F.E.A.R Corporation H1 2017 Results

F.E.A.R Corporation Financial Results H1 2017 May 14

2017

Unaudited annual financial results for half year ending 14 May 2017. The report contains the Director’s views, the Corporation’s consolidated financial statements and maps a way forward in the second half of 2017 financial year. Unaudited H1 Financial Statements

 

 

 

Contents

Directors’ Report 3

Directors’ details. 3

Principal activities. 4

Review of operations and financial results. 4

Events arising since the end of the reporting period. 4

Likely developments, business strategies and prospects. 5

Material business risks faced by the Corporation. 5

Consolidated Profit & Loss Account for half year ended 14 May 2017. 6

Consolidated Statement of Financial Position as at 14 May 2017. 7

Capital management policies and procedures. 9

Directors’ Declaration. 9

 

 

ASX Additional Information                                                                                                                                                       Appendix A: Organising the Statement of Profit or Loss by Function of Expenses

Appendix B: Statement of Profit or Loss and Other Comprehensive Income Presented in Two Statements

Appendix C: Statement of Cash Flows Presented Using the Indirect Method

Appendix D: Additional Disclosures for Mining Exploration Companies

Appendix E: Summary of Directors’ Report Requirements

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Directors’ Report

The Directors of F.E.A.R CORPORATION (‘FearCo’) present their Report together with the financial statements of the consolidated entity, being F.E.A.R CORPORATION (‘the Corporation’) and its Controlled Entities (‘the Company’) for the year ended 14 May 2017.

Directors’ details

The following persons were directors of F.E.A.R CORPORATION during or since the end of the financial period:

Itai Bryan Nyamawuya

  1. Tech (Hons) Agricultural Engineering

Managing Director
Director since 14 November 2015

Mr. Nyamawuya has substantial knowledge of manufacturing processes and retail through executive roles in the steel, agriculture and media industry where he has been responsible for implementing best practice systems across a range of industries.

Other current Directorships: None
Previous Directorships (last 3 years): None
Interests in shares: 403,565 shares
Interest in options: None

Mr. Ahmed Shafiq

CA, MBA

Independent Non-Executive Director
Audit and Risk Committee Chair and Member of the Nomination and Remuneration Committee
Director since 2013

Ahmed is a Chartered Accountant and brings years of broad financial and commercial experience, both local and international to F.E.A.R Corporation.

Other current Directorships: Voluntary Mentorship Program (Appointed 15 July 2013)
Previous Directorships (last 3 years): Sapphire Holdings Limited (Appointed 1 March 2011; Resigned 17 September 2014)

Interests in shares: 21,203 shares
Interest in options: None

Company Secretary

Mike Morgan is a Chartered Accountant and the Group Chief Financial Officer. Mike has held senior positions with a number of professional accounting firms and has a Degree in Commerce. Mike has been the Company Secretary of F.E.A.R Corporation for six (6) months.

Principal activities

During the half year, the principal activities of entities within the Corporation were:

  • sale, customisation and integration of IT and telecommunications systems
  • maintenance of IT and telecommunications systems
  • internet based selling of books, hardware and software products
  • music recording and publishing
  • design and manufacture of steel-based farming equipment; and
  • social media marketing services.

There have been no significant changes in the nature of these activities during the half year.

Review of operations and financial results

The Corporation is becoming a key participant in the IT and telecommunications services market, holding a market share of approximately 3%. While the Corporations’ Services and Retail segments have a diverse customer base, 33% of the Consulting segment’s revenues depended on a single customer (May 2016: 27%).

The operating result of the Corporation has increased to $9,400 (May 2015: $8,200); this is mainly due to the cost control measures implemented during the year which have allowed increased revenue with a lower proportionate cost base.

Revenue from Retail operations was up on last year (by 6%), which is lower than anticipated last year (our expectation was 8%). The key reason for this low increase was the rise of transaction costs in our distribution networks. Revenue growth in our Consulting and Service businesses was steady, which was in line with our expectations last year. This steady growth reflects the current global economic uncertainty and the cost reduction measures undertaken by businesses in the market place.

