By Tawanda Musarurwa

HARARE -Pharmaceutical prod-ucts distributor Medtech will now go ahead with plans to dispose its subsidiary - Medtech Medicals and Scientific (Pvt)Ltd - to "another pharmaceutical distributor."

This follows the completion of a buyback of a 40 percent minority interest in Medtech Medicals and Scientific (MMS).

In terms of the buyback, the holding company has fixed 240 130 000 ordinary shares as the purchase consideration which increases the shares in issue to 3 039 764 872 shares.

The group told shareholders today that the successful buyback had paved the way for a disposal trans-action.

"(T)he transaction to acquire the 40 percent minority sharehold-ers interest in MedTech Medical and Scientific (Pvt) Ltd, as previ-ously advised, has now been con-cluded....

"The agreement to place approxi-

mately 70 percent of the author-ised and unissued shares in MMS with another pharmaceutical dis-tributor to raise sufficient funds for this business to achieve profitabil-ity are nearing conclusion," said the group.

Medtech has been trying to sell off its loss-making assets notably MMS and its manufacturing divi-sion Zimpharm, which stopped operating about three years ago.

The struggling pharmaceutical products distributor has been weighed down by high operating costs and underperforming units, and it posted a $1 million loss for the full-year to December 31, 2014.

But for the half-year to June 30, 2015, the company narrowed its losses to $90 000 from $233 000 in the prior comparable unit, on the back of an improved performance of its other subsidiary, Chicago Cosmetics, which registered a 75 percent growth in revenue to $1,2 million.●

News Update as @ 1530 hours, Thursday 03 December 2015

Feedback: bh24admin@zimpapers.co.zwEmail: bh24feedback@zimpapers.co.zw

Disposal of MedTech Medical & Scientific (Pvt) Ltd nears

BH242

BH24 Reporter

HARARE -The signs are looking up for diversified group, Art Corpora-tion, after the group narrowed its loss for the six months to Septem-ber 30, 2015 to $0,6 million from $1,1 million in the prior year com-parative.

Group chairman Mr Moses Chundu attributed the improved perfor-mance to enhanced operational efficiencies.

"The improvement in performance was a result of the recapitalisa-tion of the factories, production efficiencies and focus on cost con-tainment," he said in a statement accompanying the results.

Investments in new equipment at Chloride, Eversharp and Kad-oma Paper Mills helped the Group improve capacity utilisation as well as reduce costs with overall oper-ating expenses coming down by 8 percent.

And management's focus on pro-duction efficiencies resulted in the firm's operating expenses declin-

ing 8 percent from the same period last year. Operating profit rose to $1,9 million from $0,2 million dur-ing the parallel period in 2014.

Gross margins also increased from 33 percent in the prior comparable period to 35 percent.

Revenue for the period also went up to $29,8 million up from $28,7 million prior year comparative, driving the loss position down-wards.

The group's loss per share was 0,13 cents against loss per share of 0,24 cents prior year compar-

ative.

Going forward, the company plans to capitalise on advantages pro-vided by the recapitalised facto-ries.

"The manufacturing units are now strongly positioned to compete with imports and the increased capacity in all the units has ensured that the group is ready to exploit growth opportunities in its markets," said Mr Chundu.

The board did not declare a divi-dend for the period.●

3 NEws

ART Corporation narrows loss

BH244

BH24 Reporter

HARARE - Listed packaging group Nampak Zimbabwe has reported a 5 percent decline in revenue to $95,9 million for the year to September 30, 2015 on the back of low aggre-gate demand.

Nampak Zimbabwe is the local unit of South Africa's packaging giant Nampak, which holds a controlling 51,43 percent interest in the entity.

Operating profit for the period amounted to $4,1 million with man-agement saying the out turn was depressed as a result of lower mar-gins.

Profit for the period amounted to $2.4 million resulting in earnings per

share of 0,32 cents.

Performance was however mixed at business unit level.

In respect of other divisions, Car-naudMetalbox recorded a 13 percent increase in revenue on improved can and (High-density polyethylene)

HDPE bottle sales and returned to profit from a loss position the previ-ous last year.

Hunyani recorded decline in revenue and operating profit by 2 percent and 59 percent, respectively, com-pared to the prior period. Manage-

ment believes that reduction in costs and new machinery will place the business on a solid footing for 2016.

MegaPak recorded a 13 percent decline in revenue compared to the prior year on depressed volumes for PET and pre-form products, driving operating profit down 43 percent .

The group is confident of positive yields in the long-term on the basis of its "current investment into addi-tional capacity and expanded prod-uct range", but believes that there is "little short-term relief in sight for the manufacturing industry."

The board did not declare a dividend for the year.

●

5 NEws

Nampak Zim FY revenue takes a 5pc hit

BH246

HARARE -The equities market con-tinued on a downward path, largely reflecting the macro-economy as the industrial index lost 0.31 to close at 114.08.

