BH24 Reporter

HARARE – Struggling coal miner Hwange Colliery Com-pany has reported a substan-tial loss of $115 million for the year ended December 31, 2015 from the loss of $37,8 million in FY2015.

Although the coal-miner experienced a notable decline in revenue s during the period under review, its loss position was particu-larly deepened by a six-year liability to the Zimbabwe Revenue Authority (ZIMRA) and a significant bump in administrative costs.

“The widening of the loss is mainly attributed to the recognition of the $69,1 mil-

lion ZIMRA liability covering the six-year period 2009 to

2015. An amount of $40,6 million had been accrued

resulting in an adjustment of $28,5 million after the

News Update as @ 1530 hours, Friday 01 April 2016

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Hwange posts hefty $115 million loss

conclusion of the ZIMRA verification exercise,” said acting chairman Mr Jemister Chininga in a statement accompanying the results.

“There was also a $118 increase in administrative costs mainly attributable to the adjustment for the ZIMRA liability,” he added.

Administrative costs for the period at $60,6 million was also higher than $27,8 mil-lion prior year.

Cost of sales of $101,3 mil-lion was much higher than the revenue of $67,5 million prior year.

Hwange Colliery’s current lia-bilities amounted to $287,3 million during the period under review compared to $209,8 million in 2014.

Management said although some of its creditors have taken legal action against the firm, efforts are being made to contain the negative

effects of such a move.

Borrowings increased from $11,9 million to $51,1 mil-lion.

Going forward, the company expects a $7,5 million coal pre-financing facility to give impetus the new business

plan. The company is tar-geting monthly production targets of 350 000 tonnes from July 2016.

Basic loss per share amounted to 0,63 cents up from a loss of 0,21 cents prior year.●

2 NEws

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BH244

BH24 Reporter

HARARE -Listed hotelier group African Sun posted a loss after tax of $8, 3 million in the 15-month period to December 31, 2015 as revenues during the period slid.

The low revenue performance was attributed to the broader negative performance within the country’s tourism sector.

“The South African market which contributes significantly to Zimbabwe tourist arrivals has suffered from the depreci-ation of the South African rand making Zimbabwe an expensive destination,’ said chairman Mr Herbert Nkala in a statement accompanying the results.

African Sun shifted its financial year end from September to December 31 to align it with that of its major shareholder - Brainworks Capital. In the previous period, it had reported a $2, 2 million loss in the year to September 30, 2014.

For the year just ended, the group’s total revenue stood at $63, 1 million.

“On a like for like, revenue decreased by 8 percent as the group experienced noticeable decline in the average monthly revenues during the period under review,” said the com-pany. Income per available room dropped from $47 to $45, how-ever occupancy levels jumped marginally from 48 percent to 49 percent. Operating expenses stood at $43,4 million, rising from $33 million in the prior 12-month period. African Sun currently operates 11 hotels in Zimbabwe.

And in October last year, the group appointed Legacy Group of hotels to manage five of its hotels — Elephant Hills, Trout-beck, Hwange Safari Lodge, The Kingdom and Monomotopa Hotel.

At the same time (2015), the group brought to an end their regional operations in Ghana,

South Africa, Mauritius and Nigeria. Management said the regional operations were weigh-ing heavy on the local unit, which was profitable. During the period under review, the group reduced staff compliment by 20 percent to 1 179, a move they anticipate will yield annual sav-ings of at least $2, 7 million.

Finance costs fell by 16 percent to $2, 5 million as the group managed to reduce borrowings from $17, 3 million to $7, 7 million. Earnings Before Income Tax Depreciation and Amorti-sation (EBITDA) amounted to $7 million compared to $8,3 million in the previous 12 month period.

Going forward, the chairman said the group will maintain implementing the new business model as well reducing cost of sales and overheads, as well as driving volume growth.

The board has resolved not to declare a dividend for the year ended.●

5 NEws

African sun reports $8,3m loss

BH246

BH247

HARARE –Revenues from fixed telephony increased by 14,2 percent to $35 million during the last quarter of 2015 despite a decrease in investment on infrastructure, latest statistics from the Postal and Telecommunica-tions Regulatory Authority of Zimbabwe (Potraz) show.

Potraz attributed the per-formance to an increase in international incoming traffic and net on net traffic.

“Revenues registered from fixed voice service increased by 14,2 percent to reach $35,3 million from $30,9 mil-lion recorded in the previous quarter,” it said.