Operationalization of GETI Ltd run GETIShop is positioning the Corporation in a strong cash position for 2017 as volume of sales recorded a 13% rise over the period.

The Corporation’s net assets increased by 5% compared to the previous year.

The Chairman’s report contains further information on the detailed operations of the Corporation during the half year.

Events arising since the end of the reporting period

There are no other matters or circumstances that have arisen since the end of the year that have significantly affected or may significantly affect either:

  • the entity’s operations in future financial years
  • the results of those operations in future financial years; or
  • the entity’s state of affairs in future financial years

 

Likely developments, business strategies and prospects

Based on the significant growth in online sales, as projected in our 2016 Annual Financial Report, and the demand from customers for the latest technology, we expect increase in online sales for next few years. We are currently implementing a number of strategies to benefit from this growth, including:

  • upgrading our online sales portals
  • further expanding our (online and offline) distribution networks
  • further reducing manufacturing costs; and
  • a strong (online and offline) marketing campaign

We commissioned the upgrade of the Corporations’ website and online sales portals. We have allocated $3,800 for this upgrade, which will mostly be funded from retained earnings. We expect the upgrade to be completed in H2, to be followed by a strong marketing campaign.

We are continually considering ways of reducing the Corporation’s cost of production. The Directors are giving consideration to a major upgrade of production-line technology to improve efficiency. The Directors are still reviewing the results of a feasibility study on investing in new technology considering various options that have been tabled.

Material business risks faced by the Corporation

They are likely to have an effect on the financial prospects of the Corporation, and how the Corporation manages these risks include:

Delayed payments from overseas markets

Given our reliance on the United Kingdom, USA and other overseas markets, the issue of bond notes and tightening control of foreign currency by fiscal authorities could have a significant impact on our financial results. We however, have noted significant growth in sales to these overseas economies and are currently investigating the likely effects of tight fiscal controls on our earnings; and

Technological obsolescence

Given the rapidly changing environment in which the Corporation operates, this could have a very significant impact on our financial results. We address this risk through investment in research and development and by constantly monitoring the market. With competitors insistently seeking to enter our market with improved designs, we see this risk increasing in the future.

 

 

 

 

 

Consolidated Profit & Loss Account for half year ended 14 May 2017

  May 2016 May 2017
Revenue 72,000 78,065
Other income 12,112 12,876
Changes in inventories
Cost of materials (33,223) (31,936)
Employee benefits expenses (27,444) (10,338)
Change in fair value of investment property
Depreciation of property, plant and equipment (2,567) (1,233)
Amortisation of intangible assets (497)
Impairment of goodwill
Impairment of other intangible assets
Other expenses (6,411) (5,937)
Share of net profit from associates and joint ventures accounted for using the equity method
Finance costs (2,863) (2,237)
Finance income 2,231 3,106
Other financial items
Profit before income tax 13,338 42,366
Income tax expense (6,820) (16,491)
Profit for the half year from continuing operations 6,518 25,875
Loss of the half year from discontinued operations (2,513)
Profit for the half year 4,005 25,875

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Statement of Financial Position as at 14 May 2017

  November November May
2015 2016 2017
Assets
Current 4,879 7,435 8,251
Cash and cash equivalents 6,788 2,876 3,917
Trade and other receivables 967 1,072 1,840
Other short-term financial assets 267 436 527
Inventories 56 109
Derivative financial instruments 91 105 84
Current tax assets 2,054 3,095 1,130
Assets and disposal group classified as held for sale
Total current assets 15,046 15,075 15,858
Non-current 4,805 4,979 4,979
Investments accounted for using the equity method
Property, plant and equipment 2,672 3,832 3,832
Investment property
Other long –term financial assets
Deferred tax assets
Goodwill
Other tangible assets 671 1,960 2,492
Total non-current assets 8,148 10,771 11,303
Total assets 23,194 25,846 27,161
 
