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1. By Tawanda Musarurwa
HARARE - Government could
be losing out on revenues
of at least $18 million, amid
claims that some local ciga-
rette firms could possibly be
circumventing the payment of
excise duty on their products.
Excise duty is a tax charged or
levied by the Government on
certain domestic production
of prescribed goods and ser-
vices, and one of these goods
in Zimbabwe are cigarettes.
In terms of how it is paid,
excise duties are self-as-
sessed by the particular
manufacturer through Excise
returns that are submitted on
a monthly basis.
British American Tobacco Zim-
babwe Holdings Ltd (BAT)
managing director Ms Clara
Mlambo told an analyst brief-
ing this morning that although
there hasn’t been an influx of
cigarette products from the
region, a major concern was
the proliferation of what she
termed “suspiciously priced
products”, which had the dou-
ble whammy of hurting BAT’s
margins and Government’s
revenue collection efforts.
Locally, excise duty on cig-
arettes was raised from $15
per 1 000 sticks to 20 dollars
News Update as @ 1530 hours, Thursday 18 February 2016
Feedback: bh24admin@zimpapers.co.zwEmail: bh24feedback@zimpapers.co.zw
Govt losing millions on “suspiciously priced products,” claims BAT

2. per 1 000 sticks in the 2015
National Budget Statement.
“We have seen what we call
suspiciously priced products
in the market particularly in
quarter four, from October
last year we started seeing an
increase in those products.
“Now let me talk about sus-
piciously priced products,
excise charges on a pack of
cigarettes translates to 40c a
pack, so when you see prod-
ucts selling on the streets at
50c a pack its actually difficult
to understand how you can
pay excise and still charge 50c
can be paid, because you have
to factor in all your production
costs, distribution costs and
remaining with 10c to make a
profit,” said the MD.
She said the company will be
engaging Government to look
into the matter.
“We are seeing an increase
in these suspiciously priced
products and it’s an area that
we need to deal with as an
industry and with Govern-
ment, because looking at Q4
last year, the Government
probably lost about $2,3 mil-
lion in excise because of the
suspiciously priced products,
and translating that to a full
year, the Government could be
losing around $18 million so
that needs to be dealt with.”
BAT posts ‘good numbers’
BAT posted a profit for the
year of $15,4 million up from
$13,4 million in the prior year.
The rise in net profit also rep-
resents a increase in earnings
per share, which jumped to
$0.75c from $0.65c previ-
ously.
Group revenue rose by $0,70
million compared to 2014,
driven by marginal gains from
pricing net of the impact of
the excise increase in Novem-
ber 2014, inspite of sales vol-
ume decline.
BAT’s total sales volumes for
the period under review were
down 9 percent compared to
prior year.
“The sales volumes for the
local brands declined by 10
percent, while our Global
Drive Brand, Dunhill grew by
12 percent albeit in the con-
text of a lesser market share,”
said BAT.
Gross profit improved by 12
percent to $32,4 million,
which management attrib-
uted to reduced raw materials
prices, productivity initiatives
and cost containment measure
in the firm’s manufacturing
system.
Other income included pro-
ceeds from the disposal of a
warehouse situated in Ardben-
nie, from which the company
recorded a profit of $1,4 mil-
lion.
Going forward, Ms Mlambo
said the manufacturer would
focus on investing in ‘brand
equity’, distribution excel-
lence and implementing cost
efficiencies where required.
BAT declared a dividend of
$0,44c per share for the
period.●
2 news