“On the other hand invest-ment declined by 61,1 percent to $1,7 million from $4,6 million invested in the previous quarter. The bulk of investment was in the access network.”

Potraz said subscribers to

fixed telephony services also increased during the quarter under review.

The increase in fixed teleph-ony subscriptions was driven by improved demand for Asymmetric Digital Sub-scriber Line (ADSL) services.

ADSL is a communications technology used for connect-ing to the Internet using a fixed telephone line.

“The total number of active fixed telephone lines increased by 0,5 percent to reach 333 702 from 332 211

recorded in the third quarter of 2015.

“Household subscriptions constituted 71,3 percent of the total fixed subscriptions whereas corporate subscrip-tions made up 28,7 percent of total fixed network sub-scriptions,” the report shows.

Active rural lines increased by 4,3 percent to record 8 998 from 8 629 lines recorded in the previous quarter.

On the other hand active urban lines increased from 323 582 to 323 704 recorded in the previous quarter.

Companies that offer fixed telephony services in Zim-babwe include TelOne and Africom, but these have failed to add more people to their networks mainly due to stiff competition from mobile phone companies.

-New Ziana.●

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Fixed telephony revenue increases

BH249

HARARE–National Railways of Zimbabwe (NRZ) workers have gone on strike to push their employer to pay them 14 months’ salary arrears.

NRZ public relations manager Fanuel Masikati told New Ziana the workers downed tools on Monday.

“The workers are on indus-trial action over the issue of salary arrears. As you may know NRZ owe them over 14 months’ salary,” he said.

He said the parastatal would pay workers when funds become available.

“The focus is to make sure that we pay them something for now. As you know NRZ is in the business of moving goods but due to the shrink-ing customer base, we have been unable to meet salary obligations,” he said.

The workers are on record saying NRZ has for some time been paying them 20 percent of their salaries.

Last year, NRZ workers demonstrated at the parast-al's headquarters in Bula-wayo over the issue, and Transport and Infrastructural

Development Minister Joram Gumbo intervened by order-ing the board and manage-ment to look for funds to pay employees.

The decline in business has paralysed operations of the rail util ity over the years.

NRZ is moving an average of three million tonnes of cargo annually compared to 12 mil-lion tonnes in 1992 and 19 million tonnes in 1997.

At least 93 percent of its revenue used to come from freight services.

NRZ is also reeling from a debt of over $30 million, while parastatals such as the Grain Marketing Board (GMB) and Ziscosteel owe NRZ $7 million and $9 million respectively.

The parastatal has been struggling to attract new investors since the turn of the millennium.

According to a study done by a Canadian consultancy firm in 2012, NRZ requires $1,9 bill ion for recapitalisa-tion.-New Ziana

●

10 NEws

NRZ workers on industrial action over 14 months’ salary arrears

HARARE -The equit ies mar-ket extended yesterday’s gains into the new month, after the mainstream indus-tr ia l index gained a further 0.19 to c lose at 97.80.

A couple of heavyweights l i f ted the performance with te lecoms giant Econet add-ing $0,0057 to trade at $0,2500, whi le beverages giant Delta rose by $0,0025 to $0,5650 and giant retai ler OK Zim increased by $0,0017 to sett le at $0,0367.

FBCH was also up, r is ing by a marginal $0,0004 to c lose at $0,0604.

On the downside, BAT shed $0,0480 to trade at $10,7500 and Hippo eased $0,0191 to $0,2509.

Other losses were seen in Padenga, which lost $0,0009 to c lose at $0,0701, Inn-scor retreated $0,0003 to $0,1870 and Pear l Proper-t ies inched down $0,0001 to

c lose at $0,0220.

The mining index was f lat

at 19.53 as a l l the mining counters maintained previ-ous pr ice levels.

.- BH24 Reporter ●

ZsE11

Equities market extend gains

MovERs CHANGE TodAy PRiCE UsC sHAKERs CHANGE TodAy PRiCE UsC

Name Change% PriCe today HIPPO -7.07 25.09

OK ZIM 4.85 3.67 PADENGA -1.26 7.01

ECONET 2.33 25.00 PEARL -0.45 2.20

FBC 0.66 6.04 BAT -0.44 1,075

DELTA 0.44 56.50 INNSCOR -0.16 18.70

iNdEx PREvioUs TodAy MovE CHANGE

INDuSTRIAL 97.61 97.80 +0.19 Points +0.19%

MINING 19.53 19.53 +0.00 POINTS +0.00%

12 ZsE TABlEs

ZsE

iNdiCEs

stock Exchange

Previous

today

13 diARy oF EvENTs

The black arrow indicate level of load shedding across the country.

