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Tiger brands Zim partner readies for bond notes

Harare – Innscor Africa Limited, which has partnerships with South African companies such as Tiger Brands in Zimbabwe, said on Wednesday that it will deal with bond notes to be introduced next month at the appropriate time although executives at the company said they were three weeks behind in foreign payments.

Zimbabwe is battling cash shortages that have caused a long queue in outbound remittances, prompting the central bank to come up with a priority list for offshore payments by companies and individuals. Innscor Africa also controls quick serve retail businesses running the Chicken Inn, Nando’s, Steers and Chicken Inn counters.

Godfrey Gwaenda, an executive at the company, said Wednesday evening that revenue from continuing operations for the 2016 full year rose 6% to $586m and projected that “we expect this number to be nearly $80m” going ahead. Innscor has a partnership with Tiger Brands in Harare listed National Foods.

Innscor has had to discontinue Zimbabwe retail operations under the Spar franchise and has also moved to stop the Spar Zambia unit, electing instead to focus on its local businesses. In Zimbabwe, it also runs light manufacturing units and has an investment in a chicken raring company as well as a non-controlling investment in a motor spare parts company, Transerv.

“Working capital started the year at $95m to close the year at $84m, most of it in inventory for our light manufacturing businesses. The net cash position opened the year at $40m and closed at $30m,” added Gwaenda.

Innscor also runs a bakery operation, Bakers Inn, in which it has invested significantly through new plant lines. It has also had to adjust it for the current difficult operation environment as it now also offers half loaves while it has shored up its pies division.

Chief executive officer for Innscor Africa, Julian Schonken, said the company was “three weeks behind in foreign payments” although the company was continuing to leverage on its cash generating businesses to offset liquidity challenges in the economy. However, he said, bond notes will be provisioned for when the time comes.

“Bond notes will come out and it is an issue that every business will have to deal with. We will have to deal with them (bond notes” when we get there,” said Schonken.

Reserve Bank of Zimbabwe governor, John Mangudya, said last week that the local bond notes – which will be introduced onto the market next month at a value of 1:1 against the US Dollar – will come as an incentive to exporters. The central bank will pay a 5% incentive for export receipts although there are fears that the government is bringing back the Zimdollar – ditched in 2009 – through the back door.

The profit before tax position for Innscor was at $39m for its amalgamated operations, a 25% rise on the previous contrasting year.

However, the profit before tax for amalgamated operations, including operations that were bundled off and separately listed was down 6% at $45m, a figure Gwaenda said was “better” considering the current difficult operating environment in Zimbabwe.

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