HARARE – Zimbabwean banking group, CBZ Holdings Limited (CBZ), has announced a delay in publishing its financial statements for the year ended December 31, 2023.
This delay is attributed to ongoing complications surrounding its significant stake in First Mutual Holdings Limited (FMHL).
According to a notice issued by CBZ’s Board of Directors, three primary factors are contributing to the delay.
The first one is FMHL accounting as an associate. CBZ now accounts for FMHL as an associate, requiring them to include a proportionate share of FMHL’s reserves in their own financial statements.
The second one is the First Mutual Life dispute. The unresolved “Corrective Order” issued by the Insurance and Pensions Commission (IPEC) to First Mutual Life Assurance Company (FML), a subsidiary of FMHL, is impeding the finalization of CBZ’s financials.
CBZ expresses optimism for an amicable resolution through ongoing discussions between IPEC and FMHL.
Implementation of IFRS 17: The recent adoption of the new accounting standard, IFRS 17, for insurance contracts, has necessitated the retrospective application and restatement of CBZ’s financial results for 2021 and 2022.
“This, in turn, has caused delays in finalizing the financials of CBZ’s insurance entities and other subsidiaries and associates.
The Board has assured shareholders that the financial statements will be published by no later than April 30, 2024, following an approved extension granted by the Zimbabwe Stock Exchange.
This delay comes amid the ongoing legal dispute between FML and IPEC. The dispute stems from a “Corrective Order” demanding substantial payments to policyholders based on a forensic audit by BDO Chartered Accountants.
FML vehemently contests the order, arguing that their submissions were disregarded and key issues remain unresolved.
Disagreements center on interpretations of facts, accounting standards, legal principles, and currency conversion methods. FML is seeking independent expert opinions to address these discrepancies.
While both FML and FMHL strive for an amicable solution, FML has filed a High Court application to challenge the Corrective Order.
This legal action underscores the potential impact on stakeholders, prompting CBZ to advise shareholders to exercise caution when dealing with the company’s securities.
Against this background, investors continue to face uncertainty as the legal battle unfolds.
The High Court’s ruling and the ongoing negotiations with regulators will be critical in determining the future of FML, restoring market confidence, and potentially impacting the timeline of CBZ’s financial reporting