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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Masawara | LSE:MASA | London | Ordinary Share | JE00B42XFD25 | ORD USD0.01 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 24.00 | 23.00 | 25.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMMASA
RNS Number : 2228L
Masawara Plc
30 September 2016
30 September 2016
Masawara plc ("Masawara", the "Company" or the "Group")
Interim results for the six months ended 30 June 2016
Masawara, an investment company focused on acquiring interests in companies based in Zimbabwe and the southern African region, is pleased to announce its unaudited results for the half year ended 30 June 2016.
The Company's interim financial statements for the half year ended 30 June 2016 may be viewed on, or downloaded from, the Company's website at www.masawara.com.
Contact details
Masawara plc
(Masawara Zimbabwe (Private) Limited, the Company's Investment Advisor in Zimbabwe)
Rutendo Maziva/Oliver Lutz
+263 4 751805
Cenkos Securities plc (Nominated adviser and broker)
Nicholas Wells/Elizabeth Bowman/Harry Hargreaves
+44 20 7397 8900
Financial review
The Directors present the interim unaudited results for the six-month period ended 30 June 2016. The results for the six-month period ended 30 June 2016 are set out in the financial statements on pages 7 to 17.
Performance
The Group achieved a profit after tax of $2.3 million for the half year ended 30 June 2016 compared to a profit after tax of $6.1 million during the same period last year. The prior year's results do not include the performance of Sable Chemical Industries Limited ("Sable"), which was an associate until 24 June 2015 when a change in control resulted in the business being consolidated as a subsidiary. A bargain purchase gain of $5.2 million was recognised in the prior year results. After taking into account once -off items and unusual transactions in the current and prior years, the adjusted profit after tax increased from $317,000 to $4.1 million in the six months ended 30 June 2016.
Consolidated unaudited proforma income statement for the six months ended 30 June 2016
Hot Features
Premium
June
2016 June 2015
---------- ---------- -------
Unaudited Growth
---------------------- -------
US$ '000 US$ '000
INCOME
Gross insurance premium revenue 41,459 40,318 3%
Insurance premium ceded to reinsurers
on insurance contracts (14,789) (16,193) -9%
----------------------------------------------- --- ---------- ---------- -------
Net insurance premium revenue 26,670 24,125 11%
Fees and commission income 10,325 10,096 2%
Hotel revenue 6,697 6,770 -1%
Manufacturing revenue a 4,133 - -
Rental income from investment properties 780 990 -21%
----------------------------------------------- --- ---------- ---------- -------
Net total revenue 48,605 41,981 16%
Gain on bargain purchase of Sable -
Chemical Industries Limited - 5,206
Investment income 2,861 4,442 -36%
Unwinding of financial guarantee
- Telerix Communications (Private)
Limited 231 242 -5%
Other operating income a 1,599 969 65%
----------------------------------------------- --- ---------- ---------- -------
Total other income 4,691 10,859 -57%
EXPENSES
Insurance claims and loss adjustment
expense (13,629) (16,900) -19%
Insurance claims and loss adjustment
recovered from insurers 849 4,763 -82%
----------------------------------------------- --- ---------- ---------- -------
Net insurance claims (12,780) (12,137) 5%
Expenses for the acquisition of insurance
contracts (5,307) (6,600) -20%
Hotel cost of sales (2,591) (2,659) -3%
Manufacturing expenses a (3,455) - -
Property expenses (804) (720) 12%
Operating and administrative expenses a (22,466) (21,861) 3%
Net realised and unrealised losses (166) (875) -81%
Total net insurance claims and operating
expenses (47,569) (44,852) 6%
Finance costs a (1,933) (1,115) 73%
----------------------------------------------- --- ---------- ---------- -------
Profit before share of profit of
associates and tax 3,794 6,873 -45%
Share of profit of other associates 45 453 -90%
----------------------------------------------- --- ---------- ---------- -------
Profit before tax 3,839 7,326 -48%
Income tax expense (1,564) (1,203) 30%
----------------------------------------------- --- ---------- ---------- -------
Profit for the period 2,275 6,123 -63%
----------------------------------------------- --- ---------- ---------- -------
Add back impact of Sable Chemical 1,822 -
Limited a
Add back non-recurring items:
Gain on bargain purchase of Sable
Chemicals Limited b - (5,206)
Interest income on loan notes c - (1,800)
Impairment of Telerix Communications
(Pvt) Ltd loan notes d - 1,200
Adjusted profit before tax e 4,097 317 1,192%
----------------------------------------------- --- ---------- ---------- -------
Notes
a. These are the line items affected by the inclusion of Sable's results in 2016. Sable was consolidated from 24 June 2015 and had no impact on the prior year's results. Included in other operating income, administrative expenses and finance costs are $1.0 million, $3.1 million and $494,000 respectively, related to Sable.
b. The gain on bargain purchase was as a result of the Group taking control of Sable on 24 June 2015.
c. The interest income on the Telerix Communications (Pvt) Ltd loan notes did not recur in the current year as the loan notes were fully impaired in December 2015.
d. An impairment loss was realised on the Telerix Communications (Pvt) Ltd loan notes in the prior year.
e. The unusual and significant non-recurring items in 2016 and 2015 have been excluded to arrive at the adjusted profit before tax.
