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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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The Bulb World starts operations in South Africa

8th April 2021

Homegrown LED light manufacturing company, The Bulb World, has kick started operations in South Africa, setting in motion the company’s ambitious continental expansion plans.

The Bulb World, which was partly funded by Citizen Entrepreneurial Development Agency (CEDA) at the tune of P4 million, to manufacture LED lighting bulbs for both commercial and residential use in 2017, announced last year that it will enter the South African market in the Special Economic Zone (SEZ) of North West province under the auspices of North West Development Corporation (NWDC).

The company has already secured a deal with South Africa authorities which entails production factory shells and tax incentives arrangements.

The company founder and Chief Executive Officer, Ketshephaone Jacob has also previously stated that the company is looking for just under P50 million to finance its expansion strategy and is reaching out to institutional investors such as Botswana Public Officers Pensioners Fund (BPOPF) and government investment arm, Botswana Development Corporation (BDC).

However, Jacob told WeekendPost that instead of sitting and waiting for expansion funding the company has started hitting the ground running.

“We have decided to get in the streets of SA, start selling lights from door to door, ” said Jacob who is in currently in Rusternburg to oversee the introduction of The Bulb World products in the market.

Jacob explained more brand activations will be undertaken in South Africa. “The plan is to do it the whole of North West and Limpopo province, through hawkers, we give the hawkers the lights to sell at a factory price and they put a mark up and make a living,” he said.

The Bulb World operates from Selibe Phikwe, it currently employees 65 young people, 80 % of which are Phikwe youth. The company plans to add 100 jobs this year alone as it forges ahead with its regional and continental expansion plans.

In July this year Bulb World products will hit South African Shelves:  Pick n Pay, Checkers and Africa’s largest retailer Shoprite.

The Bulb World has been registered as a company in South Africa; the company will start producing lights from Mogwasa after striking a special economic zones deal with North West Development Corporation in North West Province South Africa.

“Over the next 10 years we are looking to create over 5,000 jobs in Africa. Through our expansion into all of Africa we will be able to create employment for various individuals in different sectors namely; manufacturing, distribution electronics and retail,” Jacob told this publication earlier this year.

Jacob said if all goes well, the plan is to have taken over Africa or rather penetrated, and have prevalent presence in the African market.

“We are gunning to have at least 30 percent market share by then. According to a 2016 Market Survey, the total valuation of sales for LED Lighting was 57BN, a portion of which we plan to have taken over by then,” he said.

 

While the company has set its eyes on Africa, Jacob said, the company has not fully exploited its local growth, indicating that there could be strategic factories built to supply neighbouring countries of Angola and Zimbabwe.

“There is potential for further local expansion as well to other areas of Botswana if things run smoothly as anticipated. Hopefully in the long-term if our fellow Africans and all these markets receive us well we are planning to build another factory,” he said.

“We are looking to build another factory in the Chobe/Ngamiland Area that will give priority to markets in Zimbabwe and Angola,” he said

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‘Oil exploration will have minimal impact’

30th March 2021
Okavango-River-Basin

The Maun based Okavango Research Institute (ORI) has downplayed the impacts of oil and gas exploration in part of Okavango delta arguing that given the distance proposed the likelihoods of negative impacts drilling these exploration wells on the surface water systems is likely to be negligible.

The Institution released a position paper titled ‘Proposed Petroleum (Oil and Gas) Exploration Operations in the Petroleum Exploration License (PEL) No. 73,’ with findings stating that, in the event of discovery of economically viable hydrocarbon deposits, much more careful consideration of the impacts and economic benefits of development of the resource will be needed.

For example, the fracking process for gas and oil extraction is known to require large volumes of underground water.

It further argues that increased extraction of the underground water is likely to affect the water table level and further affect the overall water availability in the river-basin.

“The effect on water availability and use may become worse if surface water is reticulated or sourced by any means from the Kavango River. Should the exploration and fracking for oil and gas expand to Block 1720, 1721 and 1821, the impact on water availability and quality will be significant, especially if the wastewater is not well managed,” said the paper.

The research unit recommends close communication between the relevant Basin State Ministries (Mineral Resources, Environment) and the Permanent Commission on the Okavango River Basin, OKACOM, and other stakeholders must be facilitated.

