. Zimbabwe is blessed with human capital. Zimbabwe, inspite of what it is today will become the fastest growing economy in Africa and our development of the human capital is going to be key,” said Mutasa.

“Our weakness has been what I call the wait and see attitude. We cannot afford as an economy to wait and see. I am not blind to challenges in the Government of National Unity.

“I understand the challenges that exist in our times (but) those who want to wait and see should find a place in New Zealand or somewhere exciting,” said the TA chief.

Many believe the TA boss’ comments are not empty talk.

Mutasa has experience in regional investment trends having taken TA to several African countries and is aware of business opportunities on the continent.
He has reacted with the agility of a fish eagle to snatch opportunities as they come.

This has been the heartthrob of TA’s growth.

TA has a diversified portfolio with investment interests in fertiliser production, insurance, hospitality and other sectors in Zimbabwe.

The group controls majority shareholding in a number of foreign companies including 62.5 percent share holding in the Botswana Insurance Company, 35 percent shareholding in the Cresta Marakanelo, also in Botswana, 100 percent in Cresta Hotels, and 100 percent shareholding in Trans Industries among other foreign companies.

But his projections came as the International Monetary Fund two weeks ago painted a bleak future for Zimbabwe’s embattled economy, forecasting that several key economic indicators will fall as the country, shattered by a decade of domestic economic recession, battles to recover.

- Shame Makoshori (Chief Business Reporter)
 

The business sector has been encouraged to put in place appropriate strategies to assist skills development in order to benefit from the anticipated growth of African economies over the next two decades.

Speaking at a recent Zimbabwe Institute of Management event, TA Holdings executive chairman, Mr Shingi Mutasa said Zimbabwean business should capitalise on the country’s human capital, which is one of its biggest assets to ensure that national growth targets are met.

“Over the next 20 to 30 years Africa could emerge as a reasonably important contributor to the Gross Domestic Product of the world economy. Today Africa has around 20 percent of the global population but contributes less than two percent of the global GDP.

“However, over the next 30 years it is anticipated to change to at least 10 to 15 percent of global GDP. It is this growth trajectory that we should strategise and plan for. Zimbabwe is blessed with the most critical resource of all – its human capital.

“Unlike the rest of Africa, which has a significant population base that is largely unproductive human capital, we have a strong mass of educated people. We have a strong comparative advantage, let us use it regionally and continentally to achieve this significant growth,” said Mr Mutasa.

Zimbabwe has of late failed to maximise on its skilled human resources due to undercapitalisation of most industries, which have been worsened by the liquidity crisis.

Capacity utilisation by the local industries has stagnated at just over 30 percent this year.

The TA boss predicted that Zimbabwe would soon be the fastest growing economy on the continent, basing on the skills advantage that the country has over its African counterparts.

“Our role in the economic future of Africa is very significant, if, we choose to be actors on the stage. I strongly believe that Africa over the next 10 to 15 years will have the largest GDP compounded growth rates in comparison to other continents. More importantly, Zimbabwe will over the same period be the fastest growing economy in Africa.

“The strength of my conviction is not based on the untold mineral wealth of Zimbabwe not the diamond fields of Chiadzwa or the incredible wealth stored in the Great Dyke. Neither is it based on the great infrastructure that is second only to that of South Africa.

“It is because of the human capital that is our distinguishing comparative advantage. Our most critical asset is our human capital, we must aggressively invest in it,” he said.

Despite Zimbabwe’s extensive skills base, many companies have been trying to downsize through retrenchments as a result of the liquidity situation in the local market so as to meet their capital requirements. But economic experts contend that this strategy is both short-term and superficial and will not lead to sustained economic growth.

Mr Mutasa also said that as business they were not ignorant of the problems facing the Inclusive Government or the impact of negative sentiments and misinterpretations on the country’s indigenisation and empowerment drive. He called upon the industry to play a pro-active role.

“Let me state clearly that I am not blind to the challenges of the Inclusive Government, neither do I limit the impact of bad interpretation, both locally and internationally to the intent of indigenisation.

“These are all factors that we as business leaders and professionals must factor in when we plan. What we must stop doing is having a strategy of ‘wait and see’. For me this is an abrogation of responsibility. This stage is set of proactive players,” said Mr Mutasa.

- Business Reporter
 

ZIMBABWE Stock Exchange-listed investment company TA Holdings Limited will next month list its associate company, Cresta Marakanelo Limited, on the Botswana Stock Exchange.

Cresta Marakanelo is currently the biggest hotel in Botswana.

TA Botswana, a member of the TA Holdings Group, owns 40 percent of the share capital in Cresta Marakanelo and the remainder is owned by the Botswana Development Corporation.

Upon listing, Botswana Development Corporation will reduce its stake to 26 percent through a private placement of 10 percent of the share capital, the other 22 percent would be offered to the public and 2 percent will go to an employees' share trust.

However, the group said the listing is not aimed at raising additional capital.

"The primary objective of the listing is to give Batswana citizens an opportunity to participate in the company.

"The listing will also give employees of the company a similar opportunity.

"The board of TA Holdings welcomes the listing and the opportunities for growth that it is expected to bring," said the group in a statement to shareholders.

Prior to the listing, Cresta Holdings Limited, a wholly owned subsidiary of Trans Industries, a member of TA group domiciled in Botswana, signed a 10-year management agreement with Cresta Marakanelo, with an option to renew for a further 10 years.

TA Holdings, which controls 100 percent of Cresta Hospitality Holdings, Cresta Hospitality (Private) Limited and Cresta Hotels, is pinning its hopes on its hotel business. A recent trading update by the group indicated that Botswana occupancy went up 4 percent to 70 percent from 66 percent last year.

Average room rates at the Cresta Marakanelo increased to US$96 in the first quarter, from US$72 the previous year.

In Botswana, the Cresta group is enjoying the benefits of the soccer World Cup, which kicks off in South Africa next month.

At least 130 000 football fans are expected in Southern Africa during the month-long tournament.

