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Business Reporter
FIRST MUTUAL Holdings Limited recorded an after- tax profit of US$2,4 million for the half-year ended June 30, 2013 representing a decline of 38 percent from US$3,9 million recorded the same period last year largely due to US$2 million impairment loss that the group suffered.
The loss was related to the carrying amount of the investment in the associate company, Rainbow Tourism Group, to reflect the decline in market value of this investment.
The group’s profits were also weighed down by higher claim ratios for the various insurance businesses, particularly medical insurance.
Total comprehensive profit attributable to shareholders of the parent company also declined from US$2,9 million the prior period to US$1,3 million the period under review.
In a statement accompanying the results, First Mutual chairman Mr Oliver Mtasa said the group’s financial statement grew as a result of appreciation in the value of investments and other new investments from cash generated from other business units.
“The group’s statement of financial position grew by 8 percent to US$191,2 million due to appreciation in value of investments held, new investments from cash generated from operations by the respective business units and an increase in accounts receivables while payables remained largely unchanged,” he said.
The group also achieved a gross premium income of US$52,2 million, which is 16 percent higher compared to the same period last year and significantly above the inflation rate.
Mr Mtasa added that total expenditure for the period under review increased by 34 percent from US$36 million incurred the prior period to US$48,2 million largely driven by a 34 percent surge in claims, particularly high in the health care business.
The group’s receivables grew by 37 percent to US$9,3 million which is reflective of liquidity challenges prevailing in the market while they have made adequate provisions for any outstanding balances that are considered doubtful.
The group’s total assets jumped 8 percent from US$176 million the prior period to US$191 million the period under review while investments account for the bulk of the figure while total liabilities amounted to US$27,5 million, marginally increasing by about 6 percent from US$26 million the prior period.
Going forward, Mr Mtasa added that the group’s transformation agenda is going on well, with a number of key areas targeted in order to ensure the group performs above expectation.
“The transformation agenda for the group is progressing well with focus being placed on human capital development, product innovation, cost containment and market share consolidation while our Botswana operation will continue to focus on exploiting opportunities in Southern and East Africa,” he said.
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