MESSAGE FROM THE CHAIRPERSON
ECONOMIC OVERVIEW
The business environment in 2024 was characterised by subdued growth owing to the impact of the El Niño-induced drought. There were currency and exchange rate reforms following a significant loss in value of the local currency as well as attendant high inflation. GDP is expected to have registered growth of 2% for 2024 versus the initially forecasted 3.5% as the agricultural sector’s performance regressed by 15% owing to the absence of meaningful rains. Despite the agricultural sectors’ regression, growth was recorded in the information communication technology, mining, tourism and construction sectors. Thus, despite the overbearing impact of the drought, there were still growth opportunities for the FMHL financial services Group.
The ZWL currency devalued by 82% against the United States Dollar in Q1 2024 in the run up to the introduction of the ZWG currency on 5 April 2024. The ZWG was initially stable but lost 43% of its value on 27 September 2024. Thereafter the ZWG has been relatively stable, resulting in lower inflation. In the Monetary Policy Statement of 6 February 2025, the Reserve Bank advised foreign currency deposits accounted for 83% total deposits versus 17% for local currency deposits. While the use of the ZWG is increasing the informal sector appears to transact predominantly in USD cash, which undermines the tax base of the country as the current tax regime is principally based on the formal sector. The government recently introduced measures to increase the contribution of the informal sector to tax revenue. These developments may present new and significant opportunities to the Group through public private partnerships in the health and financing sectors of the economy. Overall, however, and at a national level, these macroeconomic imbalances have to be resolved for a more sustainable business and economic outlook, which would suit FMHL better given its investment exposures and subsidiary business units that depend on a better economic outlook.
The Group has maintained its strategic investment stance of towards real assets to not only hedge against potential value loss arising from exchange rate and inflation shocks, but to stabilise the volatility of its investments. Additionally, the Group is looking forward to assisting policy makers and the government in addressing national challenges through win-win partnerships for the benefit of its shareholder and policyholder funds and for the nation at large.
FIRST MUTUAL LIFE SETTLEMENT AGREEMENT
First Mutual Life Assurance Company (Private) Limited (FML) is continuing to work with the Insurance and Pensions Commission (IPEC) to bring finality to the issues that arose during the forensic audit. Following the withdrawal of the Corrective Order, FML and IPEC undertook to take certain steps to resolve the outstanding issues, including the appointment of independent experts to consider some aspects of the issues under contention. These tasks were concluded. IPEC subsequently asked FML to resubmit some information that had already been supplied, and to provide some additional information. This was done and FML now awaits feedback from IPEC, which has undertaken to respond expeditiously.
CHANGE IN FUNCTIONAL AND PRESENTATION CURRENCY
The Group recorded a steady increase in the use of foreign currency across its business units over the past 24 months in line with the general macroeconomic trends in the country. The increased dominance of the USD prompted a reassessment of functional currency across the Group’s business units in accordance with the requirements of International Accounting Standard (IAS) 21 – The Effects of Changes in Foreign Exchange (IAS 21). The Board concluded that based on the primary operating environment and the Group’s own operating activities, there had been a change in its functional currency from Zimbabwean Dollar (ZWL) to United States Dollars (USD) on 1 January 2024.
The Group has complied with the guidance of IAS 21, which directs entities operating in hyperinflationary economies to translate their last reported inflation-adjusted financial statements using the closing official exchange rate at the reporting date, to derive and present comparative financial statements under a newly assessed functional currency and presentation currency. Although the directors have applied the guidance of IAS 21 to present the comparative financial information, it is of paramount importance the following be brought to the attention of the users as compliance with IAS 21 has resulted in material distortions arising from the following.
There were significant distortions between the official exchange rate and the pricing exchange rate for goods and services during 2023, thus the translated transactions and balances will have little to no correlation to the actual USD prices for similar transactions. Absolute USD transactions and balances (non-monetary) recorded in 2023 were subjected to the hyperinflation adjustments as required by International Accounting Standard 29 – Financial Reporting in Hyperinflationary Economies. Translating these to the Group’s presentation currency has the impact of overstating the reported value of the transactions that are in a stable currency.
The Board is of the view the above factors will result in the 2023 comparative information being misleading. There was lack of consensus with auditors on the interpretation of IAS 1 – Presentation of Financial Statements paragraph 19, that the currency situation being faced (multi-currency environment and decommissioning of a hyperinflationary currency) was indeed “extremely rare” and thus required a departure from IAS 21 in compliance with the spirit of “comply or explain” as embodied by International Financial Reporting standards. The directors have always exercised reasonable due care and applied judgments they considered to be appropriate in the preparation and presentation of the Group’s financial statements; thus included at the end of this report is supplementary information, which better reflects the financial results of the business and is the basis on which management decisions are made.
FINANCIAL HIGHLIGHTS
FINANCIAL PERFORMANCE
The financial results are presented in US Dollars following the change in functional and presentation currency on 1 January 2024. The conversion of the prior year figures was done in compliance with IFRS, which may deviate from the underlying financial performance as tracked by management for decision-making purposes.
Insurance contract revenue decreased by 15% compared to 2023 performance mainly as a result of the IFRS-related distortions emanating from the fact that prior year transactions were subjected to hyperinflationary adjustments and subsequently translated to USD, using the official exchange rate that had a weak correlation to the inflation adjustment factors used, based on Total Poverty Consumption Line.