Hotels in Botswana were among the biggest beneficiaries of world football governing body Fifa's lucrative accommodation agency, MATCH.

The investment group, which already runs Cresta Hotels in Zimbabwe and Botswana, is planning to expand into Angola, Ghana, Nigeria and South Africa.

The group is also targeting to grow the number of hotel rooms to 2 000 by 2012.

TA also operates two insurance companies outside Zimbabwe, Botswana Insurance Company in Gaborone and Lion Assurance Company in Uganda, currently under expansion. In Zimbabwe, the company is involved in all facets of insurance -- life, short-term insurance, reinsurance and insurance broking.

Early last year, TA assumed complete control of Zimnat Lion Insurance Company, the country's second largest short-term insurance company by market share, after it successfully bought out minority shareholders through a share-to-share transfer.

The investment company's strategic vision is to expand its insurance business to eight countries in sub-Saharan Africa.

The salient features of the Listing and related matters are as follows:

The Botswana Development Corporation, TA Botswana’s co-shareholder in Cresta Marakanelo, which currently holds 60% of the stated share capital of the Company, will reduce this holding to 26% through a private placement of 10% of the total stated share capital of the Company (“the Shares”), a public offering of 22% of Shares and the sale of 2% of the Shares to an employee share trust. The Listing is not aimed at raising additional capital;

Prior to the Listing, Cresta Holdings (Proprietary) Limited, a wholly owned subsidiary of Trans Industries (Proprietary) Limited (a member of the TA Group) which is domiciled in Botswana, signed a new 10-year Management Agreement with Cresta Marakanelo, which will run from 1 January 2010 until 1 January 2020, with an option to renew for a further 10 years; and

The primary objective of the Listing is to give Batswana citizens an opportunity to participate in the Company. The Listing will also give employees of the Company a similar opportunity.

The Board of TA Holdings welcomes the Listing and the opportunities for growth that it is expected to bring. Shareholders will be advised of the outcome of the Listing in due course.

By Order of the Board
TA Management Services (Private) Limited
Secretaries

20 May 2010.

TA Holdings experienced a strong performance in its hotel business in the first quarter of the year and management is confident that the robust growth witnessed in this unit will underpin the Zimbabwe Stock Exchange-listed inv-estment group’s recovery from a US$1,4 million loss suffered last year. TA Holdings controls 100 percent of Cresta Hospitality Holdings, Cre-sta Hospitality (Private) Limited and Cresta Hotels.

It also owns a 35 percent interest in Botswana registered Cresta Marakanelo.

TA chief finance officer, Bothwell Nyajeka told shareholders last week that average room rates in Zimbabwe had increased to US$52 from US$37 in December.

In Botswana, occupancy levels went up four percentage points to 70 percent during the review period from 66 percent last year.

Average room rates at the Cresta Marakanelo increased to US$96 in the first quarter, from US$72 the previous year.

Local hotels are enjoying a new lease of life following the end of hostilities between the main political actors in Zimbabwe that had triggered travel warnings in traditional source markets.

In Botswana, the Cresta group is enjoying the benefits of the World Cup, which kicks off in South Africa next month.

At least 130 000 soccer tourists are expected in southern Africa during the month-long tournament.

Hotels in Botswana were among the biggest beneficiaries of lucrative contracts from FIFA’s accommodation agency, MATCH, which faced resistance in Zimbabwe.

TA is also reaping the benefits from the massive refurbishment of its hotel properties in Botswana.

Overall, TA reported positive results across all sectors where the group has invested in the first quarter of the year.
“We believe we are now in a stronger position,” Nyajeka told shareholders at the group's annual general meeting on Wedn-esday last week.
“The group generated total revenues of US$17 million from insurance and hotels during the first quarter versus US$10 million for the same period last year.

“Operating profit was just above US$300 000 and we are confident that our current performance trajectory will take us through to profitability at the end of this year,” he added.

“Rebranding of the entire hotel portfolio in Botswana is running on schedule.

“Key objectives are greater product differentiation and consistency across all hotel properties for the Cresta identity.

Fundraising for renovation of Cresta Zimbabwe is gaining momentum — first phase is focused on Cresta Lodge. This will cost US$6 million, which will be raised on the back of group balance sheet,” added Nyajeka.

He said positive results were also reported at TA’s ammonium nitrate production associate, Sable Chemicals, which has been facing viability problems.

With capacity utilisation up two fold to 40 percent in the first quarter, Sable improved ammonium nitrate output to 25 000 tonnes compared to 46 000 tonnnes produced during the full year in 2009. Production is expected to hit 40 000 tonnes by June.

In his 2009 annual report, chairman, Shingai Mutasa suggested that the swiftest way of controlling losses at the Sable plant would be to close its electrolysis plant and import ammonia feedstock.

“Unfortunately, there are not enough railway tank cars to permit Sable to import all the ammonia necessary to dispense with the electrolysis plant,” Mutasa said.

Turning to our sector review…

Insurance

Zimbabwe

• Started to see increase in premium revenues.
• Gross written premiums for Zimbabwe insurance companies totaled $7 million for the first quarter versus $9,6 million achieved for the full year in 2009.
• Application for approval of capitalization structure of Zimbabwe insurance businesses from Group internal resources of $4 MN has been lodged with RBZ .

Outside Zimbabwe

• · Performance is pleasing.
• · Gross written premiums totaled $7,9 million 14 % up on the same period last year.
• · Issues we are addressing:
  • Currently modernizing IT platform to enhance the customer experience, achieve greater efficiencies in client-facing as well as product marketing and distribution
  • Firm emphasis is being placed on broadening the product development and expanding distribution channels.

Hotels

Cresta Zimbabwe

• Revenues $ 2 million versus $6 million for the full year in 2009.
• Occupancy levels have risen to 42% in the first quarter of 2010 as compared to 25% for the same period in 2009
• 1Q ARR has improved to $52 versus $37 at December 2009.

