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Furnmart Zambian exit pays off

After announcing an exit from the Zambian market in the 2016 financial results, Furnmart Holdings’ exit has had a positive impact on the 2018 half year results.

 The 2016 results reflected that the closure of the group’s operations in Zambia had an effect on its profits. This though has not affected the newly released unaudited half year financial results for a period ending January 31 2018 results. A year and a half later, the decision to shut down the Zambian market still a say on the Group’s results. The Furnmart Group through its 2016 annual report explained that exiting the Zambian market was a disruptive process that required considerable focus and effort from management.

With the exception of the remaining debtors’ book the management confirmed then that all assets in the Zambian operations have been realised. The statutory winding up of the Zambian entity will commence subsequent to extracting final value from the debtors’ books. These books have been reported to have been fully provided as at the end of January 2018.The operations, with few exceptions, are reported to have all performed very well during this period. However, they noted these actions will have a positive impact on the Group’s profitability in future.

On a comparable basis the group results show that revenue increased by 12.4 percent. Gross profit margins increased compared to the prior period. The comparatives however, also included the low margin closing-down sales of the non-performing operations. Operating income of P100.0m was P44.2m an equivalence of 79.2 percent higher than the corresponding period. Even so, it is evident that the furniture retail market in Botswana and Namibia remains overtraded and imminent sweeping regulatory changes in these markets may present future headwinds.

The furniture retail industry continues to consolidate, particularly in South Africa, where store closures occurred across the board. As a result, to maintain growth, the South African furniture retailers maintained their expansion drives into Africa and are becoming more competitive in the territories where the Group traditionally dominated.

The regulatory environment for consumer credit providers is becoming increasingly challenging and complex as regulatory bodies introduce more restrictive laws, regulations and limitations in an attempt to protect consumers from high levels of indebtedness or exploitation by credit providers.

Furnmart, with a market capitalization (Market Cap) of 327.48M has realized Revenue of P660m for the just ended period which is 5.8 percent higher than the prior year. The growth in revenue is explained to have been partially offset by the closure of the non-performing operations included in the prior year.

On a comparable basis the group results show that, revenue increased by 12.4 percent. Gross profit margins increased compared to the prior period. The comparatives however, also included the low margin closing-down sales of the non-performing operations. Operating income of P100.0m was P44.2m an equivalence of 79.2 percent higher than the corresponding period.

This improvement resulted from the closing down of some of the Group’s non-performing business units and increased revenue and gross profit margins. Operating expense ratios have improved or were held constant in all continuing business units. Total debtors’ costs have increased by 31.6 percent during the period under review. The management under the Chairmanship of JT Mynhardt has cited that increase will most likely be seen against the backdrop of the strong growth in the debtors’ books during this period.

Management believes that the impairment provision on the debtor’s book is at an adequate level. Supported by a lower interest expense, due to lower borrowing and higher cash reserves, produced a profit after tax of P62.5m, which is P38.8m 164.0 percent higher than the previous year. The group’s revenue for the half year has been registered 36 million more than the corresponding period ending January 2017. The Group has confirmed and presented a very strong first half year.

The financials show that Furnmart strives to establish lasting relationships with its customers through the value for money and smart credit policies. Management is of the view that trading in the second half of the year will be comparatively less resilient. However, management is confident that the Group will produce earnings growth for the full year as a result of the growth in the debtors’ book which will highlight a focus on debtor book quality and cost control. It is further noted that opportunity seeking is on the plan to ensure a wide spread footprint. It is further explained that efforts to seek out opportunities for new store growth are appropriate.

The remaining non-performing stores will attract further focus from management in an attempt to turn them around. The Group opened three new Furnmart stores during the period under review and is now trading out of 124 stores in three countries. Management has noted that they will be opening another six stores during the current financial year.

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China’s GDP expands 3% in 2022 despite various pressures

2nd February 2023
China’s Gross Domestic Product (GDP) expanded by 3% year-on-year to 121.02 trillion yuan ($17.93 trillion) in 2022 despite being mired in various growth pressures, according to data from the National Bureau Statistics.

The annual growth rate beat a median economist forecast of 2.8% as polled by Reuters. The country’s fourth-quarter GDP growth of 2.9% also surpassed expectations for a 1.8% increase.

In 2022, the Chinese economy encountered more difficulties and challenges than was expected amid a complex domestic and international situation. However, NBS said economic growth stabilized after various measures were taken to shore up growth.

Industrial output rose 3.6% in 2022 over the previous year, while retail sales slightly shrank by 0.2% data show that fixed-asset investment increased 5.1% over 2021, with a 9.1% hike in manufacturing investment but a 10% fall in property investment.

China created 12.06 million new jobs in urban regions throughout the year, surpassing its annual target of 11 million, and officials have stressed the importance of continuing an employment-first policy in 2023.

Meanwhile, China tourism market is a step closer to robust recovery. Tourism operators are in high spirits because the market saw a good chance of a robust recovery during the Spring Festival holiday amid relaxed COVID-19 travel policies.

On January 27, the last day of the seven-day break, the Ministry of Culture and Tourism published an encouraging performance report of the tourism market. It said that domestic destinations and attractions received 308 million visits, up 23.1% year-on-year. The number is roughly 88.6% of that in 2019, they year before the pandemic hit.

According to the report, tourism-related revenue generated during the seven-day period was about 375.8 billion yuan ($55.41 billion), a year-on-year rise of 30%. The revenue was about 73% of that in 2019, the Ministry said.

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Jewellery manufacturing plant to create over 100 jobs

30th January 2023

The state of the art jewellery manufacturing plant that has been set up by international diamond and cutting company, KGK Diamonds Botswana will create over 100 jobs, of which 89 percent will be localized.

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Investors inject capital into Tsodilo Resources Company

25th January 2023

Local diamond and metal exploration company Tsodilo Resources Limited has negotiated a non-brokered private placement of 2,200, 914 units of the company at a price per unit of 0.20 US Dollars, which will provide gross proceeds to the company in the amount of C$440, 188. 20.

According to a statement from the group, proceeds from the private placement will be used for the betterment of the Xaudum iron formation project in Botswana and general corporate purposes.

The statement says every unit of the company will consist of a common share in the capital of the company and one Common Share purchase warrant of the company.

Each warrant will enable a holder to make a single purchase for the period of 24 months at an amount of $0.20. As per regularity requirements, the group indicates that the common shares and warrants will be subject to a four month plus a day hold period from date of closure.

Tsodilo is exempt from the formal valuation and minority shareholder approval requirements. This is for the reason that the fair market value of the private placement, insofar as it involves the director, is not more than 25% of the company’s market capitalization.

Tsodilo Resources Limited is an international diamond and metals exploration company engaged in the search for economic diamond and metal deposits at its Bosoto Limited and Gcwihaba Resources projects in Botswana.  The company has a 100% stake in Bosoto which holds the BK16 kimberlite project in the Orapa Kimberlite Field (OKF) in Botswana.

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