3. BH243

4. By Funny Hudzerema
HARARE - Cables manufac-
turer Cafca recorded an 84
percent decline in profit dur-
ing the first quarter of Janu-
ary due to a decline in exports
and low demand for copper in
the country.
Speaking during an annual
general meeting Cafca man-
aging director Mr Rod Webster
said the loss was due to tight
liquidity and low demand of
copper on the market.
“As we stand the end of Jan-
uary volumes are 25 percent
down, sales are down 31 per-
cent and profit is down 84
percent,” he said.
Mr Webster said that the
decline in copper prices from
$6 500 to $4 400 per tonne
affected their sales as they
only received $600 000 from
the 150 tonnes they sold
instead of $950 000.
On exports Mr Webster said
the weakening of regional
currency such as the rand,
Kwacha (Malawian and Zam-
bian) and the Metical made it
difficult to sell their copper in
those markets.
“If we look at our exports the
weakening of the rand made
our copper a bit expensive in
that market and the option
to export to South Africa is
no longer there. Exports into
Malawi were also affected by
devaluation,” he said.
With respect to Zambia, Mr
Webster said exports were
affected by low prices in that
market while in Mozambique
exports was affected by a rise
in the tax base.
He said that prospects for
recovery were slim since
exports and local sales were
down.
“The situation does not allow
us to recover as all the sec-
tors are struggling, the min-
ing sector is reeling from low
commodity prices and the
agriculture sector is not hav-
ing a good year because of
the EL Niño.
“In terms of borrowings we
accumulated maximum bor-
rowings of $1,5 million and
by the half of the year we
will be at half a million and
by the end of the year we
are expecting to cleared the
amount.
“The balance sheet is still
strong we have got lot of
stocks and lots of debtors and
some creditors so the balance
sheet is not a problem,” he
said.●
4 news
Cafca profits decline 84pc

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5

6. HARARE - The Government will
soon intervene in the stand-
off between the Grain Market-
ing Board (GMB) and its former
workers who are camped at the
company headquarters demand-
ing their unpaid dues.
Hundreds of former GMB work-
ers have been camping outside
the company headquarters in the
capital since last week, demand-
ing their unpaid 10 months sal-
aries.
The ex-workers, who were dis-
missed on three months’ notice
last year following a landmark
Supreme Court ruling, are still to
get their salaries which the para-
statal owed them before it sacked
them.
Vice President Emerson Mnan-
gagwa, who is leader of Govern-
ment business in the National
Assembly, told legislators during
the question and answer session
that the Government would inter-
vene to solve the situation.
“I think it is necessary for Govern-
ment to react to the plight of the
people stationed at GMB,” he said.
“Let me assure the House that
everything possible will be done
to attend to their plight.”
Some of the former workers, who
have travelled from as far as Bul-
awayo and other areas, have
vowed not to go back until they
get their dues. The workers have
expressed concern over failure by
the GMB management to priori-
tise their concerns.
The GMB has been facing serious
financial challenges, resulting in
its failure to pay farmers time-
ously for grain delivered.- New
Ziana●
6 news
Govt to intervene in GMB, former workers stand-off

7. BH247

8. By Tawanda Musarurwa
HARARE – Struggling logistics
and passenger transport group
Unifreight Africa will convene an
extraordinary general meeting
(EGM) next month to seek share-
holder approval for the disposal
of its controlling stake in Tredcor
Zimbabwe (Pvt) Ltd (TrenTyre) for
$2 000.
The EGM has been pencilled for
March 11.
Unifreight owns a 51 percent stake
in Tredcor, but the subsidiary is
weighing heavy on the group after
the latter’s liabilities exceeded its
assets by $5,7 million as at mid-
last year, and further deteriorated
to $6,1 million as at year-end.
In a circular to shareholders
today, Unifreight said “the primary
rationale for the proposed trans-
action is to immediately stem the
losses from TrenTyre which losses
are unlikely to reverse in the fore-
seeable future, given the current
difficult operating environment
and undercapitalisation of the
business.”
Unifreight plans to sell its 51 per-
cent stake to ScanLink (Pvt) Ltd
for $2 000. ScanLikn is a local firm
owned by Mr Hamish Rutland,
who is also a director and bene-
ficiary shareholder of Unifreight
and Tredcor.
Unifreight is concerned that if
the transaction falls through, its
consolidated financial position
will continue to reflect the histor-
ical and anticipated future losses
TrenTyre.
For the half-year to June 2015,
Unifreight’s operating loss degen-
erated to $1,2 million compared
to $476 000 last year on the back
of increased restructuring costs.
The group closed its Botswana
subsidiary last year and has since
disposed of Pioneer Transport to
its employees through a manage-
ment takeover.
The cost of stopping the Botswana
unit amounted $82 000, while Pio-
neer Coaches suffered losses of
$390 000 and TrenTyre incurred a
loss of $603 000.●
8 news
Unifreight seek shareholder approval for Tredcor sale

