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Weaker Pula boosts profits

Furnmart Limited’s interim results for the current year have shown marked improvement in profitability following the furniture retailer’s decision to close its Zambian operations in the previous year. The half year results were boosted by the weakening pula against the rand.


“This performance must be seen against the backdrop of a difficult trading environment. Lower economic growth, higher prices driven by currency weakness, high levels of consumer indebtedness and unemployment, rising food inflation and the drought in the region, have all contributed to this unsatisfactory performance. Furthermore, our main regional competitors have rationalised their positions in South Africa and are expanding into Botswana and Namibia,” this was revealed in a statement signed by Furnmart chairman, John Tobias Mynhard, and Daniel le Roux, the group’s managing director.


In the latest figures, the group’s revenue slightly increased by 0.3 percent to P624 million following lower trading volumes. On the other hand, operating income decreased by 25.8 percent to P55.8 million. The group says this mainly due to the winding down sales of the Zambian operations as well as strong competition in the region. Furthermore, the operating income was also dragged down by higher operating expenses and lower finance income earned.


While the Group’s operating profit is 32.5 percent lower than the 2016 interim results, Furnmart managed to post profit before tax of P41 million, up by more than 500 percent. The growth in profit before tax was largely in part to the weaker pula against other currencies where Furnmart operates. “The exchange gain of P6.4m is substantially better than last year’s exchange loss of P45.2m. This gain was the result of the weakening of the Pula against the Group’s other functional currencies,” the group said in a statement.


The group’s profit after tax for the current interim results is at P23.7 million, a major improvement from the P4.4 million recorded in the 2016 interim results. The group’s profitability in the past has been negatively impacted by currency fluctuations, forcing Furnmart to exit the Zambian market. In 2015, the Zambian economy was under pressure due to the fall in copper prices, leading to the weakness of the Kwacha currency. This resulted in currency exchange losses when translating currency to the stronger Pula which is the functional currency at group level.


Furnmart management, startled by the interim loss and the pressures from tough trading conditions, decided to take active measures in late 2016 to turn around the struggling business. Part of the measures involved closing down loss-making branches while non-performing stores were to be subjected to a turn-around strategy. Furnmart commenced the winding up of the Zambian operations on the 1st of November 2016, with the management confident that these measures will have a positive impact on future profitability of the group.


In the full year end results for 2016, the group managed to reduce the significant currency exchange loss which was recorded in the interim results of that year. This led to Furnmart posting a profit of P47.7 million; however this was down by 14.9 percent from the 2015 full year results.


With profits declining, the management decided not to declare dividend as it will not make business sense to do so. The management further stated that it intends to build up reserves so that it could resume making dividend payouts in the next interim reporting stage. Now with Zambian headache out of the way and subsequent recovery in the interim results for this year, Furnmart has held true to its end of the deal.


“As indicated at year-end, the Company will resume dividend payments at this interim reporting stage. In line with the Group’s dividend policy, a gross interim dividend of 1.30t per share was declared on 11th April 2017 and is payable to shareholders registered on 12th May 2017, for payment on 26th May 2017,” the group announced in a statement accompanying the latest interim results.


The big dividend payout will help soothe shareholders who were left bruised by Furnmart’s performance on the Botswana Stock Exchange (BSE) in the previous years.  Furnmart ended the year as one of the biggest losers in the stock market after its share price went down by as much as 35 percent. The drop in share price in 2016 was in addition to another 48 percent share price loss in 2014. The company’s improved profitability in the latest interim results did little to excite investors as the share price remained stubbornly at 0.65t, down by 7.1 percent this 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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