Chairman Statement
Operating environment
The year 2010 exhibited a trend of (continued) stabilization in the Zimbabwean economy. Average inflation outturn for the year, at 3.1%, was well below the levels posted by other countries in the region.
The economy is estimated to have grown by 8.1% in 2010 compared to 5.7% in 2009. This was on the back of a buoyant performance by the mining and agricultural sectors, which are estimated to have grown by 47% and 34%, respectively.
Capacity recovery in the real sectors of the economy remained uneven, a situation compounded by the liquidity challenges that persisted during the year, which yielded a generally prohibitive cost of funds profile. In the absence of meaningful progress towards debt clearance, a huge external debt burden estimated at US$6.9 billion, (continued) to militate against the country’s ability to re-engage multilateral institutions and donor agencies for the much needed external funding.
Economic outlook
Growth prospects for the Zimbabwean economy will be greatly enhanced by creating a conducive investment environment, with the mining and agricultural sectors playing a major role.
The country’s Gross Domestic Product (GDP) for 2011 is projected to grow by 9.3%, whilst inflation is expected to average between 4.5% and 5%.
On the international scene, oil prices are expected to firm in reaction to the turmoil in the Middle East and North African regions which are major producers of the resource. Food prices are also expected to remain high, reflecting the impact of natural disasters on food production.
The group’s performance
The Group posted an improved operating result for the year, increasing by 104% from US$3.4 million in 2009 to US$7.0 million before loan loss provisions and transfers to the Life Fund.
The operating results reflect an enterprise that has consolidated its operations, owing to effective business growth strategies.
An International Financial Reporting Standards (IFRS) loss of US$2.6 million was recorded for the year compared to a loss of US$1.2 million in the prior year. This is largely driven by the increase in the life assurance liabilities in which an expense overrun reserve of US$5.6 million was recognised in 2010. In exercising such prudence, aggressive measures have been put in place in order to stimulate business activity in the life assurance company and significant growth is expected in the next five years.
The financial outturn is discussed in more detail by the Group Chief Executive Officer in his report.
Dividend
In view of the overall loss posted for the year, the Board of directors has decided not to declare a dividend for the year under review.
Future prospects
The need for a technical and financial partner still remains a viable strategic option for the Group which will continue to be evaluated subject to the exercise of appropriate due diligence.
Meanwhile, the number of the Company’s shares purchased through the share buy-back scheme totalled 6 230 033, which constitutes 4% of the issued share capital of the Company. The shares were purchased at an average price of US$0.08.
Litigation and other material disclosures
Judgement is still pending from the Supreme Court of Zimbabwe in the matter in which Transnational Holdings Limited is challenging the acquisition of a controlling interest in Intermarket Holdings Limited by ZB Group. Furthermore, the Group’s listing as a Specially Designated National by the Office of Foreign Assets and Control (OFAC) of the United States of America’s Treasury Department is yet to be revoked.
Acknowledgement
On behalf of the Board, I wish to thank management and staff for a sterling effort during the past year.
I also extend gratitude to the various authorities and all stakeholders for their support and hope for (continued) harmonious relations going forward.
B P Nyajeka
Chairman
26 May, 2011
Harare
