Economic Environment
Overall performance
Dividend declaration
Other issues in 2004
Future prospects
 

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Chairman’s speech given at the AGM on 31 May 2005
Chairman’s speech given at the AGM on 31 May 2005
  • The economic environment
  • Overall performance of the Group
  • Dividend declaration
  • Other issues in 2004
  • Future prospects of the Group
  • The CEO will talk more about the performance of the Group and its subsidiaries.

Economic Environment
The main challenges are:

  • bringing down inflation,
  • improving foreign exchange supply and
  • implementing policies to boost industrial and agricultural production.

On an overall basis, the industrial index has outperformed inflation. Property values have increased by an average of 91 % since 31 December 2003, which is below inflation. However, property capital appreciation is expected to outperform inflation in the long run.

Performance of the Group – Historical Cost

  • The group recorded shareholders’ surplus after tax from continuing operations of $61.2 billion and a profit attributable to shareholders of $21.1 billion. This is after the transfer to policyholders of $126.7 billion, provisions of $22 billion and $18 billion in respect of investment impairment losses in Trust Holdings Limited and First Mutual Asset Management Company respectively.
  • The group recorded a growth in headline earnings per share of 202 % while the basic earnings per share grew by 8% from December 2003. The headline earnings per share exclude losses arising on discontinuing operations.

Discontinuing Operations

  • The asset management subsidiary was liquidated in July 2004 as a result of the failure by some of its debtors to perform.
  • The liquidation process is in progress and payouts will depend on the recoveries from some of its debtors which were placed under liquidation and curatorship.
  • The Group has written off its capital in and exposures to the asset management subsidiary.

First Mutual Limited
The holding company recorded a profit of $23 billion before writing off discontinuing operations. The holding company has adequate resources to recapitalise its businesses should the need arise. It is also eying opportunities in the local and regional markets.

Dividends

  • The Board declared a dividend of 100 cents per share covered 5 times by earnings after tax.
  • The dividend declaration was intended to send a positive message to the market.
  • Despite the recent challenges faced by FML, the Group remains strong and its prospects are good.

Payment of Small Dividend Cheques

  • Some shareholders have asked why they received dividend cheques for small amounts.
  • The reason is that we are obliged in terms of the Companies Act to treat all shareholders equally. Even someone holding 3300 shares is entitled to receive a dividend.

Cost Savings

Every effort was made to minimise the cost of distributing dividend cheques. Cheques were posted together with the Abridged Annual Reports, which we were obliged to send out in any event. The Abridged Annual Report was printed and packed in the most cost-effective manner achievable.

Other Issues in 2004

  • Memorandum of Understanding.
    ~FML Staff Empowerment Trust Deed signed by Trustees comprising staff and agents and the Group CEO.
  • Resumption of Trading FML shares on the ZSE.•Investigation into operations of First Mutual Life Assurance.
  • Strategic Partnership – Trust Holdings Limited.
  • First Mutual Asset Management Recoveries.

Group Image Management Campaign

  • A deliberate and sustained program for Group Image Management has commenced for all stakeholders including Shareholders, Investors, Policyholders, Regulatory Authorities, Media, Staff and Agents.
  • Training is ongoing in pursuit of:
    ~High Performing Teams
    ~Service Excellence
  • Continuous two way communication process targeted at all stakeholders to rebuild confidence and assurance.
  • Re-branding of all First Mutual properties and offices

Outlook

  • The demutualisation and listing of First Mutual has provided a way for the Group to expand into fields which would otherwise not have been possible.
  • We are confident that our investments in short term insurance, reinsurance and actuarial consultancy will reap rewards.
  • Difficult though the operating environment might be, I remain optimistic that the depth of our skills and dedication of our staff will enable shareholders to achieve acceptable returns going forward.