OK Zimbabwe has reported an improved set of results for the half year ended 30 September 2016. The Group recorded a 2.3% growth in revenue to $218.6 million at a time the market was expecting a drop.The growth in revenue was on the back of ongoing cash shortages which resulted in an apparent shift towards POS purchases, a phenomenon which benefited formal retailers at the expense of informal and less sophisticated outlets. The mix between cash sales and POS which used to be 70% cash and 30% POS has now shifted dramatically to 80% POS purchases. With the market also expecting shortages of basic commodities there has also been pockets of price increases which saw internal inflation improving to a negative 1.34% from a negative 4.5% prior year comparative. We believe this also helped in the revenue increase. EBITDA was up 34.3% to $7.3 million while profit for the period increased to $2.3 million up 87.1% from $1.2 million with the Group benefiting from efficient procurement, while operating costs were managed down to $15.8 million from $16.5 million prior year comparative. Basic earnings per share was at 0.2 cents up from 0.11 cents prior year comparative. Going forward management said the Group will continue to focus on securing product supply to ensure adequate offering for its customers as well as on cost containment initiatives to achieve profitable operations. – LES believes it is too soon to read much into the recovery. We believe the Group is still at the mercy of macro-economic and exogenous factors that may sway results either way. We would urge investors to Hold and see how the current monetary (read bond notes), economic and social developments play out.
Barclays Bank of Zimbabwe managing director George Guvamatanga says the soon-to-be-introduced bond notes were a temporary measure to ease current challenges and not a solution to Zimbabwe’s macro-economic challenges.“The bond notes are necessary for the current problems, but there is need to come up with long term solutions to the economy,” Guvamatanga said at the Institute of Chartered Accountants of Zimbabwe (ICAZ) CFO seminar where he was speaking in his individual capacity.He said technically bond notes would bring transacting convenience in addition to monetizing the real time gross settlement system for individuals and businesses that do not have access to electronic transacting platforms.The Reserve Bank of Zimbabwe (RBZ) Governor John Mangudya has absolute good intentions on bond notes from a technical aspect and life after their introduction will be better. “Bond notes are monetizing the real time gross settlement and swiping. In simple terms they are just the physical side of these payment systems,” he said. – Financial Express (Online)
Government has made a downward revision on revenue projections for November and December to see of a largely underperforming year.Finance and Economic Development Minister Patrick Chinamasa the ‘underperforming trend’ is expected to carry on to next year. In the absence of reforms, public employment costs will also continue to be disproportionately high in relation to budget revenue.“Projections for Nov and December, have been revised downwards from a cumulative total of $773.1 million to $663.8 million” – Financial Express (Online)
Botswana Power Company has put on hold talks for power imports from Zimbabwe following the closure of two major smelters in the western neighbouring country. BPC wrote to Zesa Holdings yesterday advising that poor global commodity prices have forced two smelters, which consumed about 80 megawatts of electricity to shut down. “This means the demand has significantly declined rendering imports unnecessary. So negotiations have been put on hold until March (next year),” said one official. The power utility wanted to raise $120 million by exporting 50MW to BPC for four years. The deal would have seen Zesa pay a lump sum of $120 million which was to be part of the power utility’s equity injection into the expansion of Hwange Thermal Power plant. – The Herald, 4 November 2016
Zimbabwe Stock Exchange listed Dawn properties says its acquisition of tourism concern Makasa Sun is expected to be completed before year end, as discussion with current owners are presently underway. In a cautionary statement released yesterday, Dawn company secretary, Peter Saungweme, said the property firm was still in discussions with Barclays and Barclays Pension Fund for the deal to be completed before the close of 2016 – Daily News, 4 November 2016