CHAIRMAN’S STATEMENT
Operating Environment
In its Global Economic Prospects report published on 9 January 2018, the World Bank estimated the global GDP growth to have peaked from 2.4% in 2016 to 3% in 2017, above the June 2017 forecast of 2.7%, underpinned by a broad-based recovery encompassing more than half of the world’s economies. A substantial acceleration in global trade strengthened export growth in most emerging market and developing economies (EMDEs). Future global growth challenges are likely to emerge from the subdued capital deepening, slowing productivity growth and less favourable demographics in developed nations.
Meanwhile, the Government estimates that the Zimbabwean economy grew by 3.7% in 2017, significantly higher than the projection of 2.8% made by the World Bank in June 2017. Growth in 2017 was on the back of an upswing in the mining sector and a buoyant performance in the agricultural sector. The mining sector grew by 8.5% in 2017, taking advantage of a modest recovery in international prices for most minerals. Interventions by Government to capacitate small scale miners boosted production in the gold and chrome sectors whilst measures to stem out leakages would have assisted the statistics. On the other hand, the Agricultural Sector is estimated to have grown by 14.6% in 2017 on the back of a good 2016/17 rainy season and the command agriculture stimulation program undertaken by Government.
The local monetary environment remained unstable for most of the year with cash shortages and backlogs in foreign remittances having persisted, the resultant general apprehension being a boon for pricing malpractices thus inducing cost pressure on business.
With simmering inflationary pressure from widespread pricing distortion, the stock exchange emerged as a value hedge with the market capitalisation having increased by 140.14% on a year-on-year basis as at 31 December, 2017, despite a significant 18.87% retreat in the last quarter. This rally was despite a reduction in industry capacity utilisation from 47.4% in 2016 to 45.1% in 2017 as reported by the Confederation of Zimbabwean Industries.
Inflation closed the year at 3.46% compared to a negative 0.93% measured on a year-on-year basis.
Financial Results
The Group has maintained a positive performance trend, posting a net profit of $15.5m for the year under review. The results are discussed in more detail in the Group Chief Executive’s report.
Dividends
In line with the Group’s dividend policy, the Board has declared a final dividend of 1.83 US cents per share for the year ended 31 December 2017.
Dividend payment dates will be advised to members in a separate announcement in due course.
Governance
I am glad to report that the Group has substantially complied with the Corrective Order issued by the Reserve Bank of Zimbabwe on 7 March, 2017 dealing with corporate governance matters. Formal lifting of the order is pending a review by the regulator.
Litigation
In the 2016 Annual Report the then Acting Chairman reported substantial progress in the resolution of the long-standing dispute between ZB Financial Holdings Limited (the Company) and Transnational Holdings Limited (THL) relating to the ownership of Intermarket Holdings Limited (IHL), an 84.26% subsidiary of the Group. In May 2016, the Government of Zimbabwe, then a significant shareholder in the Company at 24.65%, offered as full settlement a significant part of that shareholding, equivalent to 19.79%, to THL as part of a resolution framework that envisaged a further allocation of an additional 6.21% from the Company.
The request to allocate additional shares from the Company was rejected by members at the last Annual General Meeting. The legal challenge by THL on the acquisition of IHL by the Company has therefore remained outstanding at the Supreme Court where it has been since 2008.
The Board is assessing various mechanisms for the resolution of this matter.
Directorate
Mr. A Mangwiro was appointed to the Board in the last quarter of 2017.
Outlook
The Group welcomes sentiments attributed to policy makers, fiscal and monetary authorities seeking to engender financial stability and to improve business confidence in the country. The Group pledges its support and will position itself to play a significant part in the economic renaissance.
Conclusion
I extend gratitude to all our stakeholders and customers for their support during the year under review.
I would also want to thank fellow Board colleagues, management and staff for their dedication and effort in producing a pleasing result for the year.
Prof. C Manyeruke
Chairman
15 February, 2018
