Category Archives: Business

Stop being crybaby, envoy tells Zimbabwe

Zimbabwe must stop being a crybaby and instead remove cumbersome taxes and strengthen existing export relations, an envoy has said.

BY TATIRA ZWINOIRA

Democratic Republic of Congo (DRC) ambassador to Zimbabwe Mawampanga Mwana Nanga told guests at the release of the ZimTrade DRC market survey yesterday in Harare that Zimbabwe needed to maximise on its potential export sources, instead of crying about the decline in exports.

The survey showed that there was an easy access of the United States dollar in the central African nation despite it having a high import bill.

“If you want me to blunt, it is time for Zimbabwe to get up and get in, to stop crying. In the DRC, money can be changed anywhere, on the street and in the bank anywhere. We have the DRC franc, but the dollars are also everywhere. You can sell in this (United States dollar) or pay in dollars. At a street corner, someone is sitting there where you can exchange for dollars and the rate is known by everyone so there is no such thing as a black market,” Nanga said.

“We have to work outside the box because let me tell you the customs, immigration, all those regulations they are okay but they were designed by colonial powers. But now that we are independent, do we still have to follow up on these regulations?

“ I do not think so because at the end of the day the Zimra’s of this world have to be more creative in the value added tax.”

He said Zimbabwean traders — big or small — should form partnerships in the DRC in areas where the country was lacking, by supplying in terms of expertise in exchange for access to the DRC and its markets.

The ZimTrade DRC Market Survey found opportunities for small scale and corporate traders in engineering, electrical, iron and steel, pharmaceutical products, textiles including corporate and protective clothing, agricultural products.

DRC’s import bill was $5,7 billion in 2015, while its exports was $3,68 billion showing the country heavily relied on imports.

ZimTrade CEO, Sithembile Pilime said the DRC had been on a growth mode thereby offering scope for growing trade volumes in the two countries, commonly referred to as B2B (business to business) transactions.

CBZ profit falls, deposits up

CBZ Holdings saw its 2016 profit after tax dropping by 32,5% to $28,3 million from the previous year on the back of a decline in net interest income.

BY BUSINESS REPORTER

In 2015, profit after tax was $35,2 million.

Net interest income was down to $81,6 million last year from $109,12 million in 2015.

Interest income is the main avenue banks make their money apart from fees and commissions and trading revenue. Banks make money by lending it at rates higher than the interest they pay on deposits.

The decline in net interest income saw non-interest income’s contribution to total income increasing by nearly 10 percentage points to 43,4% in 2016 from 34,3% in the previous year.

Net non-interest income rose to $69 078 973 in 2016 from $62 582 558 in the comparable year driven by an increase in fees and commission income.

Commission and fee income rose to $56 482 839 last year from $48 186 788 in 2015.

Total deposits grew by 5,5% to $1,77 billion. Advances declined by 1,4% to 1 billion from $1,02 billion.

In the outlook, CBZ Holdings board chairperson, Elliot Mugamu, said it was critical for authorities to “follow through on policy pronouncements made in 2016, including the arrears clearance strategy and the accelerated implementation of key reforms under the Rapid Results Initiative”.

“Agricultural output is expected to improve, leading to preservation of foreign currency for other critical imports,” Mugamu said.

Willowton, Mega Market in $35m retail investment deal

Cletus Mushanawani News Editor
COOKING oil and soap producing concern, Willowton Zimbabwe has partnered Mega Market to set up a retail investment worth $35 million in Mutare.
Briefing the First Lady, Dr Amai Grace Mugabe during her meet the people rally at St John’s School in Buhera last Friday, Minister of State for Manicaland Provincial Affairs, Cde Mandi Chimene, said the plant was expected to run by June 2017.

“Willowton Zimbabwe and Mega Market have chosen Mutare, Manicaland’s capital as their production bases and are making huge investments to boost local production and employment. Willowton invested $40 million and produces soap and cooking oil and currently employs 100 workers,” she said.