Group's performance by segment
Masawara Plc, classifies the Group's business units into different clusters i.e. insurance, hotels, agrochemicals, property (Joina City) and technology for the purpose of monitoring the operating results of business units and resource allocation to business units. The following shows the Group's performance by segment:
Insurance
Most of the insurance sector companies registered growth in profit after tax when compared to the same period in the prior year. This was primarily as a result of the lower claims ratios across all businesses and the introduction of new products in the life assurance business. Minerva Risk Advisors Private Limited also registered strong growth in the healthcare broking line. For the rest of the year, the insurance segment is expected to continue to register growth compared to the previous year, albeit at a lower rate.
Profit after tax US$'000 US$'000
June 2016 June 2015
---------------------------------------- ----------- -----------
Botswana Insurance Company Limited 915 948
Lion Assurance Company (Uganda) 562 753
Zimnat Lion Insurance Company Limited
(Zimbabwe) 897 444
Zimnat Life Assurance Group (Zimbabwe) 2,729 1,535
Grande Reinsurance Company (Zimbabwe) 777 146
Minerva Risk Advisors Private Limited
(Zimbabwe) 878 683
6,757 4,509
--------------------------------------- -------------
For the companies operating in Botswana and Uganda, the results in their functional currencies of Botswana Pula (BWP) and Ugandan Shillings (UGX) were as follows:
Profit after tax BWP'000 BWP'000 Growth
June 2016 June 2015
---------------------------- ----------- ----------- -------
Botswana Insurance Company
Limited 10,041 9,132 10%
Profit after tax UGX'000 UGX'000 Growth
June 2016 June 2015
------------------------ ----------------------- ----------- -------
Lion Assurance Company
(Uganda) 1,899,907 2,268,166 -16%
The key performance ratios of the insurance businesses for the six months were as follows:
Claims ratio Claims ratio Combined Combined
June 2016 June 2015 ratio June ratio June
2016 2015
----------------------------- ------------- ------------- ------------ ------------
Botswana Insurance Company
Limited 55% 57% 93% 100%
Lion Assurance Company
(Uganda) 30% 35% 84% 91%
Zimnat Lion Insurance
Company Limited (Zimbabwe) 42% 43% 84% 88%
Zimnat Life Assurance
Company (Zimbabwe) 25% 29% 70% 78%
Grande Reinsurance Company
(Zimbabwe) 22% 25% 73% 81%
Hotels
The performance of the Zimbabwe hotels incurred a loss after tax in the current year, albeit a 24% improvement on the prior year. There was significant rate cutting in the Zimbabwe hotel market, resulting in a decline in revenue per available room (RevPAR) in order to protect market share. Cresta Marakanelo registered growth in profit after tax, driven by improved profitability of the resort hotel Cresta Mowana, which was at break even during the prior year. The hotel segment is expected to register limited growth for the full year ending 31 December 2016, as a result of the competitive environment in Zimbabwe.
Profit/(loss) after tax US$'000 US$'000
June 2016 June 2015
------------------------------------- ----------- -----------
Cresta Hotels (Private) Limited
(Zimbabwe) (232) (307)
Cresta Marakanelo Limited (Group's
35% share) 456 320
----------- -----------
224 13
----------- -----------
Cresta Marakanelo Limited (Botswana
and Zambia) 1,303 914
Profit after tax BWP'000 BWP'000 Growth
June 2016 June 2015
--------------------------- ------------------- ----------- -------
Cresta Marakanelo Limited
(Botswana and Zambia) 14,296 8,808 62%
The key performance indicators of the hotel businesses for the half year were as follows:
Occupancy Occupancy RevPAR RevPAR
June 2016 June 2015 June 2016 June 2015
----------------------------- ----------- ----------- ----------- -----------
Cresta Hotels Private
Limited (Zimbabwe) 53% 52% $37 $43
Cresta Marakanelo (Botswana
and Zambia) 60% 62% $54 $49
Agro chemicals
Profit/(loss) after tax US$'000 US$'000
June 2016 June 2015
----------------------------------- ----------- -----------
Sable Chemical Industries Limited (1,822) (1,504)
ZFC (Group's 22.5% share) (577) 95
(2,399) 1,409
----------- -----------
Sable became a subsidiary of the Group on 30 June 2015, prior to that date Sable was accounted for as an associate. The Group's share of Sable's losses for the six months ended 30 June 2015 were not recognised in the Group's accounts as the investment in Sable was impaired. The Sable electrolysis plant was decommisioned during the last quarter of the previous financial year, and has in the current year, moved to a new business model relying on the importation of ammonia in order to manufacture ammonium nitrate fertiliser. The business was under care and maintenance during the period under review. It sold a significant portion of the inventory carried forward from the prior year. Sable has raised some working capital finance and production is expected to recommence during October of 2016. Efforts to raise additional financing are ongoing.
