Radar Holdings to delist from ZSE

By Tawanda Musarurwa

HARARE - Radar Holdings will next month seek shareholder approval to delist the firm from the Zimbabwe Stock Exchange.

The struggling firm says it feels compelled to delist its shares from the local bourse in view of prolonged under-performance, which have - in turn - constrained its ability to remain in compliance with the listing requirements of the exchange.

"The reason for the proposed delisting is that the Group continues to under-per-form....Furthermore, com-pounding the group’s under-performance are the costs

associated with remaining listed on the Zimbabwe Stock Exchange that are exuberant,”

said Radar in an abridged information memorandum to shareholders and notice of an

extraordinary general meet-ing today.

News Update as @ 1530 hours, Friday 29 January 2016Feedback: [email protected]: [email protected]

Radar Holdings to delist from ZSE

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The ZSE costs for the group include (among others) annual listing fees (amount-ing to +/-$4 271); auditors’ costs associated with main-taining a ZSE listing, that is, interim and final accounts (amounting to +/-$46 000); costs associated with publi-cations of results and notices and any other corporate actions (amounting to +/-$18 000), and transfer secretar-ies maintenance of the com-pany share register (amount-ing to +/-$6 000).

"Secondly, trading in the

shares of the company has been limited and the absence of sufficient buyers and sell-ers of the shares has meant that the shares are relatively il l iquid. During the 2015 cal-endar year Radar traded a mere 79 483 shares valued at $2 302, further reiterating the il l iquidity of the shares.

"Finally, the size of the com-pany and the il l iquidity of shares do not allow it to fully take advantage of being listed on the ZSE. For these reasons, the board believes that it is in the best inter-

ests of the company and the shareholders as a whole if the approval of the delisting occurs as soon as possible," Radar said.

The proposed delisting will require - per ZSE require-ments - approval of at least 75 percent of the company's minority shareholders, hence the extraordinary general meeting having penciled for the 25th of next month.

Radar said after the delist-ing, the firm will stil l remain a public company but will not

be a listed company, and that the transaction will have no impact on its shareholding structure.

For the full year to June 30, 2015 the group reported a 17 percent decline in revenue to $6 million. In that period, the group incurred an after tax loss of $288 000, similar to the prior comparable period.

The holding company's opera-tions currently include: Radar Properties (Pvt) Ltd, Radar Investments (Pvt) Ltd and MacDonald Bricks.●

BH243

By Funny Hudzerema

HARARE - Zimbabwe's plat-inum sector requires $3,8 bill ion in investment capital over the next five years to optimise output.

Presenting the State of the Mining Industry Report 2015 University of Zimbabwe sen-ior lecturer in the depart-ment of economics Dr Albert Makochekanwa said the plat-inum sector requires more investments since the sec-tor’s production is declining.

“The platinum group metals (PGMs) industry said they require $3,8 bill ion to 2020 to optimise output while exist-ing players require around $450 million for 2016.

‘We asked them if they get the additional funding what will be the likely impact to the platinum sector they said using the 12 500 kg output of 2014 if we get the addi-tional funding by 2020 we are

targeting 24 000 kg by 2020 which is 100 percent growth,” he said.

Currently earnings from the

platinum sector have fallen in 2015, compared to 2014, thus earnings from platinum, for instance, declined by 23 percent in 2015, compared

to 2014 in 2013 the sector obtained $554 million, 2014 $495,4 million and in 2015 $381 million.

He added that the investment will be made in value addition and beneficiation since most respondents alluded that the sector is not benefiting from selling platinum in its raw form.

In terms of the key find-ings from the survey plati-num price declined by around 24 percent from $1 385 per ounce in 2014 to $1 053 per ounce last year.

The decline of platinum prices is being caused by declining in price on the international market.