Cde Chimene cited lack of recapitalisation, shortage of raw materials, outdated machinery and high cost of borrowing as some of the challenges saddling industrial growth in Manicala

“Cairns Foods is operating at 67 percent utilisation and supports over 1 000 farmers who are into soya bean production. This year, the company expects to put 400 hectares of Michigan beans under contract farming.

Cde Mandi Chimene

“Mutare Bottling Company is currently operating at 13,33 percent capacity utilisation. It is being affected by the smuggling of soft drinks from Mozambique. However, the company has acquired new plant equipment.

“Quest Motors is operating at five percent capacity utilisation and is largely affected by foreign currency shortages to secure raw materials,” said Cde Chimene.

She bemoaned the continuous presence of illegal settlers and gold panners in timber estates, saying this was having a telling effect on production.

“Border Timbers is under voluntary judiciary management and now operating at 60 percent capacity utilisation. The company and whole of the timber industry is affected by illegal settlers and illegal gold mining,” he said.

Turning to the mining sector, Cde Chimene said it was sad to note that Manicaland had nothing to show for its rich mineral resources.

“The province is endowed with gold, diamonds, vermiculate, phosphate, tantalite and copper. Illegal panning is rampant especially in Chimanimani at Tarka Estate where timber is being destroyed. Our mineral resources should not benefit a few individuals, but Zimbabwe as a whole. Corruption is just rampant and panners are wreaking havoc.

The country is losing a lot through these illegal activities.
“There is no diamond cutting and polishing in the province, yet most of the diamonds are being mined in Chiadzwa and Chimanimani.

The merging of diamond companies is highly appreciated, however, the process should move with speed to ensure that our communities benefit from the diamonds.

Furthermore, efforts should be made to acquire equipment relevant for deep mining of diamonds,” she said.

Dr Amai Mugabe also added her voice on adding value to minerals being mined in Manicaland.

“I totally agree that diamonds should be processed here in Manicaland. This should happen across the country where there are mineral deposits. Everything should not be transported to Harare or outside the country for processing. Every province should add value to its minerals and other natural resources,” said Dr Amai Mugabe.

Cde Chimene said community share ownership trusts should fulfil their mandate of empowering local communities.

“The Zimunya-Marange Community Share Ownership Trust has exhausted the initial funds and is left with $40 000. We expect the new company, Zimbabwe Consolidated Diamond Company to fund the trust for more projects.

“No progress has been made by Mutasa Community Share Ownership despite its formation. Mettalon Gold Mine is expected to fund the trust as the year progresses.

Ministry of Youth, Indigenisation and Economic Empowerment should enforce the law to ensure payments by the companies in Mutasa.

“In Buhera, Shava Mine is yet to meet their obligations despite the fact that the Buhera Community Share Ownership Trust is now registered,” said Cde Chimene.

She said Manicaland had identified 14 923 youths under the Zimbabwe Champions and Heroes of Economic Empowerment Revolution Programme who have created 29 817 jobs for other youths.

‘The projects identify youths who are already doing something for the economy. The Ministry of Youth, Indigenisation and Economic Empowerment intends to fund the youths through Empower Bank which is being established for youths.

“A total of 650 youths were funded under the Youth Employment Creation fund by CBZ, CABS and IDBZ fund. The repayment rate is at 90 percent,” said Cde Chimene.

SI 64 is good, says ex-Min: ‘Needs vibrant local industry support’

Dr Nkosana Moyo

Dr Nkosana Moyo

Kiyapili Sibanda, Business Reporter
STATUTORY Instrument 64 of 2016 is a noble policy that needs to be supported by a vibrant domestic industry, former Industry and Commerce Minister Dr Nkosana Moyo said.

In June last year Government gazetted SI 64/2016, which removed several goods from the Open General Import Licence (OGIL) as part of measures to protect local firms from the influx of cheap imports.

