ZimRe Holdings Limited (ZIMR.zw) HY2019 Interim Report

We have extracted a Chairman’s Statement from the 2019 half year interim report for ZimRe Holdings Limited (ZIMR.zw), listed on the Zimbabwe Stock Exchange:

my pleasure to present the financial statements for ZimRe Holdings Limited (“ZHL” or “the Company”) and its subsidiaries (together “the Group”) for the period 1 January to 30 June 2019. The financial statements were prepared in accordance with the new reporting and functional currency, the Zimbabwean Dollar (“ZWL”) which came into effect on 24 June 2019 following the issuance of Statutory Instrument 142 of 2019, and other Statutory Instruments, directives and guidelines on the ongoing currency reforms in Zimbabwe.

Operating Environment



The Zimbabwean economy continued to regress on account of a poor agricultural season, power and foreign currency shortages, subdued performance of the mining sector, rapid devaluation of the ZWL leading to increased costs of key imports, sharp rise in inflation which peaked at 175.66% in June 2019, limited external support, inadequate infrastructure and depressed market confidence. These headwinds continue to hamper productivity and depress economic growth which is forecasted between -2% and -5.1% in 2019.



Notwithstanding the negative impact of cyclones Idai and Kenneth at the beginning of the year, the Mozambican economy is expected to grow by 4% in 2019, propelled mainly by improved investor confidence, increased output in coal mining and investments into the natural gas projects.


The mining sector in Botswana is expected to experience a slowdown resulting in a 3.9% muted growth in 2019.


The Malawi economy is forecast to grow by 4% in 2019 on account of improvements in agricultural output, improving industrial base and return of donor support. Recent political disturbances following the May 2019 disputed elections are headwinds that might impact on the projected economic growth.

Zambia The Zambian economy is expected to register muted growth of 3.1% in 2019 on account of reduced agricultural output, lower copper prices, rising inflation and a precarious debt position.

Group Performance Summary

The change in the currency regime from multi-currency to ZWL, has impacted on the reporting of the Group’s financial position and performance for the half year ended 30 June 2019. Given the disparities between the requirements of local legislation as enshrined in Statutory Instrument 33 of 2019 and International Accounting Standards (“IAS”) 21, ‘The effects of changes in foreign exchange rates’, the Board resolved that relative comparison to 2018 performance be undertaken with caution to users of these financial statements.

The Group recorded overall profitability in the six months anchored by profitability at ZimRe Property Investments (Private) Limited (“ZPI”) following fair value gains on revaluation of investment property (driven by change in reporting currency), rental reviews and US$ denominated revenue from sale of inventory property. Significant business growth in reinsurance also contributed positively, particularly in the Mozambican operation. Limiting factors were however noted in the domestic environment where businesses were adversely affected by the rising operational costs in line with surging inflation and erosion of consumer disposable incomes.

Statement of comprehensive income

Total Income

Total income was ZWL167.1 million (2018: ZWL14.9 million) on account of the continued business growth in the reinsurance operations especially in the regional subsidiaries which contributed 68% of the premium written, and letting of high value rental space by ZPI.

Total Expenditure

Claims and expenses amounted to ZWL40.6 million in 2019 (2018: ZWL14.2 million). Increase in total expenditure was largely driven by inflationary factors and foreign currency exchange losses in the domestic environment and negative claims experience in Zambia and Malawi.

Profit for the period

The Group posted a profit of ZWL117.6 million in the period under review driven by profitability at ZPI, domestic insurance operations and the Group’s associates as well as positive claims experience.

Total Comprehensive Income for the Period

At ZWL185.6 million (2018: ZWL0.99 million), total comprehensive income is attributed to the exchange differences on the translation of foreign operations, fair value gains on financial assets, gains on property and equipment revaluations, and share of comprehensive income of associates. The significant gains reflect the hidden values that existed before the change in functional currency where a rate of 1:1 (ZWL: USD) was applied before the introduction of the inter-bank rate.

Statement of Financial Position

As at 30 June 2019, total assets were ZWL433.5 million on the back of the revaluation of properties and monetary assets. Shareholders equity was at ZWL194.6 million on the back of profitability, the acquisition of additional stake in ZPI, revaluation of properties and change of functional currency.

Update on Significant Matters

Further to our communication in the 2018-year end report, I would like to update stakeholders on the following significant matters.

Emeritus International Capital Raise

The Group is currently undertaking the identification and shortlisting of potential investors as well as obtaining the requisite Zimbabwean regulatory and shareholder approvals. The capital raise is expected to unlock the full potential of the regional operations in terms of growth and performance after competitive capital has been raised.

CFI Holdings Limited (“CFI”)

CFI remains suspended from trading on the ZSE as the governance issues highlighted by the regulatory authorities have not yet been finalised. It is however, pleasing to note that the retail operations of the CFI Group continued to register strong performance and profitability in the half year ended 31 March 2019. A Scheme of Arrangement has been approved by the creditors (of which CFI Holdings Limited was amongst) of Agrifoods. Zimbabwe United Passenger Company Private Limited “ZUPCO” Significant traction has been achieved with respect to discussions with government in examining the strategic options with regard to ZHL’s investment in ZUPCO.


There were no changes to the directorate in the period under review.

Interim Dividend

The Company’s dividend policy states that the Company’s ability to declare and pay dividends is based on the Company’s level of profitability after providing for contingent liabilities and reserves. After a detailed consideration of the above policy, the Company’s growth strategy and the uncertainty in the economy, the Board has considered it prudent not to declare an interim dividend for the half year ended 30 June 2019.

Outlook and Strategy

Group – wide
Despite the macro-economic challenges in the Zimbabwe economy and need to assess the impact of the fiscal and monetary policies being implemented to stimulate business performance and foreign investor confidence, the Group has gathered momentum in implementing business growth strategies premised and focused on the following: –

  • Pursuing the speedy conclusion of the Emeritus International capital raise so as to capacitate its operations to perform to their full potential.
  • Growing and strengthening the group balance sheet through mergers and acquisitions, exploiting group synergies, as well sweating the existing assets to drive growth.
  • Restructuring and realigning the property portfolio into property classes with high value lettable space value
  • Operationalising and restructuring the private equity fund and make investments in key sectors of agriculture, tourism and financial services.

With increasing fear of the re-emergence of hyperinflationary conditions in Zimbabwe and a volatile exchange rate, cost control and value preservation continue as key focus areas for the Group.


The Board appreciates and pays tribute to the management and staff for their efforts in navigating through the difficult business environment especially in the domestic market. I would also like to thank all the Board members throughout the Group for their unwavering support and commitment, wise counsel and vision in taking the Group forward. Finally, I wish to thank the shareholders and stakeholders of the ZHL Group.

B.N. Khumalo