The survey findings revealed that labour, royalties, sup-plies and electricity costs contributed more than 79 percent of production cost per ounce last year.●

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Zim platinum sector needs $3,8bn in investment

BH24

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BH24 Reporter

HARARE – The Cotton Com-pany of Zimbabwe (Cottco), reported a $8,1 million loss before taxation for the half-year to September 30, a reduction from a loss of $9,2 million last year.

Revenue for the period under review amounted to $2,3 mil-lion versus $17,8 million in the prior comparable period.

Management attributed the dip in revenue to "the delay in the start of the buying season that also affected the start of the ginning and sales off take in the industry."

The company expects full year sales figures to be lower than last year due to the decline in volumes by 33 percent and lower lint prices.

"The international lint prices remain subdued and the company concluded con-tracts at US57c/lb. Producer

prices averaged US32c," said the company in a statement accompanying the results.

Notwithstanding the decline in cotton intake, Cottco's reg-istered a reduction in losses by 19 percent from contin-uing operations due to tight cost control over the same period.

The group's borrowings at $54 million is 7 percent lower than prior comparable period. (Included in the total bor-rowings is a long-term loan amounting to $3 million).

Meanwhile Cottco - sub-Sa-haran Africa’s largest ginner and marketer - said the Gov-ernment has "started the pro-cess of rescuing Cottco from its crippling debt"

Government is taking over all of company's bank loans through the Zimbabwe Asset Management Company (ZAMCO) in a proposed debt/equity swap deal.●

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Cottco narrows lossesBH24 Reporter

HARARE –- TSL Limited has recorded a marginal revenue increase of $48,6 million for the year ended October 31, 2015 compared to $48,2 million last year.

In a statement accompanying the group’s financial results TSL chairman Mr Anthony Mandiwanza said diver-sity of operations had mitigated the decline in revenues.

"The steady performance by the group in 2015 is, in large measure, attributable to the diversity of its operations.

“While the agriculture related busi-nesses were adversely impacted by the weather patterns, the logistics and real estate clusters fared well," he said.

Full year profit before tax was how-ever lower at $6,1 million versus $6,8 million last year

Operating profit (before fair value adjustments) was down 8 percent on last year to $6,8 million. Strong per-formance registered in our logistics

and real estate clusters and new ini-tiatives in the agro trading businesses mitigated the decline in revenues and operating profit in the tobacco related businesses

Profit before tax, associates and joint venture was unchanged on prior year. Profit before tax at $6,1 million dollars was down 11 percent on 2014.

Whereas in the prior year, share of associates and joint venture prof-its contributed 11 percent to group profit before tax, contributions in the current year were nil, as these com-panies were accounted for as invest-ments

In terms of future prospects the group the group is targeting to put efforts to rationalise operations in the packaging and auctioning business in response to changing operating envi-ronment.

The group is also targeting to open international markets and access world class practices and increase efforts to give the logistics business a stronger regional footprint through arrangements with international play-ers.●

TSL revenues almost flat

BH247

HARARE – Zimbabwe has chosen to prioritise the implementation of 10 of the 17 Sustainable Development Goals as the Government seeks to uplift the lives of its citizens, an official said on Thursday.

The United Nations General Assembly last year adopted the 17 SDGs which will run up to 2030 to replace the Mil-lennium Development Goals (MDGs) which ran from 2000 to 2015.

Macro-Economic Planning and Investment Promotion per-manent secretary, Dr Desire Sibanda told stakeholders the prioritisation was in part due to budgetary constraints.

“Prioritisation does not mean we are not going to imple-ment all of them or that the others are less important,” he said.

He said the prioritised SDGs included Number 8 which

deals with decent work and economic growth, Number 7 focusing on provision of affordable and clean energy, Number 2 on ending hunger, Number 9 on industry, inno-vation and infrastructure and Number 6 on sustainable management of water.

The others include Number 13 which deals with combating climate change, Number 17 on global partnerships, Num-ber 3 on promoting healthy lives and well-being for all, Number 4 on quality edu-

cation and Number 5 which deals with gender equality.