Cresta Marakanelo (Botswana)

• Occupancy levels are at 70% versus 66% last year.
• Average room rates –Pula 670 vs Pula 570 last year.
• Cresta Lodge Gaberone refurbishments have been compelted and handover is scheduled to take place beginning of June 2010.
• Refurbishment of Riley’s Hotel is underway.
• Rebranding of the entire hotel portfolio in Botwswana is running on-schedule – key objectives are greater product differentiation and consistency across all hotel properties for the Cresta identity

Issues we are addressing:

• Fundraising for renovation of Cresta Zimbabwe is gaining momentum – first phase is focused on Cresta Lodge. This will cost $6 million which will be raised on the back of Group balance sheet.

Agrochemicals

To date we have produced more than 40,000 tonnes of Ammonium Nitrate compared to 46,000 produced for the full year in 2009.

Capacity utilization is currently at 40% versus 20% last year.

Catalysts for growth:

• We are currently running on 9 electrolytors. 10 of 14 electrolyters expected to be up and running by end of June.
• 57 railway cars in use to transport ammonia, from Sasol South Africa to the electrolysis plant versus 40 as at end of last year

Issues we are addressing:

• Electricity tariff negotiations with government are underway with a view to reset prices to a viable tariff .
• Financing options for the first phase of the electrolytor refurbishment program are currently under review. The first phase is aimed at fully refurbishing 3 electrolytors at a cost of $11.25 million. This will be financed through a combination of debt and Sable’s own resources.

The growth projectile of insurance within the continent is very significant and we would like to use our expertise to participate fully in the continental insurance space. Locally it is even more significant. A statistic that exemplifies this opportunity within Zimbabwe is the premiums for insurance. In 1998/1999 insurance premiums in Zimbabwe were around US$600million. Last year those premiums were about $60 million; that is how that sector has shrunk. I therefore see an amazing opportunity for it to grow back and beyond. The insurance sector is a great sector. Our philosophy is to focus on underwriting profitably which I believe protects the insurer in the long term, as opposed to what some other insurers do, which is to cash flow underwrite, something that was very prevalent during hyper inflation days.
We want to be very responsible underwriters. So it’s a sector we like very much. When you look at the growth of insurance on the continent of Africa; Nigeria for example has just began to implement pension fund legislation. Zimbabwe has had it for a while, there is a potential for us to use our expertise to participate in these markets.

We are in Sable Chemicals, what we like about Sable is that it is so strategic to the future of the Zimbabwean and regional agricultural economies. We have been sending some of our key guys to other countries and we have come to realize that fertiliser in most countries is a very political business. It is also very clear that a commitment not only from the producers but from government to making sure that the supply of fertiliser to the society, especially like ours is paramount. When you look at the usage of fertilizer globally, in the western developed economies, you are looking at a hectare usage of about a 100kgs of fertilisers, whereas in our environment it’s between 5 and 8kgs. It gives you a sense of what we need to do if we are going to be producing adequate foodstuff not only for our society but the region. So Sable’s position is very simple. It is the only one of our business that does not have easy scaleability around the continent; it’s much more specific to the sub-region. But we think it is a very exciting sub-sector. So those are the current sectors that we are in.

(Nyakazeya) What about PG?

(Mutasa) Yes PG, I think I would like to look at it as a very significant growth opportunity for us. Our country has been affected by challenges over the past 12 years. There has virtually not been any significant construction except for the Joina City which took 12 years to build. Just to rebuild schools, rehabilitating offices, homes, the roads that need attention – it’s a very significant area that will be targeted by everybody; government, NGOs, even ourselves. The space that PG occupies is very critical and is ideally situated to be a significant player in that space.

(Nyakazeya) Are you happy with what has been happening at TA Holdings since you joined the investment company in November 1997? Given a choice would you have made your money elsewhere?

(Mutasa) As an investor I came into TA when its share price was an average price of 2,50 cents per share. At the moment it is struggling at between 30 and 40 cents. But I believe that TA (share price) should be in the 0,90c to US$1 space currently. That kind of growth over 12 years from an investor’s point of view, of between a 30 to 40% annual return on my capital, is excellent. If I can do that continuously for the rest of my life I would be very happy.
However, it could have grown so much more had not the past 12 years been so painful.
One of the things we experienced during the hyper-inflationary environment was a general destruction of wealth. At TA we were able to preserve this and it gives us a very significant advantage as we move forward.
Are there things that I would have done differently? For me it is about people. Probably I would have acted quicker in appointing the right people and firing the wrong ones. In terms of the sectors we are in I think we are in the right direction.

(Nyakazeya) How much money have been put in Sable Chemicals now going forward and what role do you see it playing in TA’s overall strategy?

(Mutasa) If you look at Sable it went down to 50 000 tonnes last year, our target is to reach 120 000 tonnes of production this year, which is almost a one-and-a-half times’ growth in one year. To achieve that we do not anticipate, as shareholders, the need to inject fresh capital. Since the beginning of the year we have moved from four electrolytors to eight and by mid year we should be at 10. A lot of that will be through internal cash flow management as well bank capital that the company has capacity to borrow. To move the other four we need some capital. The real story for me is the building of new capacity beyond the 250,000 tonnes we have.

(Nyajeka adds) We are looking at US$45 million over the four years. We are looking at US$10 million every year. Most of this will be internally generated by the company.
(Nyakazeya) When you invest in a company do you have an exit strategy in the event that your objectives do not go according to plans?

(Mutasa) My assumption is when we enter into a company things are going to do well. I cannot enter into a business with the view that things might go bad. But it happens in life. But my investment style when I enter business is I am not doing it for a fixed period of time. If I can be in Sable and it is producing excellent results and management is growing the business I do not see any reason why I should exit. I like being in for the long term.
My inclination is not going into a business to get out, but to grow the business, and if we like the business and believe in its long term future, we try and buy more of it.

(Nyakazeya) Your latest financial results show that you made a loss, but your cash flows are rising. What are your short term plans with the cash?