Spirits-maker AFDIS declined $0,0200 to trade at $0,5600, while Fidelity Life shed $0,0070 to trade at $0,1030 and giant insurer Old Mutual went down $0,0062 to settle at $2,1100.

Also trading in the negative was Dairibord, which waned $0,0032 to close at $0,0802 and NicozDiamond retreated $0,0030 to $0,0150.

On the upside, ART Corporation gained $0,0020 to close at $0,0090 after posting an improved set of half-year interims. The group nar-rowed its loss for the six months to September 30, 2015 to $0,6 million from $1,1 million in the prior year comparative.

Also gaining was First Mutual, which added $0,0010 to close at $0,0230 while beverages giant Delta rose $0,0001 to trade at $0,7001.

The mining index shed 0.43 (or 1,93 percent) to settle at 21.90 as coalm-iner Hwange lost $0,0040 to close at $0,0300.The balance of the mining counters maintained previous price levels

- BH24 Reporter ●

ZsE7

Industrials maintain bearish form

BH24

TAA:DI251386-Y22

Laz DI324241-D15

8

MovERs CHANGE ToDaY Price USc sHAKERs CHANGE ToDaY Price USc

ART Corporation 28.57 0.90 NAMPAK ZIM -19.58 1.93

FIRST MuTuAL 4.54 2.30 NICOZDIAMOND -16.66 1.50

DELTA 0.01 70.01 HwANGE -11.76 3.00

FIDELITy LIFE -6.36 10.30

DAIRIBORD -3.83 8.02

AFDIS -3.44 56.00

OLD MuTuAL -0.29 211.00

INDEx PrevioUS ToDAy MovE CHANGE

INDuSTRIAL 114.39 114.08 -0.31 points -0.27%

MINING 22.33 21.90 -0.43 POINTS -1.93%

9 ZSe TabLeS

ZsE

INDICEs

stock Exchange

BH2410

11 DIARy oF EvENTs

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

PoWer GeNeraTioN STaTS

Gen Station

03 December 15

Energy

(Megawatts)

Hwange 203 Mw

Kariba 468 Mw

Harare 30 Mw

Munyati 18 Mw

Bulawayo 24 Mw

Imports 0 Mw

Total 714 Mw

•09 December 2015 - cottco aGM; venue: cotton Pavilion, exhibition Park; Time; 12:00hrs

•09 December 2015 - border Timbers aGM; venue: boardroom, Northern Tobacco (Private) Limited complex, 4-12 Paisley road, Southerton; Time: 9:00hrs

•11 December 2015 - buy Zimbabwe awards; venue: rainbow Towers, Harare

THE BH24 DIARy

BH2412

Johannesburg -South Africa's rand fell in early trade on Thursday as the dollar gained after Federal Reserve chair Janet yellen said she was "looking forward" to the first u.S. interest rate increase in nearly a decade.

Stocks opened lower, with telecoms company MTN Group in the spotlight. Nigerian authorities reduced by more than a third, to $3.4 billion, a fine imposed on MTN for failing to cut off unregistered users.

MTN was up nearly 1 percent at 147.90 rand, outpacing a 0.4 decline to 45,777 in the JSE Top-40 index.

By 0714 GMT, the rand was trading at 14.3700, down 0.13 percent from wednesday's close. The rand fell to an all-time low of 14.4950 to the dollar on Tuesday.

A u.S. rate increased is widely expected hike when the Fed meets later this month. when she spoke at the Economic Club of washington on wednesday, yellen did not say whether an increase would be warranted at that meeting, but she did say keeping rates at zero for too long could threaten financial stability.

yellen is scheduled to speak again today and traders expect the rand to remain under pressure.

"Given that she will most likely main-tain her more hawkish rhetoric, we expect the rand to remain vulnerable to intensified Fed rate hike expectations," Barclays Africa currency strategist Mike Keenan said.

Her comments sent the dollar index, which measures the greenback against a basket of six major currencies, to its highest level since April 2003. The rand remained resilient, on the strength of loan agreements between China and South Africa, but then gave up some gains in early trade.

The 26 loan agreements signed on wednesday are worth 94 billion rand

($6.5 billion), including $500 million for South Africa's cash-strapped power utility.

South Africa suffers from a chronic electricity shortage that is increasing costs for industry and discouraging investment. Part of its response is to build new nuclear plants, which experts say may cost as much as $100 billion.

On the fixed-income market, govern-ment bonds were mostly firmer, with the yield for debt due in 2026 shedding 1.5 basis points at 8.600 percent.

- Reuters●

PreToria - China will loan South Africa's struggling power utility $500 million as part of deals agreed on wednesday between the two countries worth 94 billion rand ($6.5 billion), the South Afri-can government said.