Dr Sibanda said the Govern-ment was working on mobilis-ing domestic finance to fund implementation of the SDGs.

“But that does not mean we will also not look for support from donors,” he said.

He said the Government was working on a communi-cation strategy that would ensure that the whole country adopted and worked towards adoption of the SGDs and ensuring their achievement.

The United Nations Develop-ment Programme (UNDP) had pledged to assist the govern-ment with the funding for dis-seminating information to all the10 provinces, he said.

“The MDGs were highly cen-tralised in the cities and we want to ensure that there is ownership of the program across the country,” he said.

UNDP senior economist, who is also chairman of the UN SDG Taskforce Amarakoon Bandara said it was critical for the Government to mobi-lise domestic finances as the developed world was battling with its own issues.

“The idea behind domestic financing is to strengthen domestic capacities to mobi-lise financing and putting a stop to il l icit financials flows,” he said, adding devel-oped countries were battling with economic woes that had also seen them shift priorities in the past 15 years.

“Official development assis-tance will continue to play its role but most of the fund-ing will come from domestic resources.”

Mr Bandara lauded Zimbabwe for coming up with a posi-tion paper on SDGs, some-thing that a few countries in the world had done.- New Ziana●

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Zim to prioritize 10 SDGs

Dr Desire Sibanda

BH249

HARARE -The mainstream industrial index closed the week on a high note adding 0.39 to settle at 103.04 on the back of gains in selected heavyweight.

Conglomerate Innscor led the movers with a $0,0070 gain to close at $0,2070, while giant tel-

ecoms Econet Wireless bumped $0,0058 to trade at $0,2297 while giant retailer OK Zim gained $0,0024 to $0,0400.

Trading in the negative territory was beverages producer Delta, which eased $0,0011 to close at $0,5289, and Simb-

isa which went down by a marginal $0,0005 to trade at $0,1585.

Giant insurer Old Mutual also slid to $1,6999 after a $0,0001 loss.

Meanwhile the ZSE has announced that CFI Hold-ings has been suspended

with effect from today.

Week-on-week, the indus-trial index shed 0.01 (or 0,01 percent). The min-ing index was flat at 19.53 points as all the mining counters maintained pre-vious price levels.

But on a week-on-week basis, the mining index retreated 0.24 (or 1,23 percent)

- BH24 Reporter ●

ZSE10

CFI suspended, equities gain

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BH2411

MovERS CHANGE ToDAy PRICE USC SHAKERS CHANGE ToDAy PRICE USC

OK Zim 6.38 4.00 SIMBISA -0.31 15.85

INNSCOR 3.50 20.70 DELTA -0.20 52.89

ECONET 2.59 22.97 OLD MUTUAL -0.01 169.99

INDEx PREvIoUS ToDAy MovE CHANGE

INDUSTRIAL 102.65 103.04 +0.39 points +0.38%

MINING 19.53 19.53 +0.00 POINTS +0.00%

12 ZSE TABlES

ZSE

INDICES

Stock Exchange

13 DIARy oF EvENTS

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

PowER GENERATIoN STATS

Gen Station

29 January 2016

Energy

(Megawatts)

Hwange 339 MW

Kariba 285 MW

Harare 30 MW

Munyati 25 MW

Bulawayo 24 MW

Imports 0 - 300 MW

Total 1268 Mw

—28 January 2016 – Chamber of Mines Zimbabwe State of the Mining Industry Report 2015 launch; venue: Rainbow Towers; Time: 0730hrs -1300hrs

—10 February 2016 - Nampak Zimbabwe Annual General Meeting: venue 68 Birmingham Road, Southerton, Harare: Time 12:00

—18 February 2016 - 70th Annual General Meeting of the members of CAFCA ; Place: Boardroom at the company’s registered office at 54 lytton Road, workington, Harare; Time: 12:00 hours

—23 February 2015 - 38th Annual General Meeting of the members of Powerspeed Electrical limited; Place: Powerspeed Board-room, Gate 1, Powerspeed Complex, Corner Cripps Road and Kelvin Road North, Graniteside, Harare; Time: 1100 hours

25 February 2016 - Extraordinary General Meeting (“EGM”) of the Shareholders of Radar Holdings limited; Place: Tanganyika House, 6th Floor Boardroom, Harare; Time: 0900 hours...