Liabilities      
Current      
Trade & other payables 3,439 3,487 3,401
Borrowings 1,000 1,500 1,630
Derivative financial instruments 283 442 602
Provisions 1,500 500 500
Employee benefits 11,133 12,064 10,385
Current tax liabilities 5,012 6,032 2,739
Liabilities included in disposal group held sale
Current liabilities 22,367 24,075 19,257
Non-current      
Trade and other payables 4,741 5,562 7,369
Borrowings 7,500 7,500 7,500
Employee benefits 4,178 4,049 4,937
Deferred tax liabilities 100 100 3,000
Other liabilities 1,584 1,592 2,630
Total non-current liabilities 18,103 18,803 25,436
Total liabilities 40,470 42,878 44,693
Net assets 23,194 25,846 27,161
Equity 8,791 9,275 10,492
Equity attributable to owners of the parent:      
·         Share capital 4,450 4,133 3,157
·         Share option reserve 1,000 1,000 1,000
·         Other components of equity 735 324 583
·         Retained earnings 2,300 2,300 2,300
Non-controlling interest
Total equity 40,470 42,878 44,693

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital management policies and procedures

The Corporation’s capital management objectives are:

  • to ensure the Corporation’s ability to continue as a going concern; and
  • to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.

The Corporation monitors capital on the basis of the carrying amount of equity plus its subordinated loan, less cash and cash equivalents as presented on the face of the statement of financial position and cash flow hedges recognised in other comprehensive income.

The Corporation’s goal in capital management is to maintain a capital-to-overall financing ratio of 1:6 to 1:4. This is in line with the Corporation’s covenants resulting from the subordinated loan it has taken out from its main shareholder in 2013.

Directors’ Declaration

  1. In the opinion of the Directors of F.E.A.R Corporation:
  2. The consolidated financial statements and notes of F.E.A.R Corporation are in accordance with the Corporations Act 2001, including:
  3. Giving a true and fair view of its financial position as at 14 May 2017 and of its performance for the financial year ended on that date; and
  4. Complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and
  5. There are reasonable grounds to believe that F.E.A.R Corporation will be able to pay its debts as and when they become due and payable.
  6. The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Chief Executive Officer and Chief Financial Officer for the financial year ended 14 November 2016.
  7. Note 2 confirms that the consolidated financial statements also comply with International Financial Reporting Standards.

Signed in accordance with a resolution of the Directors.

 

 

Director

Itai Bryan Nyamawuya
Dated the 14th day of May 2017

 

 

 

 

 

F.E.A.R Corporation Financial Results 2016

F.E.A.R Corporation Financial Results 2016 November 14

2016

Unaudited annual financial results for the trading year ending 14 November 2016. The report contains the Director’s views, the Corporation’s consolidated financial statements and maps a way forward in the 2017 financial year. Unaudited Annual Financial Statements

 

 

 

Contents

Directors’ Report 3

Directors’ details. 3

Principal activities. 4

Review of operations and financial results. 4

Significant changes in the state of affairs. 5

Dividends. 5

Events arising since the end of the reporting period. 5

Likely developments, business strategies and prospects. 6

Material business risks faced by the Corporation. 6

Consolidated profit and loss account for the year ended 14 November 2016. 7

Consolidated Statement of Financial Position as at 14 November 2016. 8

Consolidated Statement of Financial Position as at 30 June 2016. 9

Capital management policies and procedures. 10

Directors’ Declaration. 10

 

 

ASX Additional Information                                                                                                                                                    Appendix A: Organising the Statement of Profit or Loss by Function of Expenses

Appendix B: Statement of Profit or Loss and Other Comprehensive Income Presented in Two Statements

Appendix C: Statement of Cash Flows Presented Using the Indirect Method

Appendix D: Additional Disclosures for Mining Exploration Companies

Appendix E: Summary of Directors’ Report Requirements

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Directors’ Report

The Directors of F.E.A.R CORPORATION (‘F.E.A.R CORPORATION’) present their Report1 together with the financial statements of the consolidated entity, being F.E.A.R CORPORATION (‘the Company’) and its Controlled Entities (‘the Corporation’) for the year ended 14 November 2016.

