Botswana Insurance Holdings Limited darkened the mood of its investors on Friday when it broke the news that the sale of stake in its Zambian subsidiary in 2011 will leave a hole in its full year results for 2012.
The titanic diversified insurance giants said it expects the group results for the year ended 31 December 2012 to be lower than those reported for the year ended on 31 December 2011.
The move follows tough new laws in Zambia that forced Botswana Insurance Fund Management (Bifm), BIHL asset management division to downscale its shareholding in African Life Financial Service of Zambia (ALFSZ) to 49 percent from 71 percent.
“As communicated at half year end, 30 June 2012, the decrease is partly as a result of the concluded sale of a 21 percent stake in the Zambia business in April 2011 in line with regulatory requirements in that country,” BIHL, headed by Gaffar Hassam, said in a cautionary.
“The sale of this business resulted in a profit of P33 million reported last year, which will not be repeated this year. In addition, the continued economic pressure on individual households is affecting their savings ability,” the company added.
ALFSZ is now accounted as results from Zambia not as results from associates.
BIHL added that the volatility in financial markets has also resulted in unrealised investment losses, which have had a net negative effect of approximately P42 million, compared to the previous year.
“However, the board is pleased to note that results for the core businesses continue to be satisfactory and that due to an increased stake in an associate, results from associates are significantly higher than for the same period last year,” it said.
BIHL will release detailed results to 31 December 2012 around 05 March 2013.
The announcement follows the Botswana Stock Exchange’s Listings Requirements which forces listed companies to announce through the BSE and the press any circumstances or events that have, or are likely to have, a material effect on the financial results of the company for the period to be reported upon next.
BIHL group is the parent company to Botswana Life, Bifm and BIHL Sure.