25 February 2016 - The 49th Annual General Meeting of Mashonaland Holdings limited; Place: The Boardroom, 19th Floor, ZB life Towers, 77 Jason Moyo Avenue, Harare; Time: 1200 hours...

THE BH24 DIARy

CAPE TowN - Domestic bond yields had compressed on Friday morning ahead of the release of local trade data.

At 8.30am, the benchmark R186 was bid at 9,350 per-cent and offered at 9,650 percent from Thursday’s close of 9,455 percent.

The middle-dated R207 was bid at 8,845 percent and offered at 8,845 percent from a close of 8,970 percent pre-viously.

The trade balance is projected to have recorded another sur-plus in December of about R5bn after a R1,8bn surplus in November. There are nor-mally fewer imports during December as most companies are closed for the holidays and there is also usually an increase in exports.

The South African Revenue Service wil l release the data at 2pm.

Barclays Research analysts said bonds could strengthen further if there was a surplus in the trade balance as the

reading "could reduce con-cern over SA’s external fund-ing vulnerabil it ies, especial ly

heading to February’s budget meeting" - BDlive ●

REGIoNAl NEwS 14

S.A bonds firmer ahead of local trade dataRand rallies more than 1 pct after

c.bank hikes rates

JoHANNESBURG - The rand raced to i ts f i rmest in three weeks on Fr iday fo l lowing an aggressive interest rate hike by the South Afr ican Reserve Bank (SARB) as i t looked to curb r is ing inf lat ion.

At 0625 GMT, the rand had strengthened 1.05 percent to 16.0500 per dol lar, i ts f i rmest s ince Jan. 8, extending a ra l ly from the previous ses-s ion fo l lowing the central bank's decis ion on Thurs-day to push benchmark lending rates up by 50 basis points.

The unit a lso gained against the Br i t ish pound and the euro, by 0.4 percent and 0.9 percent respect ively.- Reuters●

ToKyo—Japan’s central bank stunned the markets Friday by setting the country’s first nega-tive interest rates, in a desper-ate attempt to keep the econ-omy from sliding back into the stagnation that has dogged it for much of the last two dec-ades.

The unexpected move shows the Bank of Japan's determina-tion to fight global headwinds that threaten to tip the country back into deflation, a damaging cycle of price falls and weaken-ing economy.

Yet it also shows how few pol-icy options are left for the BOJ. The central bank is already buy-ing ¥80 trillion ($674 billion) in assets a year, putting nearly a third of Japan’s massive bond market in the hands of the cen-tral bank and sending Japan’s debt-to-gross domestic-product ratio to 230 percent, more than any other major economy.

After three years of BOJ asset purchases, inflation expecta-tions in Japan are sagging, and recent volatility in global mar-kets has threatened to undo some of what the BOJ had achieved with its extraordi-

nary easing: a weaker yen and higher stock prices.

The yen fell as much as 2,1 per-cent following the announce-ment, hitting 121,33 to the dollar. The Nikkei Stock Aver-age seesawed before closing up 2,8 percent. Some government bonds saw rates turn more deeply negative. The two- and five-year yield fell to their most negative yet, both hitting as low as 0,085 percent.

The BOJ’s move could also add further pressure on the U.S Federal Reserve to hold back on raising interest rates, less than a month after it started

tightening again, as economies throughout the globe show signs of distress and weakness.

The central bank is now the second of the world’s major central banks to set negative interest rates, joining the Euro-pean Central Bank, which first did so in 2014. The central banks of Sweden, Denmark and Switzerland also have negative interest-rate policies.