The regulation restricts importation of a range of products that are available locally such as basic food stuffs, pharmaceutical products, hardware and building materials.

Addressing Bulawayo residents who included industrialists on Wednesday night, Dr Moyo, who is founder and chairperson of the Mandela Institute for Development Studies, said the success of SI 64/2016 was hinged on a robust industry revival programme.

“For the instrument (SI 64) to be successful it must be supported by a well functioning local industry. The industry must be able to supply all the products put under this instrument in order for it to bear fruits,” said Dr Moyo. He said the local industry must have the capacity to produce enough so that people do not rely on imports, which threaten the viability of local producers.

“People rely on imports because the local industry will be failing to meet demand,” said Dr Moyo.

He stressed the need for African economies to work together and come up with supporting policy measures that promote regional trade and free movement of people across borders.

“Africans must get closer and achieve economic integration. The issue of visas is onother thing that hinders the growth of African economies. There must be free movement of people across African borders. What’s wrong if our Nigerian brothers come here (Zimbabwe) and marry our sisters? This will bring together countries and enhance economic growth. “Back then economies were built among marriages as this brings together people of different cultures and background,” Dr Moyo said.

He said Africa must promote tourism within the member states and boost agricultural production to support their economies.

“South Africa, our closest neighbour, lured some Chinese to build them their wagons in order to boost their railway network. I, however, think they should have also worked with Zimbabwe in this project and this would have benefited not only the two countries but Sadc region in terms of tourism and economic growth. Bulawayo could be the nerve centre of the railway network that could serve most Sadc countries,” said Dr Moyo.

He also said youths should be innovative and develop new skills.

“Youths should be given more space to explore new heights. Parents should give them leeway in order for them to help develop our economies. New technologies have helped to better our economy and this is because of the innovation by the youths,” said Dr Moyo.

He also said that for African economies to prosper the electorate must elect leaders who are capable to deal with corruption and run the Government and local authorities efficiently.

“Corruption has destroyed African economies and people must elect people who are capable to run the affairs of a country and deliver on promises,” said Dr Moyo.

@Kiyaz_Cool

Reduce maize producer price: Irvine

Irvine’s Zimbabwe (Private) Limited chief executive David Irvine (right) explains to Industry and Commerce Minister Mike Bimha the feed production process during a tour of the company’s plant in Harare yesterday. — (Picture by Kudakwashe Hunda)

Irvine’s Zimbabwe (Private) Limited chief executive David Irvine (right) explains to Industry and Commerce Minister Mike Bimha the feed production process during a tour of the company’s plant in Harare yesterday. — (Picture by Kudakwashe Hunda)

Business Reporter
ZIMBABWE’S maize producer price, at $390 per tonne is driving prices of value added products up and making poultry producers and agro processors uncompetitive in export markets, Industry and Commerce Minister Mike Bimha heard yesterday.

Integrated poultry operation, Irvine’s Zimbabwe (Private) Limited chief executive David Irvine told Minister Bimha who was touring the company that if Government could get the prices of maize down, it would lead to a decline in prices of maize products.

“We are basically taking maize and soya and converting them into chicken and eggs. The maize price is wrong.

“It is set at $390 per tonne, a level for

those who produce two tonnes per hectare. We should not be paying to cover just small producers.

“The price in South Africa is about $170 per tonne and if you add transport to that you get to about $270 per tonne. That is the import parity that is roughly where the price should be.

“If we get that my cost of chicken will go down. Instead of putting 200 000 a week through that plant I will increase to 250 000 per week and I’ll be able to lower the price and sell more.

“If the Grain Marketing Board buys maize that is fine but if there is maize on the local

market we have to go in and buy,” said Mr Irvine.

Maize and soya make up about 55 percent of Irvine’s costs and this has a negative bearing on pricing of finished products.