(Mutasa) I think there is a lot of re-capitalisation that needs to take place within our investments. For me this is when I truly begin to get excited. At a time when companies are going to the market to raise capital, our balance sheet is very strong and we can re-capitalise most, if not all of our needs internally, without burdening the shareholder. This will be not only for the insurance group but also for the hotels. Even with Sable, the model does not require us to go back to the TA shareholders for capital. I think it is a great story for TA. It speaks volumes about our investments and the management teams that have driven the group.

(Nyakazeya) What are your thoughts on indigenization?

(Mutasa) I do not know any country that is sustainable without an empowered people. The challenge is to achieve this in a manner that is not only sustainable but competitive. Further, we must be clear what we mean by indigenising our country. I believe a strong country is one where all members of the society have a great chance to fulfill their dreams and aspirations. I want our country to be the natural choice of those brilliant people globally who want to achieve more and are not able to within their own environment. To achieve this we have to be a very attractive destination. This is seen through, how well educated our people are, how healthy they are, the quality of their lives, the beauty of the environment they live in, and the growth potential that is being realized by the country.

Not everyone is an entrepreneur and therefore to focus on ownership alone is very narrow. The key is how we get the resources of our country to directly contribute to the creation of a first world economy within Zimbabwe. How do we create an environment to attract capital which will be critical to the development of the environment I mentioned earlier! As I have mentioned before, as an investor in other countries, we do not attempt to go alone. We will always find local partners, it is good business sense. What we need to do is make our country become more competitive, that’s the question we should be focusing on.
But you also look at sectors which if you do not have growing local participation, I think the long term alignment can be lost. It is that alignment that we must seek to achieve, competitively.

When I look at the banking sector in the 90s, there was no greater act of empowerment than the introduction of the locally managed and controlled banks. For me taking management control of TA in the late 90s was through the support of bankers like Nick Vingirayi, Intermarket Merchant Bank, (Unibank) CEO Clifford Mushambadzi.

They took a risk on me, it was easier for them to take a risk on me because they knew who I was, what I could do and trusted me. At that time it would have been very difficult for someone sitting in New York, London or Johannesburg to make a genuine decision on me.
But that was done without taking equity or forcing Stanbic, Stanchart or Barclays to indigenise. Even today, the future of our banking sector will be on the growth of those locally driven institutions. They clearly showed that they could compete with the international institutions. Somewhere the international banks would wake up to the need to find local partners.
These guys were empowered. I think there are many ways that we can achieve this with a view of creating sustainable and significant growth. I think the models we saw in the 90s in the banking sector achieved amazing results.

(Nyakazeya) Do you see a possibility of TA Holdings assisting other companies to fulfill the indigenization regulations by investing in them?

(Mutasa) I think TA has been over the years one of the most empowering organization in this country when you consider the number of companies TA sold between 1992 and 2004, predominately to black entrepreneurs. It played a very significant empowerment role. TA as an investment partner? We believe that many global companies as well as local companies look at us as a good partner. We have our own capital, our governance is very good, our local knowledge, both in Zimbabwe and Africa is excellent, we are long term in our commitments and we strongly believe in the future of our markets. We understand our role and the frame of the partnership and therefore I think we make a good partner. But this is aside of satisfying a role or legal requirement. It makes good business for somebody, for example Aon, to seek us as their partner. It was not because of the law but they wanted a good local partner.

(Nyakazeya) How do you feel now that Joina City has finally opened?

(Mutasa) Relieved

(Nyakazeya) What where your initial plans for the City and how have they altered over the years?

(Mutasa) On Joina City we wanted to show that buildings can be built by us (Zimbabweans). That philosophy has not altered at all. It is instructional that in building the Joina City although it is ascribed to us, we used resources from all over the world to make it happen, that is the way it should be.

(Nyakazeya) How much did you invest in Joina City?

(Mutasa) I have put in 16 year of my life.

(Nyakazeya) In monetary terms

(Mutasa) It is difficult to put a figure now. What has made me happy has been the commitment of the local pension funds; CAIPF, LAPF, NRZPF and ZIMNAT LIFE. The Joina City would not have been possible without their total commitment to this journey. Ultimately this building belongs to the many Zimbabweans who have invested their life savings in it. The pension funds have been amazing; they stuck through thick and thin. Economically there has been a sound investment, if you probably look at any of the investors, the component of the Joina City in their portfolio is very important; it requires people to take a very long view of the country.

(Nyakazeya) What type of clients are you targeting for the building and what has been the response like?

(Mutasa) We are completely over subscribed. We have awaiting list of three times the space that we have at the Joina City. What we are trying to do though is to balance in terms of entertainment and retail. We just feel that there is enough of us, both locally and regionally, to support a retail experience such as Joina City. We might see places like the Ximex Mall being knocked down and re-built to accommodate retail capacity and strengthen our city as a prime shopping location. For me Harare is a great city which does not need a lot to bring it back to excellence. We need to build a city nucleus we as Zimbabweans would be proud of.

(Nyakazeya) Who is Shingai Mutasa and what motivates you?

(Mutasa) I am an African, I am a passionate Zimbabwean who is very optimistic about our future as a continent and a nation. I believe in God. I used to play a lot of squash, but not anymore. My children and wife occupy a very important space in my life. What motivates me is to be part of a generation that is going to make Zimbabwe a first world economy. I envisage that this will be a thirty year journey, but very achievable.

(Nyakazeya) Who are the people who have inspired you in your life?

(Mutasa) My father, who is now late, was the major mentor in my life. His words and guidance shaped me to what I am now and continue to guide me. My family played a very important role as well. If we come to people outside the family it has to be men like Abraham, Jesus Christ, Mohammed, Lee Kwan Yeuw, Warren Buffett, Mahatir, the founding fathers of America, our founding fathers of Zimbabwe. They were very influential, people who come in for a very short space of time and make such a profound difference to the future generations.
I must think more about that question though.

(Nyakazeya) The perception on the market is that Shingai Mutasa is very conservative, is that a correct assessment?

