Source - RNS
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



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 Limited

a

 1,822

 -  


 

 

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

June 2016

US$'000

 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

June 2016

BWP'000

June 2015

Growth

Botswana Insurance Company Limited

10,041             

9,132

10%

 

Profit after tax

UGX'000

June 2016

UGX'000

June 2015

Growth

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 June 2016

Claims ratio June 2015

Combined ratio June 2016

Combined ratio June 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

June 2016

US$'000

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

June 2016

BWP'000

June 2015

Growth

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 June 2016

Occupancy June 2015

RevPAR

June 2016

RevPAR

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

June 2016

US$'000

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:

 


 

Occupancy June 2016

 

Occupancy June 2015

Debtors as %

 of revenue

 June 2016

Debtors as %

 of revenue

 June 2015

Payments to shareholders

June 2016

Payments to shareholders

June 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




June 2016

December 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 MONTHS ENDED 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 City

Hotels

Insurance

Agrochemicals

Technology

Central

Inter-segment Adjustments

Total Group

 

Six months ended 30 June 2016

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000

 










 

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 City

Hotels

Insurance

Agrochemicals

Technology

Central

Inter-segment Adjustments

Total Group

Six months ended 30 June 2015

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000

US$ '000










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 1

Level 2

Level 3

Total


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 1

Level 2

Level 3

Total


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

Related Charts

Masawra (MASA)

0.00p (0.00%)
delayed 18:15PM