Joina City
Joina City continued to be affected by the liquidity challenges in the market, which in turn had an impact on debtors' collections for the period. Major refurbishments were commenced at Joina City during the first six months of the year hence the non-payment to shareholders in the current period. The remainder of the year will see the completion of the refurbishments with improved occupancies anticipated in 2017. Emphasis will be placed on improving debtors' collections.
The key performance indicators of Joina City for the six months were as follows:
Debtors Debtors Payments Payments
Occupancy Occupancy as % as % to shareholders to shareholders
June June of revenue of revenue June 2016 June 2015
2016 2015 June June
2016 2015
--------- ------------ ------------ ------------ ------------ ----------------- -----------------
Joina
City 60% 62% 28% 22% - $450,000
Group's
share n/a n/a n/a n/a - $179,918
Technology
In July 2015 regulatory approvals were obtained for the merger of the operations of Dandemutande, (a wholly owned subsidiary of Telerix Communications (Private) Limited ("Telerix")), iWay Africa (an associate of the Group) and Africa Online. The merger resulted in an increased revenue base and a broader product and service offering. The business registered a 164% growth in earnings before interest, tax, depreciation and amortization (EBITDA) compared to the same period last year, on the back of the cost rationalization that began after its merger. The strategies employed have moved the business from a loss to a profit position at EBITDA level. The Directors believe the business is now on a firm foundation to grow organically and in-organically through market consolidations.
The Group did not recognize its share of Telerix results for the six months, as the Group's investment in Telerix was reduced to $nil during the year ended 31 December 2012.
Cash flow for the six-month period
The Group recorded an overall increase in cash and cash equivalents of $3.2 million from December 2015. $1.4 million was generated from operating activities, $0.6 million was generated from investing activities and $1.0 million was generated from financing activities.
Net cash flows used in investing activities was mainly attributable to the following investing activities:
-- Cash outflow of $3.5 million for the purchase of investment property and an outflow of $0.6 million for the acquisition of property, plant and equipment;
-- $2.6 million proceeds received from the disposal of an interest in a subsidiary; and -- net cash inflow of $2.2 million from the sale of financial instruments.
Financial position
Total assets increased from $288.2 million as at 31 December 2015 to $297.8 million as at 30 June 2016. The Group had cash and cash equivalents of $29.1 million as at 30 June 2016 (31 December 2015: $25.9 million). Total liabilities increased from $188.6 million as at 31 December 2015 to $193.8 million as at 30 June 2016. The net asset value per share attributable to equity holders of the parent as at 30 June 2016 was $0.64 (31 December 2015: $0.61).
Principal risks and uncertainties
The principal risks and uncertainties affecting the business relate to the political and economic environment of Zimbabwe, where the investments are predominantly held. There is a further risk that investments made by the Group will not result in the envisaged cash generation or capital appreciation. This risk is managed by the careful evaluation of all proposed investments, with detailed due diligence work being undertaken, before any investments are made and ongoing monitoring of existing investments.
There is a risk that the illiquidity of the Zimbabwean equity and bond markets may affect the valuation of the Group's investment in investment properties in the short to medium term. The prevailing liquidity challenges in Zimbabwe may also affect the Group's ability to remit dividends from the Zimbabwean operations to the off-shore holding companies and the Masawara Plc shareholders. The operating entities may also experience significant delays in remitting payments to offshore suppliers, which may have an adverse impact on the businesses.
The economic conditions in Zimbabwe have continued to deteriorate, and this is not expected to improve during the rest of the current financial year. The Group's management will continue to focus on finding opportunities to grow and increase
market share. The property segment and the investments in listed equities are expected to be adversely affected by the prevailing conditions in the Zimbabwe market, with possible fair value losses being recorded during the second half of the financial year.
Going concern
Management have prepared cash flow forecasts indicating that there is adequate operating cash for the period to December 2017. The Directors reviewed the cash flow forecasts prepared by management when assessing the ability of the Group to continue operating as a going concern. Based on the review of the Group's cash flow forecasts, the Directors believe that the Group will have sufficient resources to continue to trade as a going concern for a period of at least 12 months from the date of approval of these financial statements and accordingly, the financial statements have been prepared on the going concern basis.