(Mutasa) No. It is a wrong assessment. You do not build a Joina City if you are conservative. You have to be a very optimistic human being, even a little crazy, to build and continue to build in the environment we have just witnessed. TA is prudent, not conservative. When hyperinflation took over we could have been reckless with shareholder capital. Under such an environment most people got hurt. We took a position that preserved the capital. I do not think that’s being conservative but being smart and optimistic. We invested in countries from Ghana, Nigeria, Namibia and Botswana. People who are conservative do not go outside their neighbourhood.

DIVERSIFIED Pan-African conglomerate TA Holdings Limited is pinning its hope for better profitability this year on the return to viability of its associate, Sable Chemicals, smarting from a US$4,2 million loss last year.

Sable's loss comes after the nitrogenous fertilizer manufacturer saved about US$4,5 million after a lower tariff was agreed with Zesa Holdings and Government.

The group, which is working on a US$10 million budget for recapitalisation and refurbishment of its businesses, posted a loss of US$680 971 and strongly believes the return of Sable to viability would significantly impact on the group.

Sable's profitability had been largely compromised by high power tariffs, which resulted in higher costs of production because the firm's major cost centre, the electrolysis ammonia plant, was running on only four electrolytors out of 14.

However, so far eight electrolytors have been brought back on line and the group hopes to have completed repairs on two more to take the total units in operation to 10, which would ramp output capacity to above 50 percent.

TA and Sable have made an arrangement with the Government for a special power tariff regime ranging between US3c per kilowatt hour to US4,5c per kilowatt hour from January this year until next June, but the tariff system would rise in tandem with increasing output thereafter.

The Kwekwe-based firm's electrolysis ammonia plant was closed for three months last year because the firm could not sustain operations at the US7,56c per kilowatt-hour tariff rate that was being charged by Zesa then.

Group Financial Director Mr Bothwell Nyanjeka said Sable's viability would have a huge impact on group profitability in the current financial year.

"The key investment that is going to have significant impact on the group is Sable.

"We will look at what we can produce locally and what we can do to increase the amount of imported ammonia to reduce the local cost of ammonia production.

"We will continue lobbying the Government because fertilizer is key and strategic to agriculture in Zimbabwe," said Mr Nyanjeka.

Alternatively, Sable might have to produce nitrogenous fertilizer by importing ammonia from South Africa, which, at US$526 landed cost per tonne, is cheaper than producing the ammonia locally, as this costs about US$750 per tonne.

The fertilizer producer has also entered into an agreement with Transnet of South Africa to refurbish more railway wagons to increase the amount of imported ammonia.

Sable's viability could easily overturn the loss posted last year in TA's local operations, which eventually drove the group into a loss for the period under review.

TA's Zimbabwe operations posted a US$2,4 millionloss attributable to shareholders while foreign operations had been marginally profitable at US$1,7 million after turnover of US$42 million was chewed up by US$40 million in expenses.

The local operations' loss was due to a US$1,5 million loss at Cresta Zimbabwe.

Most of the conglomerate's foreign operations achieved profitability, at US$1,7 million, except Lion Assurance Company of Uganda, which recorded a US$238 000 loss.

The Zimbabwean conglomerate has interests in Cresta South Africa, Botswana Insurance Company, Cresta Marakanelo in Botswana and management contracts for two new hotels in Nigeria while its subsidiary Trans Industry also secured a management contract with a Nigerian insurance firm.

In Zimbabwe, TA has interests in Zimnat Lion, Grand Re, Cresta Zimbabwe, Zimbabwe Fertilizer Company, Aon Zimbabwe and FMI Securities.

The group is working on a US$10 million refurbishment and recapitalisation programme for its hotels and insurance operations.

The group would finance the projects from a combination of debt capital and internal resources.

CRESTA Hospitality Zimbabwe, a division of TA Holdings Limited, has embarked on rebranding exercise, that will see the hotel division penetrating the region.

The rebranding commenced in Botswana, which is the largest operation within the Cresta Hospitality brand.

Cresta Hospitality Zimbabwe managing director Mrs Judy Jones said the new corporate identity is the result of a transformation process of both the product and service levels.

"Strategically, our group has embarked on a migration path for Cresta Hospitality Zimbabwe, in order to move to the new brand platform.

"Over the next two years, we would be making significant investments to upgrade our hotels," said Mrs Jones.

She added that the group would place more emphasis on repatriation of skills following the brain drain, employee training and development and upgrading technology such as reservation systems.

The desire by Zimbabwean companies to rebrand reflects a desire to become free of the shackles of an economy in crisis. Cresta's rebranding typifies a fresh wave of rebranding that has gripped the country, with companies adopting new identities in their quest for expansion.

Africa First ReNaissance (Afre) Corporation, formerly First Mutual Limited Corporation, and African Sun Limited formerly Zimbabwe Sun Limited rebranded in 2008.

Dropping the Zimbabwean identity was in line with its pursuit for continental glory, which has seen it embarking on expansion projects across Africa.

Mrs Jones said the rebranding journey would be the catalyst for growth, both locally and regionally.

Cresta Hospitality operates nine hotels in Botswana, four in Zimbabwe and one in Nigeria through a management contract.

Mrs Jones said the major challenge to the industry would be raising the necessary funding to upgrade and improve facilities in line with global trends.

Other stakeholders such as Government are facing the same challenges when trying to upgrade infrastructure such as the road network to increase accessibility, and other facilities such as health and telecommunications.

"As an industry, we are committed to working closely with all stakeholders, be it Government or the financial sector, in order to ensure that the hospitality and tourism industries play their rightful role in economic recovery," said Mrs Jones.

Analysts say the emergence of new brands could accelerate during the current year, with more companies sprucing up their images or merging to consolidate their market share to mitigate the risks associated with operating in a volatile environment.

Sable Chemicals closed the plant, the largest hydro-electrolysis ammonia plant in the world, two months ago over unsustainable power tariffs.

Sable chief executive, Mr Charles Changunda earlier said the plant gobbled 31 megawatts a month, which translated to a US$1,2 million power bill every month, throwing operations into serious viability problems.