9. BH249

10. HARARE - The mainstream
industrial index registered an
8th loss on the trot lost 0.28 to
close at 99.11 after cable pro-
ducer CAFCA slipped $0,0405
to trade at $0,2800, while
Mashonaland weakened by
$0,0032 to close at $0,0168
and Proplastics eased $0,0030
to $0,0180.
Also in the red was clothing
retailer Edgars and Masimba
which both traded $0,0020
lower at $0,0580 and $0,0070
respectively.
On the upside giant telecoms
Econet added $0,0003 to set-
tle at $0,2205 and Padenga
gained $0,0004 to close at
$0,0600.
The mining index was again flat
at 18.74 as Bindura, Falgold,
Hwange and RioZim main-
tained previous price levels of
$0,0090, $0,0050, $0,0300
and $0,1040 respectively
. - BH24 Reporter ●
ZSE10
Equities sink deeper into the red

11. BH2411

12. Movers CHANGE Today Price USc SHAKERS Change TODAY Price USc
Padenga 0.67 6.00 Masimba -22.22 0.70
Econet 0.13 22.05 Mashonaland -16.00 1.68
Proplastics -14.28 1.80
CAFCA -12.63 28.00
Edgars -3.33 5.80
ZB Financial -0.39 2.50
Index Previous Today Move Change
Industrial 99.39 99.11 -0.28 points -0.28%
Mining 18.74 18.74 +0.00 points +0.00%
12 zse tables
ZSE
Indices
Stock Exchange
Previous
02 03
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13. BH2413

14. 14 DIARY OF EVENTS
The black arrow indicate level of load shedding across the country.
POWER GENERATION STATS
Gen Station
16 February 2016
Energy
(Megawatts)
Hwange 476 MW
Kariba 285 MW
Harare 30 MW
Munyati 26 MW
Bulawayo 23 MW
Imports 0 - 350 MW
Total 1250 MW
—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...
26 February 2016 - The Sixty-ninth Annual General Meeting of Ariston Holdings Limited; Place: Ariston Holdings Limited Main
Boardroom, 306 Hillside Road, Msasa Woodlands, Harare: Time: 14.30 hours:
THE BH24 DIARY

15. BH2415

16. LUSAKA-Zambian President
Edgar Lungu’s cabinet has
approved a plan to introduce
a mine-royalties system that
varies based on copper prices
as it seeks to keep operations
open and prevent further job
cuts.
Levies will range from 4
percent to 6 percent, Amos
Chanda, the president’s
spokesman, said by mobile
phone yesterday. That’s a
narrower band than the 3
percent to 9 percent the gov-
ernment proposed in Decem-
ber. Royalties are currently
9 percent for open-pit mines
and 6 percent for under-
ground operations.
“This review in the taxation
regime is deemed necessary
to sustain continuous opera-
tion of existing mining com-
panies and avert the con-
tinuation of suspension of
mining operations and job
losses,” Minister of Informa-
tion Chishimba Kambwili said
in an e-mailed statement.
Zambia, Africa’s second-big-
gest copper producer, has
struggled to find a tax sys-
tem that suits both the coun-
try’s revenue requirements
while encouraging invest-
ment. The country last year
backed down on changes that
increased royalties that are
charged on sales to as high
as 20 percent, while remov-
ing profit tax, after opera-
tors threatened thousands
of job cuts and closures. A
mining lobby group proposed
the sliding-scale royalty sys-
tem as a way to protect the
industry as prices linger near
6-year lows.
Job Cuts
Mines owned by Glencore Plc
and Vedanta Resources have
cut more than 10 000 jobs
and halted output at some
shafts as they struggle with
prices that have fallen as low
as $4 331 per metric ton in
London. Power costs have
also increased as Zambia
faces its worst power short-
age yet.
For minerals
and base metals other than
copper, royalties will be fixed
at 5 percent, Kambwili said.
Producers of precious met-
als and gemstones will pay a
6 percent levy. Cabinet also
approved the suspension of
a 10 percent export duty on
ores and concentrates for
materials where there are no
processing facilities in Zam-
bia, and removed the variable
profit tax for mining opera-
tions. Corporate income tax
remains at 30 percent.
In addition to ensuring mines
are sustainable, the changes
are aimed at “sustaining oper-
ations in the mining industry,
securing jobs for the citizens
as well as collecting more tax
revenue in times of relatively
high copper prices,” he said.
The changes need the
approval of parliament before
it’s dissolved in May ahead of
the August general elections
before they come into effect.
An official from the Zambia
Chamber of Mines declined
to comment on the changes
immediately, saying the lobby
group would issue a state-
ment today.- Bdlive ●
regioNAL News16
Zambia Plans Price-Based Royalty for Ailing Copper Mines
Keillen Ndlovu