Unaudited interim consolidated income statement for the six months ended 30 June 2016
June 2016 June 2015
------------- -------------
Unaudited
----------------------------
US$ '000 US$ '000
INCOME
Gross insurance premium revenue 41,459 40,318
Insurance premium ceded to reinsurers
on insurance contracts (14,789) (16,193)
-------------------------------------------- ------------- -------------
Net insurance premium revenue 26,670 24,125
Fees and commission income 10,325 10,096
Hotel revenue 6,697 6,770
Manufacturing revenue 4,133 -
Rental income from investment properties 780 990
-------------------------------------------- ------------- -------------
Net total revenue 48,605 41,981
Gain on bargain purchase of Sable
Chemical Industries Limited - 5,206
Investment income 2,861 4,442
Unwinding of financial guarantee
- Telerix Communications (Private)
Limited 231 242
Other operating income 1,599 969
-------------------------------------------- ------------- -------------
Total other income 4,691 10,859
EXPENSES
Insurance claims and loss adjustment
expense (13,629) (16,900)
Insurance claims and loss adjustment
recovered from insurers 849 4,763
-------------------------------------------- ------------- -------------
Net insurance claims (12,780) (12,137)
Expenses for the acquisition of insurance
contracts (5,307) (6,600)
Hotel cost of sales (2,591) (2,659)
Manufacturing expenses (3,455) -
Property expenses (804) (720)
Operating and administrative expenses (22,466) (21,861)
Net realised and unrealised losses (166) (875)
Total net insurance claims and operating
expenses (47,569) (44,852)
Finance costs (1,933) (1,115)
-------------------------------------------- ------------- -------------
Profit before share of profit of
associates and tax 3,794 6,873
Share of profit of other associates 45 453
-------------------------------------------- ------------- -------------
Profit before tax 3,839 7,326
Income tax expense (1,564) (1,203)
-------------------------------------------- ------------- -------------
Profit for the period 2,275 6,123
-------------------------------------------- ------------- -------------
Profit for the year attributable
to:
Equity holders of parent 2,104 4,673
Non-controlling interests 171 1,450
-------------------------------------------- ------------- -------------
Profit for the period 2,275 6,123
-------------------------------------------- ------------- -------------
June 2016 June 2015
US$ US$
Earnings per share
Basic earnings per share 0.02 0.04
Diluted earnings per share 0.02 0.04
Unaudited interim consolidated statement of other comprehensive income for the six months ended 30 June 2016
June 2016 June 2015
---------- ----------
Unaudited
----------------------
US$'000 US$'000
Profit for the period 2,275 6,123
Other comprehensive income, net tax:
Items that may be subsequently reclassified
to profit or loss
Exchange differences on translation
of foreign operations 317 (2,449)
Change in value of available-for-sale
financial assets (11) (4)
---------------------------------------------- ---------- ----------
306 (2,453)
Total comprehensive income for the
period 2,581 3,670
---------------------------------------------- ---------- ----------
Total comprehensive income attributable
to:
Equity holders of parent 2,334 3,146
Non-controlling interests 247 524
---------------------------------------------- ---------- ----------
Total comprehensive income for the
period 2,581 3,670
---------------------------------------------- ---------- ----------
Interim consolidated statement of financial position as at 30 June 2016
December
June 2016 2015
---------- ---------
Unaudited Audited
---------- ---------
US$'000 US$'000
ASSETS
Non-current assets
Property, plant and
equipment 34,724 35,503
Intangible assets 3,349 3,660
Investment properties 50,344 46,832
Investment in associates
and joint venture 12,528 12,593
Financial assets 48,358 52,285
Deferred tax asset 1,080 1,080
Total non-current assets 150,383 151,953
---------------------------------- ---------- ---------
Current assets
Inventory 10,700 13,999
Reinsurance assets 23,512 23,910
Deferred acquisition
costs 4,273 2,966
Insurance receivables 19,317 13,927
Trade and other receivables 60,527 55,529
Cash and cash equivalents 29,102 25,912
---------------------------------- ---------- ---------
Total current assets 147,431 136,243
---------------------------------- ---------- ---------
Total assets 297,814 288,196
---------------------------------- ---------- ---------
EQUITY AND LIABILITIES
Share capital 1,235 1,235
Share premium 80,102 80,102
Treasury shares (232) (232)
Group restructuring
reserve (9,283) (9,283)
Other reserves (3,718) (3,999)
Non-distributable reserve (65) 370
Revaluation reserve (241) -
Retained earnings 11,146 7,205
Equity attributable to equity
holders of the parent 78,944 75,398
Non-controlling interest 25,028 24,221
Total equity 103,971 99,619
---------------------------------- ---------- ---------
Non-current liabilities
Financial liabilities 18,604 17,412
Deferred tax liabilities 8,103 7,989
Investment contracts 34,015 33,012
Total non-current liabilities 60,722 58,413
---------------------------------- ---------- ---------
Current liabilities
Financial liabilities 19,421 19,083
Insurance contract liabilities 53,144 48,841
Deferred income 1,684 1,395
Income tax liability 166 220