This will facilitate sharing of the correct information on the desired intentions of the basin states and compromises sought for the sustainability of the ecosystems in the downstream of the Cubango-Okavango river Basin, states the position paper.

ORI as a key stakeholder with scientific information says it is positioned to provide scientific advice and guidance to decision-makers on the potential impacts of both exploration and development and operation activities.

It also recommends that while the impacts might be minimal at the exploration stage, environmental impacts during the development and extraction process are significant.

Findings also state that the SADC Protocol places a mandatory duty to make a notification of planned measures undertaken in any riparian state in cases where such measures hold the potential to cause ‘significant adverse effects.’

It further states that where the planned development is trivial and not expected to cause any significant harm, the development state is not under duty to notify other riparian states.

Given that the drilling in the Kavango Region in Nambia is merely for exploratory purpose and the possibility of harm is minor, it is therefore not surprising that the Namibian government did not inform Botswana.

However, should it be found that the oil can be profitably or economically exploited, the Namibian government would be under a duty to notify both Angola and Botswana.

The institution further states that to ensure sustainable development in the Okavango Delta the following in the context of exploration for and potential development of hydrocarbon deposits within the Cubango-Okavango River Basin, it must be considered that the Okavango Delta is a World Heritage Site listed in 2014 by UNESCO and one of the binding requirements of the listing is the non-permissible commercial mining of any mineral, gas or oil within the World Heritage Site.

It states that the Okavango Delta is also a RAMSAR site in which mining is not allowed.

Should the exploration for minerals, oil and gas be allowed, there is a high chance that a mineral, oil or gas may be found given that the Delta is sitting on karoo sediments and shale rocks which in other parts of the world have been found to be sources of oil and gas deposits. Should oil or gas be discovered, there will be a strong socio-economic pressure to mine oil or gas and create jobs for the masses.

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Pakmaya yeast penetrates local market

30th March 2021
Pakmaya Africa Sales Manager: Cem Perdar

Manufactured in Turkey, Pakmaya Instant Dry Yeast can be used in the production of various fermented products, as it is suited for both traditional and industrial baking processes. All kinds of breads, buns and fermented pastry products are typical examples of applications.

Pakmaya Africa Sales Manager Cem Perdar says Pakmaya has 4 plants in across the world, further indicating that all of the plants have the highest standards of quality certificates and approvals. Regarding raw material, molasses is the main ingredient for yeast. Concerning production activities, yeast manufacturing requires high know-how and capability. Pakmaya has all those capabilities and aspects more than 45 years.

According to Perdar, Pakmaya has been existent in African markets since 30 years. From South to North, Central to East and West, a consumer can find Pakmaya in nearly every part of Africa continent.

“With its high quality, rich product selection and good service, our brand has become the favorite yeast of many Africans. On the other hand, our distributors in African countries are working very hardly and loyally in order to promote our products in their markets. After some time, we are becoming like families with our exclusive distributors in Africa and this enables both parts to work harder and keeps our product sustainable in market,” he said in an interview this week.

The yeast manufacturing giant made its way to Botswana market. The company has been smoothly working with Kamoso Distribution, a local distribution company. Perdar told BusinessPost that two entities have been working hard to earn is market locally.

“At the moment we have a good market share with them in Botswana market. I’m sure during 2021 long, we will be increasing our sales and market position. Soon we are going to start a marketing campaign in Botswana, so that means Batswana will see and recognize Pakmaya more and more. Pakmaya wants to be the best friend of bakers in bakeries and ladies at homes in Botswana.”

As per global COVID-19 regulations to curb the spread of the COVID-19, Botswana just like other country closed borders. Providentially, the restrictions did not affect the company destructively.

Perdar says “Kamoso Africa is a very important and strong partner in Botswana territory. With Kamoso’s hard work and strict measurements, we have done a very good job. So as Pakmaya, we have not suffered any distribution problem. Our partner is doing the needful at the reaching our products to end users.”

He further said “We are doing well in Botswana market and hoping to make much more. Our aim is to enter every single corner in Botswana territory. With our new marketing campaigns, we are planning to be the most preferred yeast in Botswana market.”

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