Masawara : TA Holdings Limited - Interim results FY2014 (released 29 August 2014)

l HIGHUGHTS

Financialperformance 2014

US$'000

41,908

Profit before tax

20B US$'000

38,948

.2 Gross written premium

Zjmhahytp lnyestments

Zimnat Life (srureholder funds) Zimnat Lion
June

2013

US$'000

3,710

9,901

during the period under review.
bOperating profit
Minerva ope atingprofits in<:rea sed by B% during the half year
ended 30 June 2014. Thiswas due to an 11% in<:rease in revenues driven largely byin<:reased business by Minerva Reinsuran<:e.
cln11estment i neome
Cash generated fromope ations
Basi<: earnings per share (<:ents) 0.78
.20VERVIEW
0.09
Grand Reinsua n<:e

011tsjde Zjmhahwp lnypstments BotS.vana lnsuran<:e Company Lion Assua n<:e Compa ny (Uganda)

2,649
lnvestment in<:ome dropped by 38% e
.same period l.lst year l.l gely due to tepi
Zimba bwe investment market during th
(iiHotels
This business sector <:omprises Cresta Z
Group basic: earnings per share grew by 104% from 0.78 <:ents per share for the half year ended 30 June 2013 to l.S9 <:ents per sha re for the Mlf year ended :(1 June 2014.This growth in earnings was on the backof increased earnings by Zimba bwe investments whi<:h more than otfset the dee:rea se in profits from outside Zimbabwe investments. Zimbab'I.'Je investments recon::led a profit after tax of 2.6 miIlion versus a loss of S0.8 million for the corresponding

period last yea rwhilst outside Zimb.lbwe prafit after tax fell by 77% to 0.8 million from 3.6

million for the Mlf year ended 30 June 2013 mainly due to a dee:rea se in fa ir value gains. FINANCIAL PERFORMANCE
.lProfit before taJc analysis
fune

20B

Zimnat Life (polic:yholder funds)
lntergroup gross written premium
Group gross written premium
. Hotel rE'IIenue

Zjmhahytp lnyestments

Cresta Zimbabwe

011tsjde Zjmhahwp lnypstments

Cresta Holdings
Earnings before interest,tax, deprec:iation and a mortization Cresta Sprayvie;.v pre-opening<:osts
Oeprec:iation
F'ina n<:e <:osts
Oe-recognition <:ost on refurbishment
I.Dss before taJc
Cash generated fromope ations
limbabwe ln11estments lnsurance
Zimnat Ufe (Shareholder funds)
Zimnat Lion
G and Reinsuran<:e
Minerva Risk Advisors
HotEis

Cresta Zimb.lbwe

Sable Chemials (TA share S1%) ZF'C (TA share 22.S%)
Total- Zimbabwe in11estment:s

US$'000

4 73

9!.8 (6)

1190

Group hotElre11enue
.4 ln11estment l neome lnterest received
Oividends received
Rea lised ga in on dispo.sa l of investments Rentalln<:ome
F'air value ga ins/(losses) on:
• lnvestment property
Realised investment in<:ome
Unrealised investment in<:ome
Revenue per avail.lble room (S) Ave age room rate (S)

Cresta Zimbabwe in<:urred a loss before tax of S0.07 million

<:ompared to a lossof S0.14 million forthe .sa me period last year.
The <:ompany <:ontinued to sutfer from an in<:reased "pri<:e war" withinthe hotelindustry but,managed to redu<:e its loss position due to <:ost redu<:tion initiatives that were implemented during the period.
(iii) Agrochemic.als
This business sector <:omprises Sable Chemials,the sole P'''"'"'"Il
of Ammonium Nit ate in Zimbabwe, and Zimbabwe
Compa ny ("Zf'C").
lune June

2014 2013

US$'000 US$'000
lnsurance
Botswana lnsua n<:e Compa ny
lion Assuran<:e Company (Uga nda)
HotEis
Cresta Maakanelo (3S% sha re of profitsafter tax)

Cresta Holding

.5.1Zimbabwe imte:stment:s
(ilnsutance
This business sector <:omprises Zimnat Lion lnsuran<:e Company:. Zimnat Ufe Assurance Company:. Grand Reinsu an<:e and Minerva Risk Advisors.
June