Other challenges that were highlighted to the Minister include the bureaucracy and costs of permits for operations and for imports of raw materials that are not available locally.

Mr Irvine also said the process of obtaining export permits as tedious.

He said for the importation of maize or

soya, Irvine’s requires an Agricultural Marketing Authority license which costs — $1 000; Non GMO certificate — $40; plant phytosanitary certificate — $30; National Bio Safety

Agency — $40 and Ministry of Agriculture, Mechanisation and Irrigation Development permit — $70.

The company also has to pay plant quarantine Department — $30 (per truck); National Bio Tech Inspectors at Border — $30 (per truck); plant quarantine department inspector at border — $30 (per truck); port health inspectors — $20 (per truck); importing company’s expenses — $200 (per order).

Of concern to the poultry producer is that apart from the cost, most of the permits take up to three weeks to obtain.

“We had some people from the Ivory Coast here this week and they are going to let us know next week if they want our fertile eggs.

“If they are going to get the eggs they want them (delivered) next week but I have to wait for three weeks to get a permit.

“We are going to lose three weeks’ worth of exports.

“If someone phones me up and says can you sell me something I want to say yes it’s coming tomorrow,” said Mr Irvine.

Econet adamant on infrastructure sharing

Business Reporter
ECONET Wireless has insisted that it does not agree to compulsory sharing of telecoms infrastructure, despite recent statutory regulations drafted to enforce the requirement.

The Postal and Telecommunications Regulatory Authority (Potraz) is now looking into submissions by the telecoms giant regarding its opposition to infrastructure sharing.

Potraz director general Dr Gift Machengete said Econet was still not keen on compulsory infrastructure sharing, arguing this would discourage investment into telecoms. Further, he said Econet indicated that when it initially wanted to share infrastructure other operators such as state owned fixed telecoms company, TelOne, resisted.

Dr Machengete said the idea by Government that operators should share infrastructure was noble as it avoided duplications and helped the country to save forex. The POTRAZ boss said the need to share infrastructure was beyond question, adding what needed to be deliberated on was the modalities for sharing it.

“The operators have not started (compulsory sharing of infrastructure). In fact, Econet has submitted representations on why it will not be beneficial to share,” he said.

“They feel that they should just be encouraged to share, they feel there should be room to decide who they want to share with rather than being compelled to share.”

The Herald Business understands that infrastructure sharing was very minimal and entailed basic equipment or passive infrastructure such as base station towers.

According research by POTRAZ into benefits of sharing infrastructure, the authority said it would cut operators’ costs by 15 to 30 percent and reduce capital outlay by up to 60 percent.

The study conducted by POTRAZ last year revealed that capital expenditure accounted for up to 60 percent of costs for telecoms companies operating in Zimbabwe.

“Econet is arguing that other regulations encourage (not compel) sharing, so that is the situation. We received their representations two weeks ago,” Dr Machengete said.

“We are in the process of looking into what they are saying,” he added.

Dr Machengete said Econet had argued that if the operators were compelled to share their infrastructure “they will not be that push to invest in (telecoms) infrastructure”.

Econet Wireless, founded by Zimbabwean telecommunications magnate Strive Masiyiwa, says it has invested over $1,2 billion in its business since inception in 1998. But he pointed out that it was a “sound idea (to share infrastructure). We are a small country; we do not have all the resources, especially the (requisite) foreign currency”.

Dr Machengete said sharing helps to avoid duplication in investing in infrastructure in the industry was critical in achieving efficient utilisation of precious resources.

“Infrastructure needs foreign currency, it does not matter if it is Econet importing infrastructure, at the end of the day, it is Zimbabwe’s foreign currency being used,” he said.

He said other operators such as State owned NetOne and TelOne were keen on infrastructure sharing.

“They have not gone out against infrastructure sharing, but Econet”.

Finance Minister Patrick Chinamasa is on record saying that he was unhappy with the level of infrastructure sharing, as it raised costs to end users of the services. The process to compel infrastructure sharing started in 2014 and entailed consultations with all stakeholders, including operators. The regulations were passed last year.