Directors’ details

The following persons were directors of F.E.A.R CORPORATION during or since the end of the financial year:

Itai Bryan Nyamawuya

  1. Tech (Hons) Agricultural Engineering

Managing Director
Director since 14 November 2015

Mr. Nyamawuya has substantial knowledge of manufacturing processes and retail through executive roles in the steel, agriculture and media industry where he has been responsible for implementing best practice systems across a range of industries.

Other current Directorships: None
Previous Directorships (last 3 years): None
Interests in shares: 403,565 shares
Interest in options: None

Mr. Ahmed Shafiq

CA, MBA

Independent Non-Executive Director
Audit and Risk Committee Chair and Member of the Nomination and Remuneration Committee
Director since 2013

Ahmed is a Chartered Accountant and brings years of broad financial and commercial experience, both local and international to F.E.A.R Corporation.

Other current Directorships: Voluntary Mentorship Program (Appointed 15 July 2013)
Previous Directorships (last 3 years): Sapphire Holdings Limited (Appointed 1 March 2011; Resigned 17 September 2014)

Interests in shares: 21,203 shares
Interest in options: None

Company Secretary

Mike Morgan is a Chartered Accountant and the Group Chief Financial Officer. Mike has held senior positions with a number of professional accounting firms and has a Degree in Commerce. Mike has been the Company Secretary of F.E.A.R Corporation for six (6) months.

Principal activities

During the year, the principal activities of entities within the Corporation were:

  • sale, customisation and integration of IT and telecommunications systems
  • maintenance of IT and telecommunications systems
  • internet based selling of books, hardware and software products
  • music recording and publishing
  • design and manufacture of steel-based farming equipment; and
  • Social media marketing services.

There have been no significant changes in the nature of these activities during the year.

Review of operations and financial results

The Corporation is becoming a key participant in the IT and telecommunications services market, holding a market share of approximately 3%. While the Corporation’s Services and Retail segments have a diverse customer base, 27% of the Consulting segment’s revenues depended on a single customer (2015: 17%).

In May 2016, the Corporation announced that it had been the target of an unsolicited takeover offer. The Directors believed that this offer significantly undervalued the Corporation. The offer caused some disruption, diverting management time from daily operations, and the Corporation incurred one-off costs of approximately $500 in relation to the offer. The offer has since been withdrawn.

As part of our cost reduction program, it was necessary to reduce our service staff numbers this year from 5 to 3. Redundancy payments totalling $1,800 explain the higher employee benefit expenses this year.

The operating result of the Corporation has increased to $15,400 (2015: $13,200); this is mainly due to the cost control measures implemented during the year which have allowed increased revenue with a lower proportionate cost base.

Revenue from Retail operations was up on last year (by 17%), which is very encouraging and higher than anticipated last year (our expectation was 12%). The key reason for this increase was the expansion of our distribution networks and upgrading of our online sales portal. Revenue growth in our Consulting and Service businesses was steady, which was in line with our expectations last year. This steady growth reflects the current global economic uncertainty and the cost reduction measures undertaken by businesses in the market place.

Earnings per share have increased during the year to $1.22 (2015: $1.11) although neither interim nor final dividends were declared.

Additional capital raising activities were undertaken during the year which raised $16,700 and allowed the Corporation to fund the GETI Ltd operationalization of GETIShop via a cash settlement as well as positioning the Corporation in a strong cash position for 2017 to allow for higher sales revenues, if appropriate opportunities arise.

The Corporation’s net assets increased by 63% compared to the previous year, which is largely due to the Corporation’s capital raising activities.

The acquisitions which have occurred during the year are in line with the Corporation’s strategy to increase both online and offline sales capacity.

Goodwill of $2,440 arising from restructuring of GETI Ltd (as described below) is primarily related to growth expectations, expected future profitability, the substantial skill and expertise of GETI Ltd.’s workforce and expected cost synergies.

The Chairman’s report contains further information on the detailed operations of the Corporation during the year.