Insurance payables 5,677 3,749
Provisions 1,772 5,032
Trade and other payables 51,257 51,844
Total current liabilities 133,121 130,164
Total liabilities 193,843 188,577
---------------------------------- ---------- ---------
Total equity and liabilities 297,814 288,196
---------------------------------- ---------- ---------
MASAWARA PLC
Interim consolidated statement of changes in equity for the six months ended 30 June 2016
Attributable to the equity holders of the parent
US$ '000
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ------------
Share Share Treasury Group Retained Other Non Revaluation Total Non-controlling Total
Capital Premium Shares Restructure Profit/ Capital Distributable Reserve Interest Equity
Reserve (Loss) Reserve Reserves US$'000 US$'000
Balance at 1 January
2015 (audited) 1,235 80,110 (333) (9,283) 13,547 35 (695) - 84,616 18,897 103,513
Profit for the
period - - - - 4,673 - - - 4,673 1,450 6,123
Other comprehensive
income for the
period - - - - - (1,527) - - (1,527) (926) (2,453)
--------------------- ----------- ------------------- ---------------- --------------------- ----------- -------------- ------------------------ --------------------- --------------- ---------------- ------------
Total comprehensive
income for the
period - - - - 4,673 (1,527) - - 3,146 524 3,670
--------------------- ----------- ------------------- ---------------- --------------------- ----------- -------------- ------------------------ --------------------- --------------- ---------------- ------------
Dividend paid - - - - - - - - - (119) (119)
Share based payment
transactions - - - - - 74 - - 74 - 74
--------------------- ----------- ------------------- ---------------- --------------------- ----------- -------------- ------------------------ --------------------- --------------- ---------------- ------------
Total contributions
by and
distributions
to owners of the
parent recognized
in equity - - - - - 74 - - 74 (119) (45)
--------------------- ----------- ------------------- ---------------- --------------------- ----------- -------------- ------------------------ --------------------- --------------- ---------------- ------------
Additional
non-controlling
interest - Sable - - - - - - - - - 5,003 5,003
Purchase of
additional
shares in TA
Holdings - - - - (1,293) - - - (1,293) (8,859) (10,152)
Reserves transfers - - - - (404) (236) 422 - (218) 239 21
--------------------- ----------- ------------------- ---------------- --------------------- ----------- -------------- ------------------------ --------------------- --------------- ---------------- ------------
Total changes in
ownership interests
that do not result
in change in
control - - - - (1,697) (236) 422 - (1,511) (3,617) (5,128)
--------------------- ----------- ------------------- ---------------- --------------------- ----------- -------------- ------------------------ --------------------- --------------- ---------------- ------------
Balance at 30 June
2015 (unaudited) 1,235 80,110 (333) (9,283) 16,523 (1,654) (273) - 86,325 15,685 102,010
--------------------- ----------- ------------------- ---------------- --------------------- ----------- -------------- ------------------------ --------------------- --------------- ---------------- ------------
Balance at 1 January
2016 (audited) 1,235 80,102 (232) (9,283) 7,205 (3,999) 370 - 75,398 24,221 99,619
Profit for the
period - - - - 2,104 - - - 2,104 171 2,275
Other comprehensive
income for the
period - - - - - 281 - - 281 75 356
--------------------- ----------- ------------------- ---------------- --------------------- ----------- -------------- ------------------------ --------------------- --------------- ---------------- ------------
Total comprehensive
income for the
period - - - - 2,104 281 - - 2,385 246 2,631
--------------------- ----------- ------------------- ---------------- --------------------- ----------- -------------- ------------------------ --------------------- --------------- ---------------- ------------
Dividend paid - - - - - - - - - (880) (880)
--------------------- ----------- ------------------- ---------------- --------------------- ----------- -------------- ------------------------ --------------------- --------------- ---------------- ------------
Total contributions
by and
distributions
to owners of the
parent recognized
in equity - - - - - - - - - (880) (880)
--------------------- ----------- ------------------- ---------------- --------------------- ----------- -------------- ------------------------ --------------------- --------------- ---------------- ------------
Sale of share of
Botswana Insurance
Company to minority
interests - Note
3.1 - - - - 1,885 - (483) (241) 1,161 1,441 2,602
Reserves transfers - - - - (48) - 48 - - - -
Total changes in
ownership interests
that do not result
in change in
control - - - - 1,837 - (435) (241) 1,161 1,441 2,602
--------------------- ----------- ------------------- ---------------- --------------------- ----------- -------------- ------------------------ --------------------- --------------- ---------------- ------------
Balance at 30 June
2016 (unaudited) 1,235 80,102 (232) (9,283) 11,146 (3,718) (65) (241) 78,944 25,028 103,971
--------------------- ----------- ------------------- ---------------- --------------------- ----------- -------------- ------------------------ --------------------- --------------- ---------------- ------------