The Potraz boss said a way forward must be found, which includes making sure that standing regulations on compulsory sharing of infrastructure are adhered to.

No place like Chimanimani

Isdore Guvamombe Tourism Matrix
BABOON troops lounge nonchalantly on trees along a footpath while monkeys scamper nimbly between branches.

An excited whoop erupts thereafter from deep in the forest, boosted immediately by a dozen other voices, rising in volume, tempo and pitch to a frenzied crescendo.

I imagined each voice, trying to distinguish between individual cries, pants, hoots and screams that define celebrities, the power brokers and the supporting characters. Like humans, they are quite a community!

I was later to be told by a wildlife expert that this was a bonding ritual that allows baboon or monkey families to identify each other, through individualised vocal stylisation.

Butterflies flit in dappled sunlight and again you come across another family of monkeys, preening each other’s glossy coats in concentrated huddles, squabbling noisily.

Suddenly they bound onto the nearest gallery of trees and swing effortlessly. Birds, flies, bees and butterflies erupt from a riotous wild flower display of breathtaking scale and diversity.

This must be yet another community of nectar collectors. Orchids and hibiscus grow on the tangled slopes and lobelia heath and many species of meadowland wild flowers carpet the intermittent savanna plains.

Then we come across a pair of kilpspringer, silhouetted on the rocks and like a bullet, they take off and disappear into the rolling valleys beyond. There must be scores of interlocking valley, there.

These are scenes synonymous with Chimanimani Mountain National Park, which is straddled by steep slopes that hem the eastern sky, and river valleys and for tourists this is a different place altogether.

Chimanimani is not a game park, but has baboons that scratch through the night and several species of retiring antelope, including blue duiker, nimble-footed klipspringer and shaggy water-buck.

Leopards are common, though rarely observed, and lions and buffalo are occasional visitors to the park’s remote southern extremes.

A place for discerning tourists determined to scale greater heights and get a helicopter view of the country, albeit on foot.

Rolling grassy hills enclose the tranquil beauty of mountain forest, each one a different hue of green and blue where it meets the sky.

It is only at dusk or dawn that the veil of cloud on the eastern horizon is most likely to clear, otherwise everything is at the benevolence of the oracle of the sky.

An hour’s ride from Chimanimani Village, the park includes the magnificent Chimanimani Mountains, a massive barrier of ancient and jagged crystalline rock forming the border with Mozambique.

The breathtaking beauty and pristine environment of these mountains have always drawn adventurous travellers. The park provides basic facilities, catering for the self-sufficient explorer. Hiking, rock climbing, birding, camping in caves among the sparkling waterfalls and natural swimming pools.

In the village itself one can book a visit to a traditional Shona village, chat with the locals at the village cafe, arrange a horseback ride in the forest, explore the local marketplace or book a round of golf at the nine-hole country club.

A walk takes visitors to the Bridal Veil Falls – a favourite picnic spot – and in the hills above Chimanimani Village there’s an Eland Sanctuary.

Outward Bound organisation has a facility at the foot of the mountain, and the challenging terrain is occasionally used by other organisations for team-building, super-fitness training and orienteering.

The formidable mountainside opposite Chimanimani Village is the heart of Chimanimani National Park, a wilderness of steep sand stone peaks and towers, crystal clear rivers, savanna valleys and forests of stone columns.

Barclays Africa Apologizes After Bank’s Role in Rand Fixing

Barclays Africa Group Ltd. apologized for its role in a rand-fixing affair involving more than a dozen banks, saying that it alerted regulators about the practice after suspending two traders.

Bloomberg

Maria Ramos (Photographer: Gianluigi Guercia/AFP via Getty Images)

Maria Ramos (Photographer: Gianluigi Guercia/AFP via Getty Images)

“We deeply regret that this conduct took place within our organization,” Chief Executive Officer Maria Ramos said on a conference call Thursday, without identifying the employees. “Those who contravened our rules will be held accountable.”