After the plant shutdown the Ministry of Industry and Commerce instituted investigations to establish the magnitude of Sable Chemicals' problems and see how Government could help bring the plant back to life.

Industry and Commerce Minister Welshman Ncube said meetings were held with executives of TA Holdings, Sable Chemicals and Chemplex Corporation.

The Government also consulted Zesa Holdings, which was cited as the cause of the plant shutdown.

TA Holdings holds 51 percent of Sable Chemicals while the Government-owned Chemplex Corporation and Yara Zimbabwe own 36 and 12 percent, respectively.

A report on the findings from the study is being compiled and would be presented to Cabinet next week.

"Cabinet directed that an enquiry into the matter be undertaken.

"We held meetings with people from Sable (Chemicals), TA (Holdings), Chemplex Corporation and Zesa Holdings -- cited as the reason of the plant closure," said Minister Ncube.

Sable Chemicals is the country's sole producer of ammonium. Presently, the company is importing ammonia from South Africa for production of ammonium.

The shutdown of the electrolysis ammonia plant was a major blow to companies such as the troubled Zimbabwe Iron and Steel Company and the Zimbabwe Iron and Smelting Company which relied on the firm for gaseous oxygen.

The Kwekwe-based company had tried to negotiate with Zesa Holdings for a reduction of power tariffs from the current US5,6 cents per kilowatt.

The local power utility declined the proposal arguing that it would compromise its own viability, as that would be tantamount to supplying power at below cost.

Faced with no option Sable Chemicals had indicated that it would engage regional power utilities who could supply the power at about US4,5 cents per kilowatt.

Alternatively, the company would import ammonia from South Africa and operate the plant at Zesa Holdings tariff rate, but only if it could build ammonia stocks of about 3 500 tonnes monthly to sustain ammonium production.

Sable Chemicals electrolysis plant, with 14 electrolytes, has a capacity to produce 20 000 tonnes of ammonium nitrate per month and uses hydro-electricity from Kariba and Munyati.

Source - The Herald 21 October 2009

Improvements in performance of the group's hotel investments in both local and foreign -- and its insurance investments buoyed the increase in profit.

In its financial statement for the half year ended June 30,2008, the group said that foreign investments contributed immensely to pull the conglomerate out of the woods.

On performance, basic earnings per share for the group grew from $4,2 billion per share to $4,288 million in the corresponding period.

The group said: "The growth in earnings was a result of improved underwriting performance at Botswana Insurance Company, increased profitability at Cresta Marakanelo and sustainable income growth on portfolio investments in Zimbabwe". On sectoral, performance, Zimnat Lion Insurance's net revenue increased to $871 trillion from the corresponding period of $193 billion during the half year period under review.

The balance sheet size grew from $22 trillion as at December 31, 2007 to $451 quadrillion at June 30,2008 mainly due to profits achieved during the half-year period of $290 quadrillion and revaluation of property, plant and equipment of $51 quadrillion. Zimnat life, the life fund increased from $63 trillion at the year-end to $2 quintillion as at June 30,2008 on the back of increased gains from fair valuation of equity investments and properties.

However, Cresta Zimbabwe occupancies fell from 53 percent as of last year to 49 percent during the period under review.

Profit was negatively affected by revenue restrictions resulting from price controls.

Zimbabwe Fertilizer Company's capacity utilisation was at 12 percent, an improved performance, especially in non-controlled chemical products. On Botswana Insurance company, revenue grew by 8 percent during the period under review compared to the corresponding period last year and expenses decreased by 11 percent resulting in an underwriting profit of 8 million pula.

Cresta Marakanelo recorded a profit of 6 million Pula up by 190 percent from the same period last year. Cash balances for investment and further refurbishment grew to 6 million Pula.

Uganda Lion Assurance company recorded a revenue of 3 billion Ugandan Shillings an increase of 105 percent from the previous figure of $2 billion Ugsh. Investment income grew by 429 percent on the back of good performance of the Ugandan, Tanzanian, and Kenyan securities

- This article was first published by The Herald of 29/8/2008

Figures gathered by businessdigest this week show that the Zimbabwe Stock Exchange’s mainstream industrial index rose by a record two million percent between January 1 and June 30, while the resource index rose by 1,9 million percent during-- the same period.

TA Holdings’ share gained the most during the period under review increasing 7,1 million percent during the six months, while Radar gained 6,6 million percent, Cafca — 6,2 million percent, CFI – 4,7 million percent and TSL 4,5 million percent.

The bottom five counters which gained the least are Halogen — 113 900%, Chemco — 178 471%, Zimplow — 222 122%, Zimnat — 239 900% and Medtech — 289 373%.

This jump in share prices was in excess of increases in consumer prices which averaged 1,2 million during the same period.

Events that stimulate Gross Domestic Product (GDP) — a country’s wealth, inevitably drives stock prices up, and any event that hurts GDP growth pulls stock prices down.

The opposite has however been happening in Zimbabwe: share prices are rising while the economy continues to collapse.

ZSE chief executive Emmanuel Munyuki, said the market performed "very well" although it was inflation-driven.

"The market was responding to rising inflation. The movement of share prices were inflation-driven during the first half of the year," Munyuki told businessdigest.

Economic analysts said excess growth in money supply was giving a wrong impression to investors who use the stock exchange as a barometer for Zimbabwe’s economic performance.

The country has been suffering from catastrophic economic and political policies, largely blamed on President Robert Mugabe’s government. The only means for government to fund itself has been printing money.

The stock market has become a prime beneficiary of any monetary expansion. Fresh money enters the economy first through banks and other financial entities who may invest it in shares, or lend it to others who buy shares.

Thus stock prices rise above prices of food and other investment vehicles and will outperform them as long as this monetary process is allowed to continue.

"The stock market has provided investors with an alternative lucrative investment option given the depressed performance of other markets like the money market. A number of investors preferred to take refuge on the stock market because returns have been tracking inflation," said Zimbabwe Allied Banking Group (ZABG) group economist David Mupamhadzi.