Unaudited interim consolidated statement
of cash flows
for the six months ended 30 June
2016 June 2016 June 2015
---------- ----------
Notes Unaudited
----------------------
US$'000 US$'000
Cash flows generated from operating
activities 4 934 1,437
Investment income received 2,769 2,762
Finance costs paid (1,826) (526)
Income tax paid (509) (830)
---------------------------------------- ------ ---------- ----------
Net cash flows generated from
operating activities 1,368 2,843
Cash flows from investing activities
Purchase of property, plant and
equipment (634) (1,476)
Purchase of financial instruments (10,939) (14,373)
Proceeds from sale of financial
assets 13,119 13,447
Loans issued to investee companies (140) (993)
Proceeds from repayment of loans
granted to related parties 100 29
Purchase of investment property (3,502) -
Purchase of intangible assets (10) -
Disposal of interest in subsidiary 3.1 2,602 -
Proceeds on disposal of equipment - 195
Purchase of non-controlling interests'
shares in TA Holdings Limited - (6,740)
Acquisition of subsidiary, net
of cash acquired - 3,823
Deferred consideration payment
to Minet Group - (1,194)
Net cash flows generated from/(used
in) investing activities 596 (7,282)
Cash flows from financing activities
Proceeds from borrowings 1,875 11,526
Dividend paid (880) (119)
Repayment of loans - (788)
Net cash flows generated from
financing activities 995 10,619
Net effect of exchange rate movement
on cash and cash equivalents 231 (434)
Net increase in cash and cash
equivalents 3,190 5,746
Cash and cash equivalents at 1
January 25,912 18,300
---------------------------------------- ------ ---------- ----------
Cash and cash equivalents at 30
June 29,102 24,046
---------------------------------------- ------ ---------- ----------
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHSED 30 JUNE 2016
1 Corporate information
Masawara Plc ("the Company") is an investment company incorporated and domiciled in Jersey, Channel Islands, whose shares are publicly traded on the London Stock Exchange's AIM. The company is managed in Jersey and its registered office is located at Queensway House, Hilgrove Street in St Helier, Jersey.
The Group interim financial statements consolidate those of the Company, its subsidiaries and the Group's interest in associates and a joint venture (together referred to as "the Group").
The investment portfolio of the Company has five reportable segments which are listed below:
-- The Joina City segment which comprise of the Group's largest investment property that leases retail and office space at the Joina City building which is located in Harare, Zimbabwe's largest capital city.
-- The hotels segment which comprises of the Group's interest in Cresta Zimbabwe (Private) Limited and Cresta Marakanelo Limited.
-- The insurance segment comprise of the Group's investment in insurance businesses i.e. Zimnat Life Assurance Company Limited and its subsidiaries and joint venture, Zimnat Lion Insurance Company Limited, Grand Reinsurance (Private) Limited, Botswana Insurance Company Limited, Lion Assurance Company Limited and Minerva Risk Advisors (Private) Limited.
-- The agrochemicals segment which comprise of the Group's investment in Sable Chemical Industries Limited and Zimbabwe Fertlizer Company Limited.
-- The technology segment comprising Telerix Communications (Private) Limited, a company that is licensed to construct, operate and maintain public data internet access and Voice Over network in Zimbabwe.
2 Basis of preparation
The interim consolidated financial statements for the six months ended 30 June 2016 have been prepared in accordance with International Accounting Standard ("IAS") 34 Interim Financial Reporting as adopted by the European Union.
The interim consolidated financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group's Annual Financial Statements for the year ended 31 December 2015, which have been prepared in accordance with IFRSs as adopted by the European Union. The interim consolidated financial statements have been drawn up using accounting policies and presentation consistent with those applied in the audited accounts for the year ended 31 December 2015, except as described as below.
A number of amendments to IFRSs became effective for the financial year beginning on 1 January 2016 however the Group did not have to change its accounting policies or make material retrospective adjustments as a result of adopting these new standards. The amendments to IFRS effective for periods beginning on 1 January 2016 are as follows:
-- Annual improvements 2012-2014 (Amends IFRS 5, IFRS 7, IAS 19, IAS 34) -- Amendments to IFRS 11 - Accounting for acquisitions of interests in joint ventures
-- Amendment to IAS 16 and IAS 38 - Clarification of acceptable methods of depreciation and amortisation
-- Amendments to IAS 16 and IAS 41 - Agriculture: Bearer plants -- Amendments to IAS 27 - Equity method in separate financial statements -- Amendments to IAS 1 - Disclosure initiative
-- Amendments to IFRS 10 and IAS 28 - Investment entities: Applying the consolidation principle (Not yet EU endorsed as of 1 May 2016)
Estimates
In preparing these interim financial statements, the significant judgments made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 December 2015.