South Africa’s antitrust investigators listed more than a dozen banks, including Barclays Africa, in its probe earlier this month and named more than 30 traders for price fixing and market allocation in the trading of foreign-currency pairs involving the rand. Citigroup Inc. on Feb. 20 said that it agreed to pay a penalty of almost 70 million rand ($5.4 million) to settle the case and would make witnesses available to help prosecute other banks.

Barclays Africa’s Absa unit said in a statement Thursday that the Competition Commission isn’t seeking any administrative penalty against the bank. The lender said it brought the conduct of the currency traders to the attention of the commission under the regulator’s leniency program.

“How we conduct ourselves is, for me, non-negotiable,” Ramos told reporters in Johannesburg. The bank’s involvement in the rand collusion case is “unacceptable and incompatible with the values of this organization.”

Under Pressure

The antitrust finding comes as President Jacob Zuma and his governing African National Congress step up pressure on the country’s four largest lenders, saying they should lend more to black clients. Zuma and the banks are also locked in a stand-off after the lenders closed the accounts of companies tied to his friends, the Gupta family, who are accused of using their relationship with him to influence government appointments and contracts.
The lender was also the target of protests outside some branches after a leaked draft report by South Africa’s anti-graft ombudsman said the lender may have benefited from a bailout provided to a bank it bought before the end of apartheid.

Barclays Africa will be making submissions to the ombudsman by the end of February, Ramos said. “We have factual and legal issues that we’ll take up because there are factual and legal inaccuracies. There have been a number of demonstrations and pickets. They haven’t at this stage impacted the bank’s operations in any way.”

Barclays Africa dropped 0.2 percent to 157.27 rand as of 1:22 p.m. in Johannesburg. It’s the worst-performing bank stock in South Africa this year, having declined 6.7 percent compared with the average drop of 3.5 percent on the six-member banks index.

Parent’s Payout

Earlier, Barclays Africa said it will receive the equivalent of about $1.1 billion for costs associated with splitting from its U.K. parent Barclays Plc and the creation of a program to empower black investors. The payout is “a good outcome,” Ramos said, adding that it would leave the South African lender broadly capital and cash-flow neutral.

“Although the settlement will help offset the costs Absa will incur to make the necessary investments in their IT systems and to rebrand the African entities, the risks around successfully executing the divestment without disrupting operations remain,” said Meyrick Barker, an investment analyst at Kagiso Asset Management.

Once the parent company’s stake drops below 50 percent, Barclays Africa will have three years to rebrand its units in the rest of Africa, according to Ramos. The U.K. bank will pay 2.1 billion rand toward the creation of a black-shareholder program that will include staff, Ramos said.

Earlier on Thursday, Barclays Africa said full-year net income rose 2.6 percent to 14.7 billion rand from 14.3 billion a year earlier after the bank contained costs and increased lending to businesses. Earnings per share excluding one-time items rose 5 percent to 17.69 rand, missing the 17.94 rand median estimate of 11 analysts surveyed by Bloomberg. Return on equity declined to 16.6 percent from 17 percent and the cost-to-income ratio dropped to 55.2 percent from 56 percent.

British American Tobacco (BAT) bottom line down on weak consumer demand

Tobacco processor, British American Tobacco (BAT) Zimbabwe saw its profit after tax declining by 43% to $8,5 million in the year ended December 31, 2016 attributed to a decline in revenue on weak consumer demand.

BY BUSINESS REPORTER

British American Tobacco managing director Clara Mlambo makes a presentation at the company’s analyst briefing in Harare yesterday

British American Tobacco managing director Clara Mlambo makes a presentation at the company’s analyst briefing in Harare yesterday

Last year, profit after tax was $15,47 million.

