Southview Park to boost Fidelity profit

LISTED Insurance firm Fidelity Life Assurance of Zimbabwe (Fidelity) has forecasted a US$30 million profit performance in the current year ending December 2014 buoyed by the group’s Southview Park low cost high density housing development scheme, the company says.

Taurai Mangudhla

Presenting the company’s annual results for the full year to December 2013 at an analysts briefing held in the capital this week, Fidelity MD Simon Chapereka said the company’s primary focus for 2014 was development of the South view Park project.

“This year we are expecting US$30 million profitability, US$21 million coming from the Southview park Project,” Chapereka said, adding the project was a huge game changer.

He said shareholders had assigned one of the company’s senior staff, former FD German Mushoma, to head the project full time.

Chapereka said 2000 out of the total 5950 stands available for sale had already been sold with another 1,500 expected to be sold by year end either on cash or installments. Presold stands have raked in US$4,5 million in revenues so far.

The company announced a subdivision permit has been issued by the City of Harare while topographical and impact assessment surveys had been completed and approved. The company expects to receive US$32,4 million in revenues in the current year from the sale of stands and US$4,3 million interest income.

Chapereka said for 2015 the company has budgeted US$31 million income from stand sales and US$5,5 million in interest income.
Between 2016 and 2022, Fidelity expects to get US$63 million from stand sales and US$25 million from interest income.

In terms of total profitability, the Southview park project is expected to bring in US$57,2 million net profit to the group by 2022.

Chapereka said a cadastral survey was also performed and completed adding 70% of equipment required for development was purchased.

“We have already paid for equipment to be used for development of Southview Park and the first batch of machinery is already at the site. We want to start developing by end of this month and the second batch of machines will arrive soon,” he said.

Chapereka said Southview Park project has been granted a prescribed asset status by the Ministry of Finance with the company planning to issue a US$5 million bond in the coming few weeks. Proceeds from the bond will be used to develop Southview Park.

Apart from the low cost housing scheme, Fidelity sees business opportunities coming from the increasing informalisation of the economy. Chapereka said the company was developing products to suit the informal economy.

He also said the group would take advantage of the existing low inflation trends which make business planning and budgeting easier, although there are fears of deflation is setting in.

Group FD Benard Bare said total comprehensive income stood at US$4,8 million up from US$4,1 million in the prior year.

The performance was after adding US$2,3 million classified as other comprehensive income, consisting of a revaluation of owner occupied properties and foreign exchange differences.

He said gross premiums went up by only 3% to US$14,5 million because of liquidity challenges that have seen employers failing to pay premiums and individuals cancelling their policies.

“Individual life business reduced by 12% to US$2,8 million as a result,” Bare said, adding group business and funeral assurance income contributed US$9,1 million and US$2,5 million to put total income at US$ 18,9 million, 7% down from US$20,3 million reported last year.

Total expenses for the period went down 14% to US$12,6 million, leaving an underwriting surplus of US$6,2 million. In 2012 the underwriting surplus stood at US$5, 6 million.

Investment income however slid 16% compared to 2012 at US$5,7 million.

Total assets jumped to US$58, 9 million, up from US$48 million in the prior year after a significant growth in current assets to US$27 million from US$22,8 million and investment properties from US$21,2 million from US$15,7 million in 2012.

The company’s share price went up 8% to US13 cents while its net asset value per share went up 46% to US13 cents.

One thought on “Southview Park to boost Fidelity profit”

  1. farai says:

    Is this their core business? What happens in the years they don’t have stands to sell? They bought the land for $3million, plan to spent $11million developing it and expect a profit of $21million! That’s not business but speculation and I wouldn’t put too much money into this operation.

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