17. BH2417

18. LONDON — Rating agency
Standard & Poor’s downgraded
Saudi Arabia, Brazil Kazakh-
stan, Bahrain and Oman’s
credit ratings on Wednesday,
in its second mass cut of large
oil producers in almost exactly
a year.
S&P cited the pressures being
created by the drop in oil prices
for the moves, which included
double-notch downgrades of
Saudi Arabia to A- negative
from A+ stable and stripping
Bahrain of its investment grade
status.
"The decline in oil prices will
have a marked and lasting
impact on Saudi Arabia’s fiscal
and economic indicators given
its high dependence on oil," the
ratings agency said in a state-
ment.
The plunge in oil prices since
mid-2014 had already brought
a blizzard of downgrades for
oil producers, including Saudi
Arabia, Russia, Brazil and Ven-
ezuela, where the oil rout has
raised the fear of a sovereign
default.
The moves were a near repeat
of similar co-ordinated cuts
made this time last year. The
firm’s head of sovereign ratings
in Europe, the Middle East and
Africa, Moritz Kraemer, said in
January that another such move
was being considered.
One country that was spared
this time was Russia. S&P said
Moscow’s fiscal buffers gave it
more leeway, although it could
still cut its BB+ rating again if
those were eroded faster than
expected or if international
sanctions were "significantly"
tightened again.
Brazil was kept on a negative
outlook, meaning a roughly one
in three chance of another cut
as its rating dropped one notch
to BB from BB+. However, it
was Brazil’s political difficulties
as much as the economic pres-
sures from falling oil prices that
were cited for the move.
For the Middle East there is far
more intense pressure from low
oil because many currencies,
including the Saudi riyal, are
pegged to the dollar, limiting
scope for currency weakness
that could stimulate the econ-
omy.
Authorities are also having to
dig into reserves to keep spend-
ing at levels that support their
highly dependent economies.
Like Saudi Arabia, Bahrain’s
rating was cut by two notches.
Significantly, though, it also
lost investment grade as it
went to BB from BBB-. Oman
was lowered two steps as well
to BBB-stable from BBB+ neg-
ative while Kazakhstan was cut
one notch to BBB- from BBB
but left on a negative outlook
due to concern about inflation,
exchange rate pressures and
banking sector stability.-Reu-
ters●
internatioNAL News18
S&P downgrades large oil producers