China will also help to build a car manufacturing plant on South Africa's coast which should begin exporting vehi-cles to other African countries by the end of 2017- Reuters●

reGioNaL NeWS 13

Rand drops on yellen's hawkish comments, stocks open lower China to loan south africa's power firm

Eskom $500m

Anheuser-Busch InBev NV said it will explore the sale of SABMiller Plc’s European premium beer brands including Peroni and Grolsch to smooth the way for the 73.5 bil-lion-pound ($110 billion) takeover of its main rival.

Meantime Brewing Co., the inde-pendent beermaker acquired this year by SABMiller, is also among the brands being considered for sale, AB InBev said in a statement Thursday.

Selling the assets would help to meet potential antitrust complica-tions arising from AB InBev’s plan to acquire the maker of Castle lager, which would create a company con-trolling about half the industry’s profit. Molson Coors Brewing Co. has already agreed to acquire SABMiller’s 58 percent stake in MillerCoors for $12 billion, while a 49 percent stake in China Resources Snow Breweries Co. may also need to be sold.

Selling Peroni and Grolsch “would help reduce leverage and doesn’t make the SABMiller acquisition less attractive,” Javier Gonzalez Lastra, an analyst at Berenberg in London, said by phone. “They are attractive assets. They’re very well positioned, internationally recognized brands.”

Peroni and Grolsch could fetch $1

billion to $1.2 billion, Susquehanna Financial Group analyst Pablo Zuanic estimates. Potential buyers include Japan’s Kirin Holdings Co. and Carls-berg A/S, he said in a Nov. 30 note.

“Divesting Peroni and Grolsch should have minimal effect on the upside” that the Budweiser maker will gen-erate from buying SABMiller, Zuanic said. A sale “would be within our expectations, and we would see this

as a positive sign if it paves the path to regulatory approval of the deal.”

AB InBev shares were little changed at 121.55 euros at 9:10 a.m. in Brussels. SABMiller was almost unchanged at 4,046 pence in Lon-don.

“These beers are loved by consum-ers and we are very proud of them,” SABMiller Chief Executive Officer

Alan Clark said in the statement. “until the change of control we will continue to invest in growing these great beers and supporting our tal-ented people who brew, sell and manage them.”

Any sale would be conditional upon completion of AB InBev’s acquisition of SABMiller, the companies said. - Bloomberg●

iNTerNaTioNaL NeWS 14

ab inbev to explore sale of SabMiller's european premium brands

By Nigel Gambanga

The last time anyone was counting, Zimbabwe’s internet penetration stood at 44,5 percent. This figure was pre-sented recently by POTRAZ, the national telecoms regulator in its second quarter report for 2015.

This percentage, which is a reflection of the extent to which the internet is being accessed by the citizens of this country, was a 0,2 percent increase from the previous quarter. However, one other remarkable pattern was also displayed in the same POTRAZ report.

In the first half of 2014, we were actu-ally experiencing an increasing internet penetration rate. It jumped from 43,1 percent in the first quarter of 2014, to 47 percent and from the second to the third quarter of 2014 it rose marginally to 47,5 percent.

In the two consecutive quarters, it fell from its 47,5 percent high to the 44,3 percent that was being rebounded from in the latest report. So what seems like an improvement in internet penetration is actually a feeble attempt at recover-ing lost ground.

what caused the change?

There a lot of factors that could be sin-gled out for low internet penetration. Limited infrastructure investment from operators is one drawback, then there’s the cost of internet services and sup-porting tools like devices for accessing it that keeps users at bay.

A receding penetration, however, had to have been caused by other factors. In the Zimbabwean context, it’s easy to point to a wheezing economy that has made online access less of a priority for most people over the past year.

There is one other huge change that happened during the period of decline. The government introduced a 25 per-cent import duty on mobile devices in the last part of 2014.

This meant that distributors passed on the cost to the consumer and all devices became more expensive. whatever excitement that was being cultivated in having that first internet experience on mobile devices was pacified by higher device costs.

In the absence of harder data, it can

be argued that the import duty might not be the leading factor. Instead we’ll have numbers on reducing disposable incomes being brought up to explain every industry lull.

But the trends from POTRAZ are too compelling to ignore here. This is the case especially after the telecoms oper-ators have all voiced their challenges with the import duty on devices and its effect on their industry.

These same troughs in internet pene-tration have a correlation with telecoms revenue. In an industry where voice communication is losing sex appeal, the outcomes of broadband pricing are going to be a key determinant of overall telecoms performance.

One would expect a stronger, unified lobby from telecoms operators to have this duty removed or, more realistically, revised downwards to accommodate the impact it could have on their future revenue prospects.

By now, the State should have noticed how “minor adjustments to the tele-coms sector can have a huge impact on operational outcomes and ultimately, the taxes repatriated at the end of the year. - TechZim●

15 analysis15 aNaLYSiS

How taxes could have negatively affected Zimbabwe's internet penetration