The introduction of negative rates once again signaled BOJ Gov. Haruhiko Kuroda’s willing-ness to pursue a “shock-and-awe” strategy. He denied in recent days that the bank was considering negative rates.

Mr. Kuroda has maintained that three years of aggressive quantitative easing have had “intended effects,” but they have failed to produce the tar-geted 2 percent inflation. Mr. Kuroda has blamed falling oil prices for the low inflation and pointed to a price index that excludes energy prices as evi-dence that underlying inflation is strong.

Many economists have begun speculating that the asset-buy-ing program may have reached

the limits of its capacity and effectiveness.

Shuichi Ohsaki, a rates strat-egist at Merrill Lynch Japan, said the move represented a “change of direction” for the BOJ, and reflected a decision to focus on rates instead of the quantity of assets.

Mr. Ohsaki said the BOJ likely wanted to take a page out of the playbook of the European Cen-tral Bank, but the bigger gap between lending and deposits rates at Japanese banks might limit the measure’s effective-ness in Japan.

The central bank said it cut the deposit rate it pays on cash parked at the BOJ by commer-cial banks in excess of legally required reserves, to minus 0,1 percent, from the previous 0,1 percent.

The goal was to push down bor-rowing costs across a broad time spectrum to stimulate inflation, the bank said in a statement following its two-day policy meeting. It also said it would cut the interest rate fur-ther into negative territory “if judged as necessary.” - wSJ●

INTERNATIoNAl NEwS 15

Bank of Japan introduces negative interest rates

It’s no blessing for com-panies that bet on high prices.

By Asjylyn loder & Mat-thew Philips

“For anyone consuming oil, lower oil prices are a tax cut,” said US Secretary of the Treasury Jacob Lew at the World Economic Forum in Davos on Jan. 21. “It puts more money in people’s pock-ets. It actually has a positive effect.” Lew was trying to be reassuring, with good reason. The day before, crude prices had dropped to a 12-year low of $26,55 a barrel, down from $107 as recently as mid-2014. The ripple effects in the stock market briefly wiped as much as 565 points off the Dow Jones industrial average. (Oil rallied back to $32 as of Jan. 27.)

Lew’s contention that dra-matically cheaper oil is some-thing to cheer about makes a lot of intuitive sense. China, the world’s largest oil importer, has capitalized on

lower prices by stockpiling reserves; for all the country’s problems as its growth slows, energy costs aren’t among them. In the US, consumer confidence is on the rise. The benefits of the price cut “handily outweigh the neg-atives,” says Jacob Oubina, senior US economist for RBC Capital Markets. “It’s just a matter of when consum-ers and businesses adjust to this.”

The meme that cheap oil acts like a tax cut goes back dec-ades. As early as 1983, law-makers asked the Congres-sional Budget Office to gin up estimates of the benefi-cial impact of falling prices. Revisiting the topic a few years later the CBO offered an instructive caveat: “It may be best not to refer to a ‘tax cut equivalent’ of an oil price change.”

Among the reasons the anal-ogy didn’t work: The drop in revenue for domestic energy companies can trigger eco-

nomic contraction not seen with a tax cut. And, surpris-ingly, the total economic ben-efit actually shrinks the fur-ther prices fall.

Increased US energy inde-pendence has made the math even trickier. With domestic output near a 43-year high and fuel imports down to 24 percent of consumption, a glut of crude isn’t a problem just for OPEC and Texas any-more. Third-quarter revenue for U.S. independents, the little companies that drove the shale boom, was $26 bil-lion less than the year before, according to data compiled by Bloomberg. Last year’s spending is on track to be more than $60 bill ion lower than 2014, and oil at $30 a barrel has prompted a fresh round of cutting.

Goldman Sachs, which hailed lower prices as a $125 bill ion tax cut in December 2014, put it this way in a Novem-ber report retreating from its bullish prediction: “Shale

states shrank the stimulus” that usually comes when con-sumers pay less at the pump.