Revenue declined by 25% to $34,1 million on declining volumes as the harsh economic environment affected consumer spend.

BAT Zimbabwe finance director, Lucas Francisco told an analysts briefing in Harare yesterday that despite the drop in volumes, the upmarket brand Dunhill grew by 7,2% compared to 2015 off a small, but growing consumer base.

The tobacco processor’s managing director Clara Mlambo said despite the drop in the bottom line, she was pleased with the results considering that 2016 was a tough year.

Mlambo said 2016 was a tough year in which “agility was the name of the game”.

She said BAT had a stronger second half of the year. The December performance, she said, saw good recovery in terms of sales.

The company saw its marketing spend increasing by 9% as it moves to defend its brand adding that it was a signal that “BAT is here for the long haul, hence continue to invest in the brand”.

Mlambo said the pie was getting smaller, but “BAT managed to hold on to our market share”.

An independent research showed that the tobacco processor had a market share of 79% in 2016 from 80% in 2015.

“This is commendable because we saw a number of entrants,” she said.

Mlambo said her company supports the government’s position to maintain excise duty at the current rate as this “allows pricing stability and volume recovery”.

In the 10 months to October, BAT paid $15,9 million to Treasury in excise duty constituting 86% of the total paid by cigarette manufacturers.

Mlambo said there has been a growth in duty non-paying cigarettes, which eats into legitimate industry volume and “less revenue for the government because the players are not paying taxes”.

Companies pay $20 per 1 000 sticks in excise duty. Mlambo said by maintaining the duty, “it maintains price stability and volume recovery” adding it was critical for excise to remain the same.

She said the Zimbabwe Stock Exchange-listed entity would not “necessarily enter a price war” to defend its brand.

BAT after-tax profit down 45 pct on weak sales

HARARE, – Cigarette maker BAT’s after-tax profit plunged 45 percent to $8.48 million in the full year to December 2016, down from $15.4 million previously after a sharp decline in sales, the company announced on Wednesday.

BAT registered a 25 percent decrease in revenue from $45.3 million to $34.1 million in the full year to December 2016. The company’s operating profit declined by 43 percent from $20.8 million in the previous year to $11.9 million.

The overall sales volume decreased by 20 percent from the previous year, although international premium Dunhill brand recorded an increase in sales volumes.

“Our local brands declined by 21.5 percent compared to the same period in 2015, whilst our Global Drive Brand, Dunhill grew by 7.2 percent compared to 2015 driven by a small but growing consumer base”, BAT finance director Lucas Francisco told analysts on Wednesday.

Francisco said administrative expenses went down by 3 percent to $10.4 million following a staff rationalisation exercise which was completed in 2015 and a reduction in management fees.

Francisco said cash generated from operations was down 13 percent to $13.3 million as a the impact of declining profit was offset by improved collections, foreign payment delays and a decrease in inventory.

The company closed the year with $12.4 million cash compared to $3.9 million in 2015 due to an increase in net cash used in financing, attributable to the challenges the company is facing in paying foreign dividends.

“Net cash used in financing activities declined by $11.5 million due to lower dividend paid in 2016,” Francisco said.

BAT managing director Clara Mlambo said the company has largely held its market share, which only dropped a marginal 1 percent from 80 percent in 2015 to 79 percent following the entry of new players into the market.

Mlambo said the company was facing difficulties in importing critical raw materials due to a gridlock in foreign payments pervading the financial system. She said BAT continues to engage banks to get inputs paid for on time.

She said the delays in importing the raw materials might negatively impact revenue in the coming period.

“It could potentially affect sales if we can’t find a solution to address it. The key is to continue engaging the banks and we have done that in the course of 2016 with a mixed success rate and we just have to continue that in the course of 2017,” Mlambo said.

The company declared a final dividend of $0.33 per share, and together with the interim dividend of $0.18 per share, the total dividend for 2016 amounted to $0.51. – Source

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