Significant changes in the state of affairs

During the year, the following changes occurred within the Corporation:

Recapitalisation of GETI Ltd:

On 30 September 2015, the Corporation recapitalized GETI Ltd by 100% of its market value thereby allowing it to retool and gain market share. The recapitalization was made to enhance the Corporation’s position in the retail market for computer and telecommunications hardware in Zimbabwe. GETI is now a significant business in Zimbabwe in the Corporation’s targeted market. The cost of recapitalization was $1,606 which was made in cash.

Operationalisation of GETIShop:

On 14 May 2016, the Corporation opened the doors of GETIShop which is 100% owned by subsidiary, GETI Limited. The shop was classified as operational in the 2014 financial statements. There was an operating loss of $2,000.

Issue of share capital:

On 14 May 2016, the Corporation issued 1,500,000 shares as part of its capital raising program which resulted in proceeds of $16,700 each share has the same terms and conditions as the existing ordinary shares.

Dividends

In respect of the current year, no dividend will be paid on 14 November 2016 (2015: $Nil).

Events arising since the end of the reporting period

Apart from the final dividend declared, there are no other matters or circumstances that have arisen since the end of the year that have significantly affected or may significantly affect either:

  • the entity’s operations in future financial years
  • the results of those operations in future financial years; or
  • the entity’s state of affairs in future financial years

 

Likely developments, business strategies and prospects

Based on the expected growth in online sales, as predicted by a number of prominent economic commentators, and the demand from customers for the latest technology, we expect significant increase in online sales for next few years. We have a number of strategies to benefit from this growth, including:

  • upgrading our online sales portal
  • further expanding our distribution networks
  • further reducing manufacturing costs; and
  • a strong marketing campaign

We have instigated an urgent upgrade of the Corporation’s website and online sales portal. We have allocated $3.8m for this upgrade, which will mostly be funded from retained earnings. We expect the upgrade to be completed in the next twelve (12) months, to be followed by a strong marketing campaign.

We are continually considering ways of reducing the Corporation’s cost of manufacturing. The Directors are giving consideration to a major upgrade of production-line technology to improve efficiency. The Directors expect to receive the results of a feasibility study within the next six (6) months, and the various options will be considered at that time.

Looking ahead, the Corporation is currently engaged in a competitive tender process to supply the Zimbabwean government $100,000 IT and telecommunication systems and offer integration and maintenance services over the next five (5) years. If successful, supply is expected to commence next year, significantly affecting future revenues.

Given both the competitive nature of the tender, and the fact that the process is ongoing, we have utilised the exemption in s299A(3) and have not disclosed further details about the possible impact of the potential contract on the Corporation’s business strategy and future prospects. We are relying on the exemption on the basis that disclosure of the potential financial impact on the Corporation arising from the outcome of the tender process is premature, and would be likely to result in other tender competitors gaining a commercial advantage, which would jeopardise the Corporation’s prospects.

Material business risks faced by the Corporation

They are likely to have an effect on the financial prospects of the Corporation, and how the Corporation manages these risks include:

Delayed payments from overseas markets

Given our reliance on the United Kingdom, USA and other overseas markets, the issue of bond notes could have a significant impact on our financial results. Based on the views of prominent economic commentators, we do not anticipate any significant slowdown in these overseas economies, but are currently investigating the likely effects of the bond notes; and

Technological obsolescence

Given the rapidly changing environment in which the Corporation operates, this could have a very significant impact on our financial results. We address this risk through investment in research and development and by constantly monitoring the market. With competitors constantly seeking to enter our market with improved designs, we see this risk increasing in the future.

 

Consolidated Profit & Loss account for the year ended 14 November 2016

Revenue   134,000
Other income   25,324
Changes in inventories  
Cost of materials   (67,456)
Employee benefits expenses   (53,889)
Change in fair value of investment property    
Depreciation of property, plant and equipment   (2,567)
Amortisation of intangible assets   (497)
Impairment of goodwill  
Impairment of other intangible assets  
Other expenses   (11,451)
Share of net profit from associates and joint ventures accounted for using the equity method  
Finance costs   (4,567)
Finance income   4,561
Other financial items  
Profit before income tax   23,464
Income tax expense   (13,520)
Profit for the year from continuing operations   9,944
Loss of the year from discountinued operations   (1,934)
Profit for the year   8,010