Going Concern
Management prepared cash flow forecasts indicating that there is adequate operating cash for the period to December 2017. In assessing the liability of the Group to continue as a going concern, management carried out sensitivity analysis on the cash flow assumptions to reflect a range of other reasonably possible outcomes and concluded that Masawara will be able continue as a going concern. The Directors reviewed the cash flow forecasts prepared by management when assessing the ability of the Group to continue as a going concern. The Directors believe that the Group will have sufficient resources to continue to trade as a going concern for a period of at least 12 months from the date of approval of the financial statements and accordingly, the financial statements have been prepared on the going concern basis.
3 Significant events
The following significant events that have a material effect on the financial statements of the Group took place during the six months period ended 30 June 2016.
3.1 Disposal of interest in a subsidiary without change in degree of control (Botswana Insurance Company Limited)
On 24 January 2016, the Group disposed of a 15% interest out of its 62% interest held in Botswana Insurance Company Limited (BIC) at a consideration of $2.6 million. The carrying amount of non controlling interests in BIC on the date of disposal was $6.5 million (representing 35% interest). The transaction resulted in an increase in non controlling interests of $2.8 million and decrease in equity attributable to owners of the parent of $0.2 million. The effect of changes in ownership interest of BIC is summarized as follows:
US$ '000
Consideration received from non controlling
shareholder 2,602
Carrying amount of interest disposed to
non controlling shareholder (2,804)
---------
Loss on change in degree of control (202)
---------
3.2 Acquisition of additional interest in a subsidiary without change in degree of control (Lion Assurance Company Limited)
On 24 January 2016, the Group acquired an additional 31% interest in Lion Assurance Limited (LAC) for no consideration. The Group now holds 86% of the equity share capital of LAC. The carrying amount of non controlling interests in LAC on the date of disposal was US$ 1.9 million (representing 43% interest). This resulted in a decrease in non controlling interests and an increase in equity attributable to owners of the parent of US$ 1.4 million both. The effect of changes in ownership interest of LAC is summarized as follows:
US$ '000
Consideration paid to non controlling shareholder -
Carrying amount of interest disposed by
non controlling shareholder (1,363)
---------
Gain on change in degree of control (1,363)
---------
3.3 Net impact of transactions with non controlling shareholders on the Group's equity
US$ '000
Decrease in shareholding in BIC
Decrease in non distributable reserve (1,846)
Decrease in revaluation reserve (241)
Increase in retained earnings 1,885
---------
Net loss on change in degree of control (202)
---------
3.3 Net impact of transactions with non controlling shareholders on the Group's equity (continued)
US$ '000
Increase in shareholding in LAC
Increase in non distributable reserves 1,363
Gain on change in degree of control 1,363
---------
4 Cash generated from operating activities
June 2016 June 2015
Unaudited
-------------------
US$'000 US$'000
Profit before tax 3,839 7,326
Adjustments to reconcile profit before tax to net cash
flows from operating activities:
Share of profit of associates
and joint venture (45) (453)
Unwinding of a financial guarantee
- Telerix Communications (231) (242)
Investment income (2,861) (4,409)
Finance cost 1,933 1,115
Depreciation and amortization 1,127 1,017
Amortization of intangible assets 352 -
Loss on disposal of investments 65 -
Net realized and unrealized
losses 166 -
Gain on bargain on purchase
of Sables Chemical Industries - (5,206)
Impairment of financial assets - 1,249
Loss on disposal of property,
plant and equipment - (33)
Fair value gain on financial
instruments - (374)
Share-based payment transaction
expense - 271
Working capital adjustments:
Decrease in inventory 3,299 72
Decrease/(increase) in reinsurance
receivables 776 (2,107)
Increase in deferred acquisition
costs (1,272) (624)
Increase in insurance receivables (5,087) (4,516)
Increase in trade and other
receivables (3,940) (10,013)
Increase in loans to Directors
and employees (441) (72)
Increase in insurance contract
liabilities 4,054 5,602
Increase in insurance liabilities 1,253 2,728
Increase/(decrease) in deferred
income 289 (66)
Increase in insurance payables 2,230 1,664
(Decrease)/increase in trade
and other payables (4,572) 8,508
--------------------------------------------------------- -------- ---------
Cash generated from operating
activities 934 1,437
--------------------------------------------------------- -------- ---------
5 Segment information
The chief operating decision maker i.e. the Chief Executive Officer, the Chief
Operating Officer and the Chief Financial Officer classifies the Group's business
units into different clusters i.e. hotels, insurance, technology, agrochemicals
and properties for the purpose of monitoring the operating results of business
units and resource allocation to business units. The basis of segmenting business
units into different clusters is consistent with the same basis described
in the Group's financial statements for the year ended 31 December 2015.
