TWELVE years ago after Shingai Mutasa’s turbulent take over of TA Holdings, anyone who doubted that he will steer the ship in the right direction must be learning the importance of investment in an unstable environment from the group.
For TA Holdings, investments work when they are appropriate for the particular circumstance, but some of the best investment judgments come when people learn how investments were abandoned after incurring losses or were not directly relevant.
In 1999 Mutasa was quoted as saying: “As long as you enjoy investing, you will be willing to do the homework and stay in the game. That is why I try to make the show so entertaining, because if you are not interested, you will either miss the opportunity to make money in the market or not pay enough attention and end up losing.”
Now 10 years down the line, Mutasa has proved that to really understand a business takes years, not months.
Announcing the group’s interim results for the period ending June 30, TA Holdings said: “The confidence of the group in Zimbabwe is evidenced by the purchase of minority interest in Zimnat Lion, investment by Trans Industires in Quest Limited and the resultant investment in PG Zimbabwe”.
World markets have been constantly in a state of uncertainty and flux and money has been made by discounting the obvious and betting on the unexpected.
During the period under review TA Holding’s foreign investments recorded an operating profit of US$568 052.
The profit was driven by underwriting profit from Botswana Insurance Company (BIC) and operating profit at Cresta Hotels Limited South Africa (Cresta South Africa)
“We believe that attractive opportunities exist for expansion and acquisition in our strategic investment sector, agro-chemical, hospitality and financial services.
We remain committed to the building of a Pan African business and thank our shareholders for the continued and support in our journey,” said TA Holdings in a statement accompanying its financial results.
An investment loss of US$ 1 095 871 was recorded during the interim period. The loss was largely due to unrealised losses incurred on portfolio investments held by BIC and LAC. The asset managers are reviewing the portfolio with a view to repositioning it to take full advantage of recovery on stock markets as the global credit crunch eases.
On associate companies, profit is made up of the group’s share of profits achieved at Cresta Marakanelo Limited, Botswana (That is 40%)
Cresta Markanelo continues to perform well on the back of high occupancy levels which on overall increased in the comparative period.
In addition the refurbishment programme is proceeding well. However, occupancy rates at Mowana Safari Lodge decreased from 57% last year to 51% in the current year. This was due to decreased arrival of overseas visitors.
Local investments however incurred an operating loss of US$1 250 290 mainly as a result of operating losses at Cresta Zimbabwe and a small underwriting loss at Zimant Lion.
The underwriting losses at Zimnat Lion were largely due to depreciation charges on assets following a revaluation exercise of all property, plant and equipment. The revaluation was done to commence retaining some insurance risk instead of just acting as brokers for reinsurers.
Investment income for the half year under review amounted to US$1 035 073. This arose from the fair valuation of quoted equities. The fair value is based on the increase in values during the period February 19 (when the Zimbabwe Stock Exchange was dollarised) to June 30.
Zimnat Asset Managers, who manage the bulk of the group’s portfolio of investments had total funds under management of US$7,4 million as at June 30 2009.
The group had total assets of US$114 million as at June 30 of which 44% were local and 56% offshore.
The total group borrowing increased to US$5,3 million during the period under review. All borrowings were made by companies outside Zimbabwe and the increase was due to draw downs on loan facilities which were made to finance a joint venture investment.
The group managed to generate a positive cashflow of US$1,757 million in the period under review underpinned by a positive technical result of US$902 899 achieved at BIC. The group had net cash balances amounting to US$8,6 million as at June 3 of which US$7,5 million was with the foreign investment and the balance was with the local investments.
During the period under review, the cost of refurbishing Cresta hotels in Zimbabwe increased from US$7 million to US$9,7 million to incorporate the funding for the completion of the expansion of Churchill Arms in Bulawayo. Negotiations with financial institutions outside Zimbabwe for the funding are underway.
Paul NyakazeyaÂ Â Â