19. BH2419

20. By Mike Dolan
Financial markets that pre-
dicted eight of the last six
recessions may be yet be
wrong again, but market
stress itself is now part of
the calculus and leaves the
world more open to left-field
shocks.
Given the violence of this
year's slump in equities,
where more than $8 trillion
has been wiped off global
stock market values, it is
remarkable how few econo-
mists still see recession as
the most likely outcome.
Yet more and more believe it
will be a close-run thing; pro-
tracted market volatility itself
could well tip the balance and
investors are in no mood to
hang about for a confirma-
tion.
Anxiety is high, with few
extraordinary policy measures
now likely or even available,
and more negative interest
rates in Europe or Japan seen
by many as part of the prob-
lem rather than the solution
for a bruised banking system.
It may take a nervy few
months for clarity on whether
the worrying slide in global
industry, trade and invest-
ment late last year has deep-
ened, or to see if indebted
consumers and a still-grow-
ing service sector will save
the day.
While they wait, investors are
scrutinizing the many geo-
political risks and systemic
concerns that would typically
be ignored in periods of more
robust growth, but which may
now be magnified as addi-
tional threats to businesses'
and households' investment
or spending plans.
In cutting its world growth
forecast for this year to 2,7
percent from 3,1 percent -
still above the 2-2,5 percent
level many see as a baseline
to avoid an effective per-cap-
ita global recession - Axa
Investment Managers flagged
concern about systemic as
well as cyclical risks for mar-
kets in this climate.
"When global growth is so
sluggish, when corporate
profits are so miserable,
when pay rises are so small
- you don't need a very big
shock to disturb global mar-
kets significantly," said Eric
Chaney, Chief Economist at
French insurer Axa.
A sudden change of financial
and economic policy thinking
within China's ruling commu-
nist party was one possible
shock it outlined. The political
20 analysis20 analysis
With recession lights amber, brittle markets vulnerable to all shocks

21. 21 analysis21 analysis
and central banking dilemma
surrounding the euro zone's
incomplete banking union was
another soft spot.
But on a knife edge in terms
of probabilities is a referen-
dum on Britain's possible exit
from the European Union,
likely to be held by the end of
June. For AxaIM, this contains
huge uncertainties for world
financial markets, for Britain
as a top five world economy
and the wider EU as a durable
construction.
"London is the number one
financial center, for example.
If there was any destabiliza-
tion of the financial industry
in the UK, it would transmit
quickly around world mar-
kets," said Chaney, adding
that this went beyond loca-
tion and into questions about
the extent to which English
law, which dominates global
financial contracts, is influ-
enced by EU law.
"London is systemic."
Flirting with recession
But is the world in a better
place than markets let on?
Some banks, such Morgan
Stanley and Societe Gen-
erale, put the chances of a
global recession this year at
about one-in-five.
Others, such as Citi, say the
risk is rising all the time.
Bank of America Merrill Lynch
sees a 20 percent chance of a
US slump.
Whoever you believe, reces-
sion is no longer off the radar.
The energy shock saw world
industrial activity barely grow
at all in 2015 and it tailed off
alarmingly in the back end of
the year.
World trade growth too has
stalled as China splutters,
and huge annual drops of
between 11 and 18 percent in
Chinese exports and imports
in January should ring more
alarm bells. Global shipping
freight prices have collapsed
to record lows.
Yet, JPMorgan points out that
since 1970, global factory
output has slowed to a near-
halt year 12 times but only
six were associated with sub-
sequent recessions. And ser-
vices, while weakening, are
still expanding at least.
Stock markets, on the other
hand, appear to have priced
in a recession already.
"Equity markets are correct-
ing lower only a little more
aggressively than in the past
if we assume that a global
recession starts this year and
finishes mid-2017," according
to Citi strategist Jeremy Hale.
So, is this prescient or
just cautionary?
More often than not US equity
market drops of 15-20 per-
cent over a year do pre-empt
recessions. But they're not
infallible. Alliance Bernstein
points out that similar drops
over six month periods were
recorded in 1988 and 2002
without a subsequent down-
turn.
Forecast corporate profit
declines this year anywhere
between 7 and 10 percent
might justify equity market
fears. But, here again, JPMor-
gan research shows there have
been periods in the 1960s,
1980s and 1990s where prof-
its and markets peaked and
then both rebounded quickly
without recessions.
The worrying difference back
then was each episode was
met with sizeable policy eas-
ing that is harder to execute
now.
And it's not just equity fright.
Corporate bond spreads have
moved more squarely into
recession territory, according
to JPMorgan, and currency
and commodity price move-
ments have by now completed
their average trajectory of
the last six recessions.
"If financial stress continues
to build, a much more pro-
nounced downturn will be the
result," said Standard Life
Investments Chief Economist
Jeremy Lawson.-Reuters●