2013

US$'000

zrc

Sable Chemials
TA share of profitof associate ZF'C (22% etfec:tive interest) Sable Chemials
(S1% etfec:tive interest)

(aiZFC

(880) (2,2SO)

- (3,424)

(880( {5,674

(198) (49S) (1,746)

(1981 (2,2411

Total- foreign in11estment:s
Zimnat life (Policyholder funds
Profit before gross <:hange in polic:y hol der liabilities
Gross <:ha nge in polkyholder li.lbilities
Corporate<:osts
f•.Akro-fina n<:e,Sovereign Health a nd other investments
Group profit before taJc
Underwriting result
Zimnat Ufe (Sha reholderfunds) Zimnat Lion
Grand Reinsua n<:e
Minerva R isk Advisors
Operating profit
lnvestment in<:ome
F'inan<:e<:osts
Profit before tax
Ca:sh generated from operations Zimnat Ufe (Sha reholderfunds) Zimnat Lion
Grand Reinsua n<:e
Minerva R isk Advisors

1,020

[]

844

782 (31)

The Company's loss position decreased during the period under revie;.v l.l gely due to a reduction in bad debts provisions.
(bSable

As reported in the Statement to Shareholders for the year ended

31Oecember 20B published on :() April2014,theGroup impa ired its investment in Sable due to the un<:erta inty over future returns from this investment. Whilst signifkant progress has been made in
the negotiations fora viable taritf. the <:ompany was not receiving sutfkient power supply in order to operate at profitable levels.In light of this,returns to be realised from Sable are stili un<:ertain and the investment in this <:ompany remained impaired as a t 30
June 2014.
.5.2 Out:side Zimbabwe in11estment:s
(ilnsurance
This business sector <:omprises BotS.vana lnsuran<:e Company, whic:h is the l.l gest undenlriter of short-term insuran<:e in
Botswana,and Lion Assuran<:e Companyof Uganda.

Combined ratio
Zimnat Life (Sha reholderfunds) 78% 7S% Zimnat Lion 77% 81% Grand Reinsua n<:e 92% 99%
aUnderwriting performance
• Zimnat life underwriting profit in<:reasedfrom S0.27 million last yea r to S0.91miIlion mainly as a result ofa SO% in<:rease in premiums<:oupled with a deerea se inthe<:l.lims ratio from
4 3% for the half year ended 30 June 2013 to 29% for the half year under review. The growth in premiums was driven ma inly by in<:rea se in individuallife business.
• Zimnat Lion undenlriting perlorman<:e grew by S2% during the period under review largely dueto a 37% in<:rea se in revenue and good<:ost<:ontrolwhkh resulted in a drop itsoperatiog expense ratio to 31% from 36% for the <:orresponding period
last year. The in<:rease in revenuewas mainly dueto gr • GrandRe rec:orded an undenvriting profit increaseon the b.l<:k
ofa 4004 growth in premiumsanda 17% dee:rea se in<:osts
Underwriting result
Botswana lnsuran<:e Company
lion Assura nee Company (Uga nda)
lnvestment in<:ome
F'ina n<:e <:osts
Profit before taJc
Ca:sh genetated from opetations
Botswana lnsuran<:e Company
lion Assura nee Company (Uga nda)

[!]

00

June

2013

US$'000

1,640

DIRECTORS:S S MUTASA INON-EXECUTIVE CHAIRMAN)- G SAINSBURV 0 ICEO)- J VEZEY- F DANIELS- R N GORDON- B P NYAJEKA•- Z RANDEREE j•Ex cutlv )

aUnderwriting performance
9otS.vana lnsuran<:e Company's underwriting profits declined during the period under review ma inly due
to the <:ontinued loss of ma rket share. The <:ompany has sine: e been restru<:tured a nd a slow recovery is anti<:ipated for the remainder of the year.
Lion Assuran<:e Compa ny:. Ug.a nda,recorded a drop in underwriting performan<:e during the period under reviewlargely due to a n inc:rease in itS<:Ia ims atio from 27% for the half year ended 30 June 2013 to 3S% for the period under review a nd write-ba<:ks of non-perfoming debtors.
blnve:stment income
The redu<:tion in investment in<:ome was due to unrea lised losses on equities arising from the under performan<:e of sto<:ks on the regiona lsto<:k e hanges.
(ii) HotEis
This business sector <:omprises Cresta Mara ka nelo a nd Cresta Holdings whi<:h provide hotelservi<:es in 9otS.va na

a nd Zambia.