The Group incurred a loss after tax of US$27 million from a profit of US$58.7 million in the prior period. The contrasting performance for the two periods is owing to major distortions on investment property emanating from compliance with functional currency transitional guidelines as required by IAS 21. In 2023, investment property was valued in ZWL by an independent property valuer who did not necessarily make use of the official exchange rates in their valuation because of its limited use in property transactions. Translation of the ZWL investment property values to USD on 1 January 2024 resulted in the opening balance of US$178 million, which was more than the USD valuation of US$128 million for the same property as at 31 December 2024. This phenomenon resulted in the Group incurring a fair value loss on investment property of US$50.5 million. This decrease in the carrying amount of investment property is not an actual loss as it arises solely from compliance with IFRS requirements.
SUSTAINABILITY
Sustainability remains central to our value-creation and optimisation strategy, anchored in environmental, social and governance (ESG) principles. In our ongoing commitment to transparency and sustainable growth, we began our IFRS ISSB adoption journey in 2024, taking the first steps towards integrating the IFRS Sustainability Disclosure Standards (S1 and S2) into our reporting. As part of this process, we conducted a gap assessment to evaluate our current alignment, identified disclosure gaps and enhanced our 2024 reporting disclosures. The Group is currently developing a structured adoption roadmap towards full compliance in the years ahead. At the same time, we are refining our reporting against the Global Reporting Initiative (GRI) framework, identifying areas for improvement and further strengthening our ESG disclosures.
These frameworks serve distinct but complementary purposes:
- IFRS S1 provides the foundation for sustainability-related financial disclosures, focusing on material risks and opportunities that affect our resilience, financial position and strategy.
- IFRS S2 builds on S1 with climate-specific disclosures, covering governance, risk management and performance metrics such as greenhouse gas emissions.
- GRI takes a broader view of our economic, environmental and social impact, increasing transparency for a wide range of stakeholders.
The introduction of IFRS ISSB standards marks a fundamental shift in global ESG reporting, reinforcing that sustainability-related risks and opportunities are just as important as financial data. Effective collaboration between finance, sustainability and risk teams is essential to confirm complementary and fact-based disclosures that meet the ISSB’s requirements.
Our approach is strategic and phased, ensuring we strengthen our reporting practices while preparing for full compliance with leading international sustainability standards. This ongoing journey reflects our commitment to responsible corporate stewardship, long-term value creation and sustainability leadership in an evolving global landscape.
FIRST MUTUAL IN THE COMMUNITY
First Mutual Holdings Limited remains committed to transforming lives through its corporate social responsibility (CSR) initiatives, with a particular focus on providing educational support to vulnerable children. Through the First Mutual Foundation, the Company continues to offer financial assistance to students at primary, secondary and tertiary levels, ensuring they have the resources needed to pursue their academic dreams. This support includes, but is not limited to, the payment of school fees, levies, examination fees and the provision of essential learning materials such as stationery and uniforms. At the tertiary level, the programme extends to tuition, accommodation, food and upkeep fees.
During the period under review, the First Mutual Foundation proudly celebrated its 10th anniversary, marking a decade of meaningful impact in education. Over the years, the programme has significantly enhanced school attendance, retention and transition rates among beneficiaries. Many students have not only successfully completed their studies, but have also excelled in highly competitive fields such as actuarial science, data science and computer engineering. The initiative has played a crucial role in shaping well-rounded individuals, equipping them with academic qualifications, personal development opportunities and professional exposure through industry attachments and internships.
Building on this success, First Mutual Holdings Limited has expanded its scholarship programme to include five state-owned universities: the University of Zimbabwe, Chinhoyi University of Technology, the National University of Science and Technology (NUST), Midlands State University (MSU) and Bindura University of Science Education. Under this initiative, three students per university will receive financial assistance, further strengthening the Company’s commitment to supporting higher education.
Notably, five students transitioning to tertiary education in 2025 have been part of the First Mutual Foundation’s support system from primary and secondary school. Their academic achievements have earned them continued sponsorship, reinforcing the organisation’s long-term investment in nurturing future leaders.
First Mutual Holdings Limited remains dedicated to empowering vulnerable students through education, fostering brighter futures and making a lasting impact on communities.
OUTLOOK
The Group remains optimistic about future endeavours and believes developed strategies will be adequate in ensuring agility and real growth. Provision of relevant products that serve the client needs remains critical to sustainable operations.
DIRECTORATE
There were no changes to the directorate during the period under review.
DIVIDEND
On 28 March 2025, the Board resolved that a final dividend of US$1.2 million be declared from the reserves of the Company for the period ended 31 December 2024. Further details on the payment of the dividend will be communicated in a separate dividend announcement.
APPRECIATION
As we reflect on the past year’s successes and challenges, I want to extend my sincere gratitude to everyone who has played a role in our achievements. We are truly grateful for the ongoing support from our customers and will continue striving to exceed your expectations. A heartfelt thank you to our dedicated employees, whose resilience, creativity and steadfast commitment power our daily operations. Your hard work forms the foundation of our progress.
We also deeply indebted to our shareholders and partners for their continued trust and support. Your confidence in our strategy, especially as we navigate a complex landscape, allows us to pursue bold, long-term objectives.
I am also thankful to the Board of Directors and leadership team for their steady guidance and collaborative approach. Their expertise and foresight have been essential in balancing financial discipline with our sustainability goals, ensuring we stay flexible in an ever-changing environment.
Lastly, I want to thank our stakeholders and the communities where we operate for holding us accountable and motivating us to lead with purpose. Together, we are building a future where business success and societal progress go hand in hand.
This collective effort gives us hope as we look to the future. With gratitude and a shared commitment, we remain focused on delivering value, fostering innovation and maintaining the highest standards of integrity.
Amos Manzai
Chairman
5 June 2025