PowER GENERATioN sTATs

Gen Station

31 March 2016

Energy

(Megawatts)

Hwange 518 MW

Kariba 285 MW

Harare 30 MW

Munyati 22 MW

Bulawayo 22 MW

Imports 0 - 400 MW

Total 1332 Mw

THE BH24 diARy

JoHANNEsBURG -South Africa's rand steadied against the dollar early on Friday, holding on to its strongest levels in four months, but traders were cautious ahead of a uS jobs report that will help inves-tors gauge the strength of the world's biggest economy.

At 0645 GMT, the rand traded at 14,7430 per dollar, 0,16 percent firmer from Thurs-day's New York close of 14,7670.

The currency rallied to its

firmest level since Dec. 9 on Thursday after the country's top court ordered President Jacob Zuma to repay the state for some upgrades to his private home.

"The recent closes in the rand have been technically supportive of the local cur-rency," Nedbank analysts said in a note.

"However, somewhat exces-sive euphoria around the local constitutional court rul-ing and generally improved sentiment prevailing will see

markets likely to be some-what cautious ahead of the plethora of uS data this afternoon."

Stocks were set to open lower at 0700 GMT, with the JSE securities exchange's Top-40 futures index down nearly 1 percent.

In fixed income, the yield for the benchmark instrument due in 2026 added 2 basis points to 9,135 percent

- Reuters●

REGioNAl NEws 14

Rand steady, focus on Us jobs data

wAsHiNGToN - The Inter-national Monetary Fund (IMF) said on Thursday that it has again cut its growth forecast for Nigeria as the oil exporter faces "substantial challenges" from low crude prices. In its annual review of Nigeria's economic sit-uation, the IMF said that gross domestic product growth would slow to 2,3 percent in 2016 from an estimated 2,7 percent in 2015. In February, after IMF officials visited the country, the Fund had forecast 3,2 percent growth for Nigeria in 2016.

"Key risks to the outlook include lower oil prices, shortfalls in non-oil revenues, a further deterioration in finances of state and local Governments, deepening disruptions in private sector activity due to con-straints on access to foreign exchange, and resurgence in security concerns," the IMF said in a statement. It added that Nigeria's general government deficit would grow further after doubling to 3,7 percent of GDP in 2015. - Reuters●

iMF cuts Nigeria growth forecast again amid oil

slump

NEw yoRK - Oil prices jumped more than 10 per-cent in March in the best quarter since mid-2015 although some analysts said the rally could fade soon as an output freeze plan by major crude exporters fails to alleviate worries of a glut.

A weak dollar and data showing a drawdown in crude stocks at the uS futures delivery hub helped oil settle steady to firmer in Thurs-day's session.

But traders remained worried that a tentative agreement among the world's largest producers to keep oil out-put at January's levels will barely make a dent on global supplies.

Analysts said crude futures also appear to have over-extended gains with a 50 percent rally since the deal was proposed mid-February, amid little improvement in fundamentals.

"Oversupply stil l persists due to resilient uS production, even if declining moderately; high OPEC output, led by

Saudi Arabia and Iraq; and the gradual return of Iran starting Q1 2016," said Mike Wittner, global head of oil research at Societe Generale.

Brent crude for May delivery, which expired as the front-month contract, settled up 34 cents, or 0,8 percent, at $39,60 a barrel. June Brent closed 0,7 percent higher at $40,33.

The benchmark's front-month soared 10 percent higher in March - its best month since April 2015 - and jumped 6 percent in the first quar-ter - its best quarter since the second quarter in 2015. uS crude futures settled at $38,34, up 2 cents on the day, rising 14 percent in March and 4 percent in the quarter - also its biggest

quarterly gain since June 2015.

In a Reuters poll, oil ana-lysts raised their average price forecasts for 2016 for the first time in 10 months - Brent averaging $40,90 and uS crude $39,70 in 2016 - but cautioned the rally could fade near term.

On Thursday, the dollar hit a mid-October low, making greenback-denominated oil more attractive to holders of the euro and other curren-cies.

Data from market intelli-gence firm Genscape showed a 807,496-barrel drawdown in stocks at the Cushing, Oklahoma delivery hub for uS crude futures in the week to March 29, traders said.

