Acting Chairman’s Statement
Introduction
It is my pleasure to provide this statement on the affairs of the Company.
Operating Environment
The Zimbabwean economy performed below target in 2016, with growth estimates being revised by the Ministry of Finance initially from 2.7% to 1.2%, and then subsequently to 0.6%.
The reviews were on the back of various inhibiting factors, the major ones being:
- the El-Nino induced drought which significantly reduced agricultural output;
- the depressed international commodity prices, which adversely affected mineral output and earnings; and
- the sustained strengthening of the US Dollar against the South African Rand, the currency of Zimbabwe’s major trading partner, which added to the erosion of the competitiveness of the local manufacturing sector and promoted over-reliance on imports at the expense of local products.
Structural bottlenecks, including power shortages, antiquated machinery and equipment and deteriorating infrastructure have all contributed to economic deceleration.
The country’s economy remained in a deflationary mode with year-on-year inflation in December 2016 being recorded at -0.93%.
The equities market rallied in the Fourth Quarter of 2016 to result in a year-on-year increase in the industrial index of 26.3% from 2015, while the mining index rose by 119.9%.
The shortage of bank notes and the resultant payments log-jam had negative consequences on efforts to sustain confidence in the financial sector.
Financial Performance
Against the background of an increasingly difficult operating environment the Group posted a full year profit of $11.4m for the year ended 2016.
Outlook
The removal of the Group from the listing of Specially Designated Nationals maintained by the Office of Foreign Assets Control (OFAC) of the United States Treasury Department on 4 October, 2016 is a major milestone that will open trading opportunities in international markets. Restoration of foreign business activities has so far advanced satisfactorily.
Meanwhile, substantial progress has been made in resolving the long-standing dispute between the Company and Transnational Holdings Limited (THL), a former controlling shareholder of Intermarket Holdings Limited (IHL). THL has been challenging the acquisition of IHL by the Group since 2007. The resolution framework, brokered by the Government of Zimbabwe, will see THL emerging as a significant shareholder in the Company, taking over a substantial part of the shareholding previously held by the Government.
The above developments augur well for the development and maintenance of confidence in the Group. A strategic re-orientation program is underway and should see the Group strengthening its capacity going forward.
Directorate
Messrs T P B Mpofu, E Munemo, E Hamandishe and Ms T I Chirisa resigned from the Board in October, 2016. On behalf of the Board, I would like to thank them for their contribution to the affairs of the Group during their term. I wish them success in their future endeavours.
The Board welcomes and looks forward to the positive contribution of Mr M Mahachi, Prof. Z Muranda, Mr N M Vingirai, Mr O Matizanadzo and Dr J D G Nhavira who all joined the Board in the second half of 2016 as well as Mr S Bvurere who joined in February 2017.
Conclusion
I would like to thank our staff, management, clients and other stakeholders for their support during the period under review.
P B Nyoni
Acting Chairman
2 March, 2017