June

20B

US$'000
Cresta Ma a .anelo
• Given the momentum experien<:ed in H2l 014,ali Zimbabwe insua n<:e <:ompanies a re expec:ted to rec:ord growth in premiumsand underwriting profit in ex<:essofthose recorded in FY 2013.
• lnvestment in<:ome growth is expected to be flat given the <:urrent <:onditions preva iling in the Zimbabwea n investment market.
• After a ditfkult 2013,profits at Minerva are expected to <:ontinue to grow for the rema inderof the finan<:ial year.
(ii) Hotels
• The tough trading<:onditions at the Group's dty hotels a re expec:ted to <:ontinue into H2 2014.Revpa fS a re forec:ast to be in l ine with those achieved in H2l 014 and the group wili<:ontinue to foc:us on<:ost reduction so as to ensure that profits remain above breakeven level.
• Any upturn in economie: activitywillhave a<:orresponding etfect on o<:<:upan<:ies and profits at this division. (iiiAgrochemic:als
• The Group isoptimisti<: tha t a viable elec:tric:ity taritf for Sa ble wili be fina lized during H2 2014. In a ddition it is
Earnings before interest,tax, depreciation a nd amortisation
Oeprec:iation Finan<:e<:osts lAS17 leasing<:osts
ln<:ome tax expense
Profit after tax
Cresta Ma a .anelo- share of profits (3S% etfective interest) Cresta Holdings-profit before tax
2,984 (326) (167)

(1,098) (179)

anti<:ipated that norma lpower supplies wili be restored in Q3. These wili enble the <:ompa nv to <:omplete
refurbishment of the plant so as to retum the <:ompany to its installed<:apacity.
• As part of itsstrategv to mave away from electri<:ity usage,Sa ble iS<:urrently eng.aged in investig.ations to explore the use of Coa lBed Methane a sa n alternative feedsto<:k in the manufa<:ture of Hydrogen.This study wili<:ompliment earlier feasibility studies on <:oa lg.asifkation.1t is a ntidpated that the <:hoi<:e of technologv wili be finalized after <:ompletion of this investigatoi n so that migration to a new technologv an be done
expeditiously.

5.2 Out:side of Zimbabwe investment:s

Cash generatEd from operations
Cresta Ma akanelo
Cresta Holdings
Revenue perava ilable room ( ) Average room ate( )
Cresta Ma a .a nelo's performa n<:e declined during the period under review when<:ompared to the half yea r ended :() June 2013.This was ma inly due to losses in<:ured by Cresta Golfview (Zambia) whi<:h outweighed the
6% growth in operating profits a<:hieved by the Botswana hotels.
4 FINANCIAL POSHION
4.1N et AssetValue (NAV Insurance
US$'000
(ilnsurance
• Whilst the restru<:turing<:ha rees have a lready been implemented at BIC,these a re only likely to be fullyfelt during the 201S finan<:ia lyea r. Consequently:. undenlriting profits for 2014 are a nti<:ipated to be below those
achieved in 2013.
• Ouring the year,BIC has made a na dditionalinvestment of US 1)3million in a new assodate,Continental
Reinsuran<:e 9otS.vana (Pty) Limited, a sta rt-up reinsuran<:e business that is due to <:ommen<:e operations in
September 2014. ContinentalReinsuran<:e 9otS.vana (Pty) Limited is majorityowned byContinental
Reinsuran<:e Pk,who wiliassume management responsibility.
• 91C has <:onduded an agreement with a fellow short term insurer in 9otS.Ia na, 9HIL Sure,to pur<:hase their
short tenn insua n<:e book fora n a mount of Pula 8 million.This tran.saction awa its regulatorya pprovai. This wili

add an a dditiona lannualpremium of a pproximately Pula 2S million.

