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Chairman's Statement - 2012

26 March 2013


The Group has continued on its recovery path to delivering steady earnings and cash flow growth to shareholders underpinned by solid business models in all its investee companies.The results for the year to December 2012, which are covered in greater detail in the CEO’s report (Review of Investments on pages 7 to 11) show that during the year operating profits grew by 238% whilst cash generated from operations increased by 111% compared to last year. In addition, 2012 was the first year in which all insurance companies within the Group achieved underwriting profits.

These results were achieved in an environment where tighter economic conditions both in Zimbabwe and outside made for a harsher trading environment.Looking ahead, the Group will continue to focus on strengthening its businesses in Zimbabwe and outside to ensure growth in the short to medium term as follows:

a) Insurance
The insurance business is made up of two distinct areas: underwriting and investments. In underwriting, the focus is on growing premiums without compromising on underwriting profitability. In order to achieve this, the insurance companies are putting greater emphasis on customer service,prompt claims settlement, product development and widening distribution channels. In Zimbabwe the insurance industry still shows signs of growth but the rate of growth is slow mainly in sympathy with the economy. Focus will therefore be on developing new products, especially in the micro insurance area and expanding distribution channels, mainly bank-assurance.
In Botswana the economy is stagnating and there is pressure to reduce rates in view of the increased competition. Focus will therefore be on maintaining our customer base through improved customer service.On the investment side, a review of the Group’s Zimbabwe property portfolio has been completed
and a number of property development projects will be implemented in the coming years with the aim of increasing rental yield levels. In addition, I am pleased to advise that Mr Tony Fisher joined the Group in January 2013 as the Managing Director of Zimnat Asset Managers to drive growth in the Group’s Zimbabwe investment portfolios.

b) Hotels
The objective in hotels is to refurbish the hotels in Zimbabwe and grow the number of rooms under the Cresta brand both in Zimbabwe and the region.

The refurbishment of the Cresta Lodge in Harare is underway and should be completed towards the end of the third quarter of 2013. Mindful of the anticipated increase in tourist arrivals in the future, Cresta Zimbabwe negotiated for the lease and management of the Sprayview Hotel in Victoria Falls and gives the Group a footprint in one of the key tourist resorts in Africa. This brings the total number of hotels under Cresta Zimbabwe to five.

In Botswana, Cresta Marakanelo has added a further 64 rooms after the opening of Cresta Mahalapye which is 200km from Gaborone on the road to Francistown and brings the total number of hotels under Cresta Marakanelo to nine.

c) Agrochemicals
In my 2011 Statement I informed you of Sable Chemicals’ intention to close the electrolysis plant and to embark on a fertilizer manufacturing model which was predicated on imported ammonia. However, in view of the unprecedented increases in global ammonia prices in 2012, a model based
on full ammonia importation is no longer viable.Consequently, Sable will continue using the electrolysis plant to manufacture ammonia whilst engaging the Government and Zimbabwe Electricity Supply Authority (ZESA) to secure a viable electricity tariff. In the meantime Sable is also continuing
with its efforts to change ammonia production technology within the next five years. On the coal gasification project, coal samples from the Sengwa fields were sent to China to establish the design for the coal gasifier. This has now been completed
and the suitable gasifier is under design.


As advised last year, the Group’s investment in PG Industrie has been targeted for disposal. However, due to the deteriorating situation at PG, the Board resolved to fully impair the investment in this asset. The process to divest out of ZFC Limited is still underway and, as highlighted in 2011, this process will be protracted and complicated.

External Auditors
In line with a resolution that was passed at the last Annual General Meeting (AGM), the Board appointed Messrs PricewaterhouseCoopers as external auditors of the company with effect from 1 January 2013. A resolution will be presented to shareholders at the forthcoming AGM on 27 June 2013 to ratify the appointments of Messrs PricewaterhouseCoopers.

Messrs Hassam Abdul Gaffer Bhadella and Shabir Randeree retired from the Board on 27th June 2012. I would like to thank the two gentlemen for their invaluable contributions to the Board over the years.

On behalf of the Board, I wish to thank management and staff for their effort during the past year. I also wish to thank the various stakeholders and all authorities for their continued support.

Thank you

Shingai Mutasa
Non-Executive Chairman
TA Holdings Limited
26 March 2013