First Mutual scraps only $100 000 profit


First Mutual Holdings Limited (FML) will sell-off its 20 percent shareholding in Zimbabwe’s second largest hotel group, Rainbow Tourism Group (RTG), as it moves to concentrate on its core operations.

The insurance group said yesterday it had reclassified its investment in RTG, which has been posting losses since 2009, to “available for sale” from strategic investment, as it scouts for interested buyers.

“We have reclassified RTG from a strategic investment to one that is available for sale,” said chief executive officer, Douglas Hoto, during a presentation of FML’s financial results for the year ended December 31, 2015.

“We felt that we have no interest in RTG,” noted Hoto, who revealed that FML had also sold off its African Actuarial Consultants unit during the review period.

RTG has found the going tough in the dollarised environment where it has been posting losses.

Its current liabilities more than doubled during the half-year to June 30, 2015, against the backdrop of shrinkage in current assets.

The hotelier is expected to present its full-year results to December after the Easter holidays.

But its current liabilities swelled to nearly $29 million during the half year to June 30, 2015, from $13 million during the comparable period the previous year.

This was against a low current assets portfolio of $9.5 million during the half year reporting period, from $12.5 million during the prior time.

RTG also had borrowings amounting to $4 million which were also due in 2015, and had a bank overdraft funded to the tune of $1.4 million as at the half year.

Despite the dire financial situation, directors said their assessment of the group’s going concern status was positive.

During the reporting period, the group suffered an eight percent slump in revenue to $12.4 million. This was against the $13.5 million achieved during the comparable period the previous year.

It registered a $1.9 million loss during the reporting period, from a marginal profit-after-tax of US$0.1 million the previous comparable period.

Hoto said it had achieved an overall profit of $100 000 during the review period, from a loss of $5.1 million the previous year.

Gross Premiums Written for the period, at $116.1 million, was one percent above the prior year figure of $115.3 million, which improved on the back of strong performance in the health insurance business.

In the 12 months to December, First Mutual’s rental income decreased by 3 percent from $7.5 million in 2014 to $7.3 million, reflecting the current challenges faced by tenants and the resultant decline in occupancy levels and rentals per square metre.

Hoto noted that the average rental per square metre decreased from $7.86 in 2014 to $7.58 in 2015.

“The occupancy rate for the period was 79 percent compared to 80 percent in the prior year. The  claims at $67.7 million declined by $2.3 million from prior year mainly due to reduced retrenchments in the life and pensions segment and lower claims incurred for the health insurance business,” he said.

First Mutual incurred investment losses of $4.7 million in 2015 compared to investment losses of $3.8 million in 2014 in line with the downward movement in the stock market.

Hoto said the group’s investment property was independently revalued by the end of last year resulting in fair value losses of $6.6 million.

In the period under review, the group’s total assets declined by 2 percent from $213.3 million at December 2014 to $209 million by December 2015.

The insurance giant attributed the decline to the fair value loss on investment property of $6.6 million, fair value losses of $7.3 million on the listed equity investments portfolio and the $2.6 million impairment of the investment in RTG.

“The decline in total assets was, however, mitigated by net new cash flows as reflected in the increase in money market and held to maturity investments,” Hoto said.

No dividend was declared for the 2015 financial year.- The Source


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Charles Rukuni
The Insider is a political and business bulletin about Zimbabwe, edited by Charles Rukuni. Founded in 1990, it was a printed 12-page subscription only newsletter until 2003 when Zimbabwe's hyper-inflation made it impossible to continue printing.


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