He said with inflation continuing to hit all time highs most investors found the stock market to be a viable investment avenue, as returns on the other investments remained in "negative territory".

Trillions of dollars were made during the period under review as investors either leveraged the embarrassingly low interest rates or used their own funds to generate huge returns, which was not based on production growth.

ZB Financial Holdings group economist Best Doroh said the stock market was largely been driven by investors trying to lock in value in an environment where there were very few investment options.

"To a large extent, speculators have also taken advantage and invested on the stock market," he said.

Economic analysts said with inflation currently at 9 030 000% keeping Zimbabwean dollars in the pocket will result in losing half of their value by the next day. Putting money in the bank, where rates are "not competitive", and a maximum withdrawal limit enough to buy one loaf of bread was not wise.

Investing in government bonds is the equivalent of financial suicide. Converting the local currency into foreign currency is difficult, hard currency is scarce, and strict rules limit exchangeability.

There is little incentive at unit trusts and the money market since economic prospects look so bleak. Metropolitan Bank group economist Nyasha Mandeya said the stock market was driven by Asset Price Inflation, gloomy inflation outlook and negative real returns on the money market.

"The stock market was mainly subdued by political environment which presented uncertainty as to economic direction. The market was also buoyed by the conditions of excess liquidity emanating from concessionary funding facilities such as Aspef, Basic Commodities Supply Side Intervention (Bacossi), Farm Mechanisation and election related expenditures," said Mandeya.

Businessdigest understand that new money being printed was not distributed to everyone equally and at the same time it was injected into the economy at certain initial "entry points".

Some investors benefited from company earnings which skyrocketed in Zimbabwe dollars on the back of revaluation of assets as the local currency continues to lose internal and external value. Business was also taking advantage of any distortions that arose in the economy whether they constituted "core" business or not.

- Article first published in the Zimbabwe Independent on the 17th of July 2008 and written by Paul Nyakazeya

Lion Assurance’s marketing manager, Daka Munyaradzi, handed over the motorcycles at the Security Group offices in Kampala.

Munyaradzi said: “Today, we reward honesty by these employees. This gesture is part of our commitment to promoting security and integrity.”
He also said: “Security duties call for a high level of integrity. We encourage all staff to live to this call.”

The employees were Aliel Manix, Michael Alam, John Baptist Omeleku, Lucy Ayabotho, David Abangi and Henry Okongo.

Lion Assurance is a subsidiary of Botswana Insurance Company, the largest insurer in Botswana. It is part of the insurance arm of TA Holdings, a conglomerate listed on the Zimbabwe Stock Exchange with interests in insurance, hotel ownership and management, financial services and chemical processing all over Africa.

The human resource manager of Security Group, Chris Mwesiimo, encouraged the other staff to always stand out. “These employees have depicted heroism in the face of adversity,” he said.

Article by Joseph Odomel first appeared in New Vision Online Newspaper on 9 March 2008

He said Trans-Industries headed by Mr Hillary Munyati was working on three regional opportunities and Cresta Hospitality Holdings, which was now self-funding, had signed three Memoranda of Understanding for management contracts valued at US$300 million. He, however, said this was still at the "early stages and the conversion rate is low".

On performance for the last financial year ending December 31, TA had reported an earnings growth of 216 225 percent which marginally exceeded the fair value gain in US dollars (211 000 percent).

Total revenue was $78,67 trillion from $53,17 billion in 2006, an increase of 146 959 percent. Of that figure, gross earned insurance revenues were $31 trillion from $16 billion and investment income stood at $58,8 trillion from $26,8 billion on the comparable period.

Finance director Mr Bothwell Nyajeka said a split in revenue showed insurance dropping to 21 percent from 43 percent, investment income grew 77 percent against 51 percent while hotels eased to 2 percent from 6 percent.

Basic earnings per share were $298 798 from $128 in 2006 and the group declared a final dividend with the option of scrip of $12 500,37.

The local share made up 57 percent of revenue from 44 percent but excluding investment income it dropped to 20 percent from 26 percent. Of the investment income, local made up 69 percent and foreign 31 percent.

Mr McDevitt said the group expected its hotels' performance to improve over the year. The group would be adding another 50 rooms to the Cresta Churchill in Bulawayo. Renovation of the Jameson was underway and capital would be committed to the renovation of Oasis and Cresta Lodge once "economic pricing formulas were put in place".

Cresta Marakanelo had a record month in February and management had since reforecast values in Botswana to grow by 50 percent.

On the balance sheet, total assets amounted to $413 trillion up 246 841 percent last year. Of that amount, 50 percent was in investments, 20 percent current assets, which did not include cash, 12 percent life funds, 8 percent property plant and equipment, 7 percent cash and 3 percent in goodwill. Shareholders' funds amounted to $143 trillion while the NAV rose to $881 935 from $365.

Mr McDevitt said the balance sheet continued to massively understate ZFC and Sable, where capital was now required for "vital repairs". Sable would be a "key focus" this year.

This article first appeared in the Zimbabwe Herald of 17 March 2008

EPS in the period amounted to $70 169,56 (2006: $37,60), while the group declared a dividend of $14 732,29 per share in addition to an interim dividend of $14,41 that was paid in September.

MD Elisha Moyo said the key achievement to come out of these results was the continued achievement of a technical profit as well as the improvement on the claims and expense ratios.

Gross premium written in the period rose 38 225% to $1.8 trln (2006: $4.6 bln), while net written premium advanced to $813 bln (2006: $2.5 bln).

Financial director Anthony Makonese said the modest growth in premium was pleasing given the group's strategy to retain and acquire profitable businesses.

Underwriting profit went up by 152 842% to $20.1 trln. Makonese said this had been achieved by improvement on the claims and expense ratios. Claims ratio improved from 18% to 5% while expense ratio improved to 38% from 53% in prior year.

"Our claims control and risk management strategy is paying dividend."

