10 April 2011

Zimbabwe: Kingdom Relisting Imminent

KINGDOM Financial Holdings board will be seeking shareholder approval at its forthcoming extraordinary meeting for the relisting of its shares on the Zimbabwe Stock Exchange.

The relisting of the company follows the finalisation of the demerger process from Meikles Limited after all outstanding conditions were met.

The demerger would be finalised through the issue of a dividend in specie of two Kingdom shares for every Meikles share held.

Kingdom chairperson Ms Sibusisiwe Bango said the board was cognisant of the significance of listing company shares and they would seek approval to do so.

"Work on the relisting of the company has already commenced and shareholders will be advised of the model and timetable immediately after securing shareholder approval," said Ms Bango.

At the EGM, directors are also expected to recommend a recapitalisation plan for approval by shareholders as the group seeks to inject new capital and capitalise its operations.

"The group's capitalisation efforts are underway to ensure injection of new capital by shareholders before the end of the fourth quarter of 2011," she said.

Following the cession of US$12,5 million to Meikles Limited, Kingdom Bank remained with an interim non-compliance with the Reserve Bank of Zimbabwe minimum capital and capital adequacy requirement.

"The board and shareholders have been working hard to ensure that the bank situation is redressed within the shortest possible time," added Ms Bango.

However, Kingdom Asset Management and Kingdom Stockbrokers are in compliance with the minimum regulatory capital requirements.

During the financial period ended December 31, 2010 Kingdom posted a net profit of US$5 million, reversing a loss of US$1,1 million recorded in the prior year.

Kingdom's performance, on the back of improved contribution from its Zimbabwean operations, has laid the groundwork for the diversified financial services group to strengthen its capital base and expand following the successful demerger.

Ms Bango said the results show the resilience of the group's operating subsidiaries and strategies that were implemented to sustain operations.

As in the first half, Kingdom's performance was underpinned by Zimbabwean operations, which contributed 85 percent of total profit before tax.

Net interest margin was a positive 53 percent compared to 88 percent in prior year, mainly due to an increase in the use of more wholesale funds, which are costly, to fund the lending book.

Interest expense as a proportion of interest income, however, worsened from 12 percent to 47 percent.

Meanwhile, the Reserve Bank last week authorised Interfin Banking Corporation to operate as a commercial bank.

Interfin took over a controlling stake in CFX Financial Services after shareholders undersubscribed the group's US$10 million rights offer

It later took over the liabilities of CFX and transferred the assets into Interfin, resulting in the group reverse listing on the Zimbabwe Stock Exchange as Interfin Financial Services early last year.

Prior to the merger, Interfin was operating as a merchant bank.

In a statement, the Reserve Bank said Interfin Banking Corporation has been authorised to commence business as a commercial bank from April 5 this year after conducting pre-opening inspection.

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