• A t LAC, ma rket sha re growth is expected to <:ontinue and given <:urrent daims levels,undenlritingprofits are
forec:ast to inc:rease aver the 2013 fina ndalyear.
(ii) Hotels
• Cespite a slow start to fina nc:ialyear,oc:<:upan<:ies are forecast to i mprove a nd budgeted growth levels a re likely to beachieved.
JOJune2014
Zimbabwe lnvestments Outside Zimba b'l.ve investments
Group
NAV attributable to pa rent <:ompany

21,066

26,4 21
• Constru<:tion of a new hotela nd<:onferenc:e <:entre in 9otS.Iana is awaiting regulatorya nd munic:ipal approvals.Constru<:tion is forec:ast to <:ommen<:e during the <:ourse of Q3 in 2014

UNAUOITEOGROUPINOOME STATEMENT FOR THE HAlf YEAR ENOEO 30 JUNE 20W

30 June

20B

US$'000
l neome

31Oecember 2013
Zimbabwe lnvestments Outside Zimba b'l.ve investments
Group
NAV attributable to pa rent <:ompany
The Group's net asset value position in<:reased by S million from 60.9 miIlion at 31Oecember 2013 to 6S,9 miIlion at :() June 2014 due to profits for the yea r ( 3.4 million) and acquisition of an a dditiona lstake in MineM (2 million).
4.2 Cash and bank balances
:Kl lune 30 Oec

201A 20B

US$'000 US$'000
Zimbabwe lnvestments S,927 4,029
Outside Zimba b'l.ve investments 16,727 12,771
Group 22,6511 16,300
Cash generated from operations by the Group remained stati<: at 6.4 million.Aftera<:<:ounting for<:ash utilized in finandngactivities,theGroup'S<:ash baia ne:es in<:reasedfrom 16.8 millionat 31Oec:ember 2013to 22.7 million

a t 30June 2014.

4.3 8orrowings
9orrowires dec:reased from S8 miIlio nasa t 31Oec:ember 2013 to7,6 million at 30 June 2014. The decrease was due to loan repaymentsby Cresta Zimbabwe.
N et earned premium
Gross written premium
Cha ree in unearned premium reserve lnsuran<:e premiums <:eded to reinsurers lnvestment inc:ome
Realised
Unrealised
Hotel revenues
Fees,<:ommission and other in<:ome
Total lncome
Expenses Net<:laims Hotel<:ost of .sales
Expenses fora<:quisition of insuran<:e <:ontracts Operating and administrative expenses Totalexpenses
Profit before intEre:st andineome tax
Finan<:e<:osts
Sha re of assodates profits/(losses) Profit before income tax
ln<:ome tax expense
Profit for the period
Profit attributable tD: Owners of the pa rent Non-controlling interests

l ,.,,,

(2,787)

(14,312)

4,8cl0
1,898

2,942

7,336
4,920

DIRECTORS:S S MUTASA INON-EXECUTIVE CHAIRMAN)- G SAINSBURV 0 ICEO)- J VEZEY- F DANIELS- R N GORDON- B P NYAJEKA•- Z RANDEREE j•Ex cutlv )

Earnings per share for profit:s .ntributable toowners ofthe parent

UNAUDITED2014

Bask (cents) Diluted (cents)

June

lll14

1. 9

1.36

June

lllU

0.78

0.67

Attributable to owners ofthe parent

Retelned

Non- e:a1nlngs/ 01dun uy Non-

'"uedsha1 dlstrlbuteb (Accunlul ed sha1 hol rs' «>ntol lllng 1btel

capitel 1 1lt'S 1....., equlty ln tf'St equhy

US$'000

ASSETS

Propeny:. pia m and equipment lntangible ass s

lnvestment properties

lnvestments in associates Fina ncialinstruments lnvemories

lllU US$'000

28,S43

1,7SO

16,218

13,490

36,37S

186

1.Basis of p reparation

The Group's DirectoB a re responsible forthe prepa ran·an and fair preseman·an of the consolidated fina ncial statements.The prindpa laccounn·ng policies ofthe Group have been followed in ali materia lrespects a nd conform to lmernan·analFinancia lReportingStanda rds ("IFRS"')a nd the Zimbabwe Companies Act (Cha pter 24:03).The same

accounn·ngpolicies a nd methods of compuun·an are followed as compared with those in the prior financia lperiod. The fina ndalstatementsa re presented in United States Dalla 13 whkh is the funcn·anala nd presentan·ancurrencyof

the Group.The numbers have been rounded to the nea rest USS1,000.