Instead of tax cut, some ana-lysts are turning to another simile: Falling oil prices could be like falling real estate val-ues. “This was a Wall Street bet, and the bet was that the price of oil, a theoretically finite commodity, wouldn’t go below a certain level,” says Martin Bienenstock, co-head of bankruptcy and restruc-turing at law firm Proskauer Rose. “The bet turned out wrong. Just like the bet that housing prices would never fall.”

During the boom years, some shale producers spent $2 drill ing for every $1 earned selling oil and gas, according to data compiled by Bloomb-erg, and they plugged the shortfall with debt.

Wall Street extended low-in-terest credit lines to junk-rated borrowers, which put up their oil and gas properties as collateral. Producers tapped

16 analysis16 ANAlySIS

what's not to like about cheap oil? well....

17 analysis17 ANAlySIS

their bank lines to buy prop-erties and drill wells. When companies needed to pay off their loans, their bankers helped them sell equity and debt. Investors, hungry for higher returns after years of low interest rates, snapped it all up.

From 2004 through 2014, the high-yield bond mar-ket doubled in size while the amount of bond debt owed by junk-rated energy produc-ers expanded elevenfold, to $112,5 bill ion, according to Barclays. Bond buyers were so eager that provisions meant to protect them eroded.

It worked beautifully until oil prices collapsed. Revenue has plummeted, leaving pro-ducers short of cash to pay their debts. Banks have cut dril lers’ credit lines as the value of their collateral has fallen. Oil and gas bonds have pushed debt market distress to levels not seen since the 2009 recession, according to Standard & Poor’s, and bond buyers are selling their hold-

ings at steep discounts to salvage some part of their investment.

Those who got out could be the lucky ones. Last year 42 US oil producers went broke owing $17 bill ion, accord-ing to the law firm Haynes & Boone, a trend that’s likely to accelerate at today’s prices. Many holders of those compa-nies’ bonds will get nothing. Banks aren’t immune. Wells Fargo, Bank of America, Cit-igroup, and JPMorgan Chase said this month that they’ve set aside at least $2,5 bill ion to cover potential losses on souring energy loans. If low prices persist, the price tag will get bigger.

The worry is that the pain spreads from finance to the broader economy. “Consum-ers may be doing great until producers can’t service their debt,” says Michael Feroli, chief US economist at JPMor-gan. “And that creates prob-lems for everyone, producers and consumers alike.

” He points out that the com-modity bust of the 1980s contributed to the inability of emerging-market countries to pay their debts, with world-wide consequences.

Oil-rich countries that spent the boom years collecting bonds, equities, department stores, and soccer teams are in selling mode. As they dump assets, exacerbating the market rout, “it feels pretty messy,” wrote David Zervos, chief market strategist for Jefferies Group, in a Jan. 18 report.

Saudi Arabia, the world’s largest oil producer, has seen its foreign exchange reserves fall by more than $100 bill ion since mid-2015, according to the Saudi Arabian Monetary Agency, a bigger drop than during the financial crisis.

“But outside the energy mar-ket, this is nothing like 2008,” Zervos added. “This crash is a huge transfer of wealth away from the levered global energy asset holder to the

unlevered average consumer.” Similarly, RBC’s Oubina calls comparisons to the subprime bust “insanity.” The financial system, he says, “is ironclad compared to 2007.”

There’s one more thing low oil prices might be like: a flash-ing red warning light. China’s downshift to annual growth of 6,8 percent, from 10 per-cent five years ago, is a big factor pulling oil prices down. It points to an increased risk of deflation and slow growth throughout the global econ-omy. In other words, per-sistently low oil prices could really be just a symptom, says JPMorgan’s Feroli.

“This may be the result of a bad economy,” he says. “Not a cure for a bad economy.”

The bottom line: While cheap oil has benefits for consum-ers, defaults by producers and pain in oil-rich countries could stall the world economy

- Bloomberg●