Joina Hotels Insurance Agrochemicals Technology Central Inter-segment Total
City Adjustments Group
Six months US$ '000 US$ US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
ended '000
30 June 2016
Net insurance
premium
revenue - - 26,808 - - - (138) 26,670
Fees and
commission
income - 11,633 - 1,496 (2,804) 10,325
Hotel revenue - 6,697 - - - - - 6,697
Manufacturing
revenue - - - 4,133 - - - 4,133
Rental income
from
investment
properties 821 - - - - - (41) 780
--------- --------- ---------- -------------- ----------- ----------- -------------- ----------
Total revenue 821 6,697 38,441 4,133 - 1,496 (2,983) 48,605
--------- --------- ---------- -------------- ----------- ----------- -------------- ----------
Profit/(loss)
before
tax and
equity
accounted
earnings (247) (231) 7,775 (1,494) - 4,355 (6,364) 3,794
Equity
accounted
earnings - 521 101 (577) - - - 45
Profit/(loss)
before
tax (247) 290 7,876 (2,071) - 4,355 (6,364) 3,839
--------- --------- ---------- -------------- ----------- ----------- -------------- ----------
As at 30 June
2016
Segment assets 32,402 31,235 190,255 35,914 282 77,870 (70,144) 297,814
--------- --------- ---------- -------------- ----------- ----------- -------------- ----------
Segment
liabilities (6,695) (11,143) (131,313) (26,334) - (43,997) 25,639 (193,843)
--------- --------- ---------- -------------- ----------- ----------- -------------- ----------
Joina Hotels Insurance Agrochemicals Technology Central Inter-segment Total
City Adjustments Group
Six months US$ '000 US$ US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
ended '000
30 June 2015
Net insurance
premium
revenue - - 24,610 - - - (485) 24,125
Fees and
commission
income - 9,748 - 1,567 (1,219) 10,096
Hotel revenue - 6,770 - - - - - 6,770
Rental income
from
investment
properties 1,030 - - - - - (40) 990
--------- --------- ---------- -------------- ----------- ----------- -------------- ----------
Total revenue 1,030 6,770 34,358 - - 1,567 (1,744) 41,981
--------- --------- ---------- -------------- ----------- ----------- -------------- ----------
Profit before
tax
and equity
accounted
earnings 211 6,089 (308) 5,206 - (3,305) (1,020) 6,873
Equity
accounted
earnings - 20 373 60 - - - 453
Profit/(loss)
before
tax 211 6,109 65 5,266 - (3,305) (1,020) 7,326
--------- --------- ---------- -------------- ----------- ----------- -------------- ----------
As at 31
December
2015
Segment assets 32,375 32,219 171,568 46,628 282 86,128 (81,004) 288,196
--------- --------- ---------- -------------- ----------- ----------- -------------- ----------
Segment
liabilities (6,501) (10,713) (119,594) (34,977) - (44,759) 27,967 (188,577)
--------- --------- ---------- -------------- ----------- ----------- -------------- ----------
6 Financial assets fair value hierarchy
As detailed per the 31 December 2015 annual report, the fair value hierarchy at which a fair value measurement is categorized is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety.
The following table provides the fair value measurement hierarchy of the Group's financial assets that are carried at fair value.
There have been no transfers between Level 1, level 2 and level 3 during the period.
30 June 2016
Level Level Level Total
1 2 3
US$ '000 US$ '000 US$ '000 US$ '000
Available for sale
* Debt securities - 655 - 655
Financial assets at
fair value through
profit or loss
* Equity securities 23,306 - 4,217 27,523
--------- --------- --------- ---------
Total assets 23,306 655 4,089 28,178
--------- --------- --------- ---------
31 December 2015
Level Level Level Total
1 2 3
US$ '000 US$ '000 US$ '000 US$ '000
Available for sale
* Debt securities - 374 - 374
Financial assets at
fair value through
profit or loss
* Equity securities 23,989 - 3,780 27,769
--------- --------- --------- ---------
Total 29,447 374 3,780 28,143
--------- --------- --------- ---------
7 Events after the reporting period
There were no subsequent events or transactions that required recognition or disclosure in the consolidated financial statements.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR PGUCUBUPQGGB
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September 30, 2016 02:00 ET (06:00 GMT)
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