Of the premium income, motor's contribution in the period advanced 45 034%, while commercial was up 33 585%. Personal lines to were up 58 248%, while farming went up 11 896%. The business mix was made up of 52% motor, 2% farming, 5% personal and 41% commercial.

Makonese said the 178 992% increase in investment income to $19.3 trln (2006: $10.8 bln) was within management's expectations. He added that the bullish performance of the stock market towards the end of the year, investment property revaluations and better cash flow management contributed to the growth in investment Income.

The bulk of the investment income came from equities at $14.4 trln or 75% of the portfolio. The portfolio has since grown up to $25 trln as of Friday February 22.

Makonese added that properties, which comprised 29% of the portfolio at Dec 31, was revalued by 169 000% to $4.9 trln.

The total investment income for the year comprised of 74% unrealised gain from equities, 29% unrealised gain from properties, and 21% realised investment income.

On the challenges faced by the group in the period Moyo said the unabated rise in inflation had increased incidences of underinsurance and no insurance.

He said the group had reduced the credit period to cash basis resulting in further difficulties in cash collection.

On the outlook, Moyo said the group would focus on profitable revenue growth as well as introducing foreign currency denominated policies. He added that the new forex denominated policy had been given the go ahead a month ago.

Moyo said the group's investments would primarily remain in equities. He said the group would maintain the same strategies as of now unless there is a change after the March 29 elections.

Analysts comment: While the gain in bottomline profit is the best seen in the reporting period to date, we need to be reminded that the Industrials index was up 333 494% in the year to December, while Minings, for which counters Zimnat indicated it had a preference for at the last briefing, was 577 286% ahead. The 178 992% increase in investment income is less than half of this, however "impressive" the headline number looks.

The most impressive thing remains Zimnat's ability to produce a technical profit in this environment with insurance spend having been cut down to the bone. You can see this from the 38 225% rise in GPW while inflation by the government measure was 66 000% (and private measures were nearly triple that). Delivering a 152 842% rise in underwriting profit (closer to the private measures of inflation) shows claims and costs were well controlled and margins rose.

Insurance companies have for a long time looked to eat into their capital base and this year is going to be no different. Success comes down to those that have managed to streamline what's left of their insurance business and then manage their funds wisely to at least maintain some kind of value in the balance sheet. Unlike other companies reporting this period, EPS is not totally irrevelent since no forex earnings are consolidated.

If it were the case for other companies, it would almost be time to introduce a new market measure that would be of use in hyperinflationary times. The forward earnings to share price ratio (FE/SP) ratio. Zimnat is probably going to increase earnings by a factor of 150-200 in the year ahead, meaning its earnings in the year to December 2008 will probably be just shy of $3 mln, placing the group on a FE/SP ratio of 6.

Zimnat (ZMAT.ZI) year to December 31 2007 (Z$)

Historical

• Gross premium written – $1.770 trln vs $4.619 bln
• Net premium written – $813.3 bln vs $2.566 bln
• Underwriting profit – $20.14 mln vs $13.17 mln
• Investment income – $19.34 trln vs $10.80 bln
• Pretax profit – $19.41 trln vs $10.67 bln
• Attributable profit – $15.51 trln vs $8.309 bln
• Basic EPS – $70 169,56 vs $37,60
• Final dividend – $14 732,29 vs $10,34
   

The programme is run in conjunction with the Ministry of Education Learners Welfare Department Each province selects 5 potential candidates whose applications are forwarded to the Ministry’s Learners Welfare department. A committee comprising Zimnat Life and the Ministry select the students based on laid down criteria.

The successful candidates receives entire school’s tuition fees until Upper 6, if student continues to perform well. Zimnat Life also provides the first & third year (Form 1 & 3) basic uniform requirements.

This year the following were chosen:

• Blessing Sibanda
• Ngonidzashe Manditsvanga
• Devon Tsuro
• Pauline Magoso
• Ronald Chigamba
• Lucy Mzumala
• Constance Magaya

Three students are yet to be selected as the necessary paperwork from three provinces was incomplete. However they will be selected within the next two weeks.

Banking groups, ABC Holdings Limited and Kingdom Financial Holdings Limited came just close, with ABC taking the first runner-up spot while Kingdom settled third as the second runner-up in the Top 20. Innscor Africa Limited clinched the award for the Most Consistent Company over three years, while Steelnet (Zimbabwe) Limited won the Best Turnaround trophy at the awards ceremony.

TA Holdings and ABC Holdings were also category winners in the Conglomerate/Industrial and Financial sectors respectively.

Other category winners were The Cotton Company of Zimbabwe Limited, which maintained its spot as the winner of the Agro-processing sector but slipped its ranking after losing the top spot to TA Holdings.
Zimbabwe Sun Limited won in the consumer sector, while Bindura Nickel Corporation Limited led in the mining sector category. Zimnat Lion(link), a subsidiary of TA, took the honours in the insurance sector category.

Circle Cement Limited won in the construction and property sector although it failed to make it into the top 20 companies.

The Malawi Stock Exchange was again judged the top performing regional bourse for the second year running.

The selection of top performers for The Financial Gazette/ Premier Banking Corporation’s Top Companies Survey was conducted by a team of judges led by Ternard Kwashirai, managing director of Infinity Asset Management.

The judges’ team comprised of Oliver Lutz, a director with 4D Corporate Finance, an advisory services firm, Addmore Chakurira, head of research at Imara Edwards Securities, Godfrey Muponda, a lecturer at the University of Zimbabwe and Kenias Mafukidze, a chartered accountant and founding chairman and chief financial architect of KM Financial Solutions.

Premier Banking Corporation, which celebrated its fifth anniversary this year, partnered The Financial Gazette in producing the survey for the third year running.

The Financial Gazette, Zimbabwe’s leading weekly business and political newspaper, has been in the publishing industry since 1969 and has produced the Top Companies Survey for decades.

Its partner, Premier Banking Corporation, a young but robust merchant-banking outfit that has transformed banking in the country since its establishment five years ago, is a subsidiary of Premier Finance Group. - Financial Gazette