It is my pleasure to present the Chairman’s Statement on the performance of the FMHL Group for the half year ended 30 June, 2020.
ECONOMIC OVERVIEW
Covid-19 has had a huge and unanticipated impact on the political, social and economic structure of society across the globe. The severity of the pandemic is unprecedented in recent times and the Group has not been spared from its vagaries. When Government implemented the lockdown, the Group had to find new ways of doing business, mainly through technology, with its attendant costs and benefits.
Gross Domestic Product initially projected to grow at 3% was revised to contract by 4.5%. Negative performance is now also projected in the key industries of Mining, Agriculture, Manufacturing and Tourism. However, growth is anticipated in the Information and Communication technology, Health, and Foodstuff industries. There has been an upside on Diaspora remittances reflecting more funds finding their way into the country through formal channels as international borders remain closed to most human and vehicular traffic.
Foreign currency availability remained a constraint for doing business. The Reserve Bank of Zimbabwe (RBZ) has moved from the interbank market, to a fixed exchange rate for the second quarter of 2020 to the current Dutch auction system which appears to be finding favour with industry, if the recent stability between the auction and alternative market rate is taken as a measure.
Inflation rate remained elevated due to the pass-through effect of alternative market exchange rates and forward pricing on most goods and services with the June year-on-year rate at 737.3% (June 2019: 175.66%).
The Zimbabwe Stock Exchange (ZSE) All Share Index gained 677.45% since the beginning of the year while the ZSE Top 10 Index was up 508.24% as of 28 June 2020. When trading on the local bourse was suspended by the Ministry of Finance on 28 June 2020, the market had experienced a ‘bull run’ on the back of investors seeking to hedge assets against hyperinflation. The markets reopened on 3 August 2020. The Group, however, believes that quoted equities remain a viable long-term asset class and will continue to diversify its real assets portfolio.
FINANCIAL HIGHLIGHTS
In October 2019 the Public Accountants and Auditors Board concluded that conditions for applying Financial Reporting in Hyperinflation Economies (International Accounting Standard (IAS) 29) had been met in Zimbabwe. The historical cost financial results have been restated to take account of changes in the purchasing power of the local currency during the year.
Inflation adjusted financial results therefore represent the main financial statements with historical cost financials providing supplementary information.
SUSTAINABILITY
Sustainability is a core value of the First Mutual Group. Sustainability provides considerable integrated thinking on how to manage economic, environmental and social impact through shared values with stakeholders. The Group will include a sustainability report in the current year annual report as for the year ended 31 December 2019. The report will be prepared in line with the Global Reporting Initiatives (“GRI”) standards. The Group will continue to take constructive steps of aligning business values with sustainability while building shared values with stakeholders for long term business success.
FIRST MUTUAL IN THE COMMUNITY
First Mutual continues to contribute to the community in which it operates in various ways including offering educational assistance to selected children in need from primary school to tertiary level through the First Mutual Foundation and the First Mutual Reformed Church University Scholarship based on humanitarian need and academic merit. In addition, the Group is playing a key role in equipping university students with financial literacy education through its Future First programme. First Mutual also provides support to cancer awareness programmes and has contributed to the national effort to mitigate the impact of COVID-19 on vulnerable members of the community. Donations of non-perishables goods and clothing have been made through our Employee Corporate Social Responsibility initiative.
OUTLOOK
The Ministry of Finance and Economic Development is projecting that the economy will contract by 4.5% in 2020 on account of the adverse effects of COVID-19 and negative impact of the 2019/20 drought on agricultural production. The Group intends to continue leveraging on its diverse business portfolio as well as regional footprint to sustain a positive growth trajectory into the future. Plans are well advanced to enhance the capital positions of the Group’s businesses, in need, at home and in the region. Concerted efforts by both Monetary and Fiscal authorities should bring about price and exchange rate stability which support key growth industries as well as the economy at large. This should lay a foundation for business recovery and success.
DIRECTORATE
In line with the principles of good governance that require periodic rotation of directors and board revitalisation, Mr Oliver Mtasa stepped down as a director and Chairman of the Board with effect from 7 August 2020. Mrs Daphine Tomana, a non-executive member of the board resigned with effect from 1 August 2020. Mrs Tomana had served the Board since July 2018.
Mr Mtasa had been a board member since 2012 and Chairman of the FMHL Group since 2014. He oversaw significant growth in the Group both organic and through acquisition of a key SBU, including consolidation thereof. The Group will miss his wise and professional leadership. I would like to convey the Board’s heartfelt appreciation and best regards to Mr Mtasa and Mrs Tomana for their dedication, professionalism, hard work and invaluable contribution to the Group.
I was appointed as Chairman of the FMHL Group Board with effect from 7 August 2020.
DIVIDEND
The Board resolved that an interim dividend of ZWL20 million, being ZWL2.76 cents (two point seven six Zimbabwe cents) per share be declared from the profits of the Group for the half year ended 30 June 2020. The dividend will be payable on or about 30 October 2020 to all shareholders of the Company registered on close of business on 16 October 2020. The shares of the company will be traded cum-dividend on the ZSE up to 13 October 2020 and ex-dividend as from 14 October 2020.
APPRECIATION
On behalf of the Board, I would like to extend my gratitude to our customers, regulators and other stakeholders for their support during the period under review. We especially appreciate the commendable efforts by employees in the current difficult COVID-19 environment. Finally, I wish to thank my fellow board members for their support, open and honest contributions.
Amos Manzai
Chairman
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