Reinsurance receivables Oeferreduquisin·an expenses lnsura nce receivables

Accounts receivable

Taxan·an

Bank. and cash

Totalassets

19,320

2,376

10,6S8

10,461

36

16,800

2.Related party transactions

Transactions

lnsurance contractsto assodates lnsurance contractsthrough a n assodate

Period-end balances

June

lll14

US$'000

June

lllU US$'000

EQUITY ANO UABILITIES Capitaiand reserves

lssued sha re ca pilal

Non-distributa ble reserves

Accumulated losses

Equityattributable to owners ofthe parent

Non omrolling interests

Totalequity

Receiva ble from asscodates (insura nee contracts) 7 2

Payable to associates (insura nce contracts) 71

Key management remuner.Jtion

Short-term employee benefits 193 188

3.Capi131eJCpenditure and(Ommitments

Uabilities

Borrowings

Oeferred incarne tax liabilities

Oeferred revenue

lnvestment contracts with OPF

lnvestment contracts

Capitai penditure

Capitaicommitments far purchase of

700 467

lnsura nce contract liabilities lnsura nce paya bles

Accounts payable and provisions

property:. plant a nd equipment 1,400

Totalliabilities

Totalequity and liabilities

lnduded in the Group's asss a nd liabilin·es at 30 June 2014 are policyholderasss with a carryingamount of USS33.79S miIlion (31Oecember 2013:USS31.32S million) a nd polkyholder lia bilin·es with a ca rryingamount of USS33.79S million (31Oecember 2013:USS31.32S million).

UNAUDITED

June lllU US$'000

4.Segment information

June2014

Incame

Profit before imerest and taxan·an

Net imerest pense

Incame tax pense

Net profit

JOJune2014

Totalass s

Zimbabwe Outside Zimbabwe

lnvestment:s lnvestments Group

US$'000 US$'000 US$'000

27,890 14,018 41,908

3,646 1,273 4,919 (3681 - (3681

(6861 (4491 (1,13 1

2592 824 U16

103,274 88,026 191,300

Cash generated from operations

Nfina nce cha rge

Incame tax pa id

Net cash flow from operating activities

Ncash generated from/(used in) invesn·ngacnVin·es Ncash (used in)/ generated fram fina ncingacnVin·es Net inuease in(ash balances

Cash and cash equiva lents at the beginningof the yea r

Etfects of foreign currency tra nslan·an

Cash and(ashequivalents a't end ofthe year

7,948 (3141 (1,2301

1

5

Total liabilin·es

JunelOU Incame

(loss)/profit befare interest a nd taxan·an

Net imerest pense

Incame tax pense

Net (lossVprofit

31OecemberlOB

76,861 48,668 12 , 29

23,813 1S,13S 38,948 (4 4,341 3,886

(3141 - (3141

(421 (7671 (8091

ratU )1574 2176:1

lnduded in the Group's cash a nd cash equiva lents balance at 30 June 2014 is a cash and bank. balance attributable Totalass s

to polkyholders of USS0.223 million (June 2013:USS0.333 million). Cash generated fram operan·ansattributable Total liabilin·es to policy holders during the ha lf year under revie<1 amoumed to USS1.S81million (June 2013:USS1.208 million).

82, 91 73,622 1S6,213

9 622 3S,689 %311

5.Dividend

No dividends were decla red far the half Y2ar ended 30 June 2014.

DIRECTORS:S S MUTASA INON-EXECUTJVE CHAIRMAN)- G SAJNSBURY•jCEO)- J VEZEY- F DANJELS- R N GORDON- B P NYAJEKA•- Z RANDEREE j•Ex cutlv )

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