FIRST Mutual Holdings Limited (FMHL) profit after tax increased by 44% to $4,3 million in the five months ended May 31 on the back of a growth in investment income.
BY FIDELITY MHLANGA
In the same period last year, profit after tax was $3 million.
Total investment income surged to $5,5 million during the period from -$581 000 in the comparable period in 2017.
The increase in profit after tax comes despite a 2% drop in gross premium written at $47,9 million from $49 million recorded during the same period last year mainly due to less premium cash collections.
FMHL group chief executive officer, Douglas Hoto said difficult points were in short-term insurance where the premium income was lower than planned for the first five months and difficulties in collection.
“With policies being turned into monthly, quarterly and annual policies, cash is not coming as we expected,” he said at the company’s 14th annual general meeting on Wednesday.
The company’s net earned premium declined to $44,3 million from $44,9 million recorded in the comparable period last year.
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While occupancy levels remained stagnant at 72% compared to last year, rental income went down to $2,6 million from $2,8 million, with Hoto attributing the decline in rental income to reduced rates which decreased by at least 10%.
“The rental income decline is mainly attributed to the negotiations we have with some of the tenants because of the difficult operating environment. Generally, the rental deductions are at 10%. Net letting has improved as compared to last year,” Hoto said.
Operating profit declined to $2,7 million from $3,1 million in the same period last year.
Hoto said the company was subdividing some of its property to accommodate the small-to-medium enterprises so as to minimise the impact of voids.
He said FMHL was monitoring the situation at RTG which may affect the value of 19,8% shareholding the group holds in the hospitality company.
“There was a judgment against one of their [RTG] creditors which may affect the value of shares we hold. We hold those shares at a market value as available for sale investments and we are monitoring the situation. We believe that since we own our shares, we are watching that such that when anything happens we will advise our stakeholders around that. We own 19,8% shares in RTG which carry a value of about $3,4 million,” he said.
The annual general meeting endorsed $108 611 paid as directors’ fees for the past year, as well as the remuneration of $411 995 paid to PricewaterhouseCoopers Chartered Accountants (Zimbabwe) for the past audit.
FMHL is a diversified group with subsidiaries such as First Mutual Wealth, First Mutual Health, Pearl Properties, First Mutual Life and Tristar Insurance.