Inventories at Cushing have receded from record highs for two consecutive weeks, with uS government data on Wednesday showing a 272 000-barrel drawdown in the week ending March 25.

Total uS crude stocks, how-ever, rose 2,3 million barrels last week to 534,8 million barrels, a record high for a seventh straight week.

OPEC crude output rose in March to 32,47 million barrels per day from 32,37 million bpd in February, a Reuters survey said.

Analysts also expect an April 17 meeting of major oil pro-ducers in Doha to discuss the output freeze to fall short of expectations.

"There is a clear risk of disappointment and for a temporary setback in prices ahead or immediately after the Doha meeting," Carsten Fritsch, commodities analyst at Commerzbank, told the Reuters Global Oil Forum.

– Reuters ●

iNTERNATioNAl NEws 15

oil posts best quarter since mid-2015 but glut still worries

By sanjaya Baru

March 2013. Barely three years ago, South Afri-ca’s President Jacob Zuma sported a big smile, standing in the middle, flanked by Russia’s President Vladimir Putin, China’s President Xi Jinping, Brazil’s President Dilma Roussef and India’s Prime Minister Manmohan Singh.

They had just concluded their fifth summit meeting in Durban, completing, as they called it, “the first cycle of summits”.

They announced the setting up of the Brics’ (Brazil-Rus-sia-India-China-South Africa) New Development Bank and declared their arrival on world stage.

Cut to March 2016. Roussef faces the distinct prospect of an ignominious exit before she can host the Rio Olym-pics in August.

The first of the ‘Durban Five’ to go was Manmohan Singh, whose government

was trounced and had an equally ignominious exit. In South Africa, Zuma has also

been charged with economic mismanagement and humun-gous corruption and is now

16 analysis16 ANAlysis

BRiCs leaders should resist usual temptation of asking what world can do for them

17 analysis17 ANAlysis

accused of trying to perpet-uate himself in office going against the spirit of the Constitution that even Nelson Mandela respected.

In Russia, Putin continues to celebrate his recent geopo-litical victories hoping his people will not pay too much attention to Russia’s dim economic prospects.

Finally, in China, the so-called ‘most power-ful leader since Mao’ Xi is embattled handling an econ-omy in trouble and a people on the bubble.

Problems at home have encouraged Xi to be asser-tive in China’s neighbourhood generating a new nervous-ness across Asia not seen since the Asian financial crisis of 1997-98.

It would, however, be wrong to blame the Brics for all their woes.

The downward turn of the commodity super cycle, the

more generalised downturn of the ‘Kondratiev long wave’ — the 40- to 60-year cycle of economic upswings and downswings — and the wave of inward-orientation and protectionism in developed economies too have hurt the global economy in general and developing economies in particular.

To the usual mix of eco-nomic policies and perfor-mance anxieties gripping nations, the International Monetary Fund (IMF) man-aging director Christine Lagarde has added, address-ing a conference in New Delhi earlier this month, “escalated geopolitical ten-sions” as a challenge for global economic manage-ment.

The failure of the Group of Twenty (G20) to emerge as an effective board of global economic management, the spreading ‘regionalisation’ of the global trade and financial systems, and the ‘beg-gar-my-neighbour’ policies

of several developed and developing economies have all contributed to the disin-tegration of the Brics mortar. If in the beginning of their journey, Brics was in search of mortar, now they worry about the quality of the cement in their structure.

Prime Minister Narendra Modi was correct to claim a few weeks ago that it is only the ‘I’ in Brics that was doing well.

Both on the issue of the handling of the economy and of corruption, India presents afar more reassuring picture compared to the other four.

But Brics is not vital to India’s economic journey forward. Rather, India needs the G7 — especially Japan, Germany and the uS — and other countries of the South, more than Russia or China for its economic modernisa-tion.

It is against this background that India assumes the chair-

manship of Brics.

It will host the 8th Brics Summit in Goa on October 15-16. When they meet in Delhi, Brics leaders should resist the usual temptation of asking what the world can do for them and see what they can do for the world, by addressing problems at home. Brazil, Russia and South Africa need domes-tic political and economic reform.

All five have to improve domestic governance, respect the rule of law and contain disruptive and jingo-istic elements at home.

It is only when they get better at addressing these challenges at home that their leadership and views will be taken more seriously at home and abroad, inspiring greater confidence in their shared aspiration to create new centres of power and performance.

– The Economic Times●