23rd Sep 2015 09:57
LONDON (Alliance News) - Masawara PLC on Wednesday said its pretax profit rose considerably in the first half of 2015 after it began generating revenue streams through new investments.
The investment company focused on opportunities in Zimbabwe and the southern Africa region reported a large rise in pretax profit in the first six months of 2015 to USD7.3 million from USD4.4 million a year earlier.
That was the result of revenue rising to USD42.0 million in the half compared to only USD999,000 a year earlier. A year ago, the company only derived revenue from rental income and from its property portfolio.
Revenue in the period included net revenue from insurance premiums of USD24.1 million, fees and commission income of USD10.1 million, and hotel revenue of USD6.8 million, whilst rental income experienced a slight drop to USD990,000.
However, the company also booked a series of new costs that were not present a year ago.
The company booked a USD12.1 million net loss on insurance claims, USD6.6 million in costs of acquiring new insurance contracts, and USD2.7 million in cost of sales for the hotel division. None of those costs were present last year.
Alongside that, operating and administrative expenses multiplied to USD21.9 million from only USD4.9 million, and finance costs increased to USD1.1 million from USD243,000.
The company has two major investments. Masawara upped its stake in investment company TA Holdings Ltd to 100% in the period, boosting earnings. TA Holdings contributed a USD9.0 million profit after tax, compared to USD3.4 million a year ago, after it purchased a majority stake in Sable Chemicals Industries Ltd at what Masawara called "bargain" price of USD5.2 million in April.
In addition, the improved results were due to the fact that all the companies within the TA Holdings Group achieved better-than-prior-period results with the exception of the hotel operator Cresta Zimbabwe, it said.
"Following the acquisition of TA Holdings in December 2014, the group embarked on an in-depth strategic review and restructure of the entire group portfolio. The restructure is ongoing and once complete, revenues and operations are expected to improve as a result of streamlining activities, consolidation of duplicated activities and engagement of strategic technical partners," said Masawara.
Retail building company Joina City, in which it holds a 40% stake, contributed a USD211,000 in earnings to Masawara, which was flat from a year earlier. The occupancy level at the company's retail unit fell 14% year-on-year and its office tower occupancy fell 43% year-on-year, it said.
"The decrease in the retail occupancy was due to termination of leases for defaulting tenants. The office occupancy decreased due to the termination of a lease by one of the tenants and the office space is yet to be taken up," said Masawara.
Masawara shares were down 2.0% to 49.0 pence per share on Wednesday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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