 

 

 

 

 

Consolidated Statement of Financial Position as at 14 November 2016

  14 November
2014 2015 2016
Assets      
Current 3,688 4,879 7,435
Cash and cash equivalents 4,843 6,788 2,876
Trade and other receivables 1,674 967 1,072
Other short-term financial assets 782 267 436
Inventories 56
Derivative financial instruments 30 91 105
Current tax assets 1,083 2,054 3,095
Assets and disposal group classified as held for sale
Total current assets 12,100 15,046 15,075
Non-current 4,608 4,805 4,979
Investments accounted for using the equity method
Property, plant and equipment 1,390 2,672 3,832
Investment property
Other long –term financial assets
Deferred tax assets
Goodwill
Other tangible assets 690 671 1,960
Total non-current assets 6,688 8,148 10,771
Total assets 18,788 23,194 25,846

 

 

 

 

Consolidated Statement of Financial Position as at 30 June 2016

  14 November
2014 2015 2016
Liabilities      
Current      
Trade & other payables 2,347 3,439 3,487
Borrowings 1,000 1,500
Derivative financial instruments 901 283 442
Provisions 1,000 1,500 500
Employee benefits 7,451 11,133 12,064
Current tax liabilities 3,220 5,012 6,032
Liabilities included in disposal group held sale 1,000
Current liabilities 15,919 22,367 24,075
Non-current      
Trade and other payables 3,564 4,741 5,562
Borrowings 7,000 7,500 7,500
Employee benefits 4,651 4,178 4,049
Deferred tax liabilities 100 100
Other liabilities 1,602 1,584 1,592
Total non-current liabilities 16,817 18,103 18,803
Total liabilities 32,736 40,470 42,878
Net assets 18,788 23,194 25,846
Equity 6,711 8,791 9,275
Equity attributable to owners of the parent:      
·         Share capital 3,486 4,450 4,133
·         Share option reserve 1,000 1,000 1,000
·         Other components of equity 451 735 324
·         Retained earnings 2,300 2,300 2,300
Non-controlling interest
Total equity 32,736 40,470 42,878

 

 

 

 

 

 

Capital management policies and procedures

The Corporation’s capital management objectives are:

  • to ensure the Corporation’s ability to continue as a going concern; and
  • To provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.

The Corporation monitors capital on the basis of the carrying amount of equity plus its subordinated loan, less cash and cash equivalents as presented on the face of the statement of financial position and cash flow hedges recognised in other comprehensive income.

The Corporation’s goal in capital management is to maintain a capital-to-overall financing ratio of 1:6 to 1:4. This is in line with the Corporation’s covenants resulting from the subordinated loan it has taken out from its main shareholder in 2013.

Directors’ Declaration

  1. In the opinion of the Directors of F.E.A.R Corporation:
  2. The consolidated financial statements and notes of F.E.A.R Corporation are in accordance with the Corporations Act 2001, including:
  3. Giving a true and fair view of its financial position as at 30 June 2016 and of its performance for the financial year ended on that date; and
  4. Complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and
  5. There are reasonable grounds to believe that F.E.A.R Corporation will be able to pay its debts as and when they become due and payable.
  6. The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Chief Executive Officer and Chief Financial Officer for the financial year ended 14 November 2016.
  7. Note 2 confirms that the consolidated financial statements also comply with International Financial Reporting Standards.

Signed in accordance with a resolution of the Directors.

 

 

Director

Itai Bryan Nyamawuya
Dated the 14th day of November 2016

 

 

 

10 tips for doing business in Africa

You’re ready, willing and eager to do business in Africa. But you have no idea where to start. We sympathize.

Recently, Africa.com’s CEO and founder Teresa Clarke was invited to deliver a speech on doing business in Africa to a packed room in the White House, full of CEOs and investors. She delivered the following ten tips, the ten things no one ever tells you. The audience left the room confident and ready to engage with the continent; you will be too.

Article adopted from Africa.com http://www.africa.com/doing-business-in-africa-ten-things-no-one-ever-told-you

Doing Business in Africa: Ten Things No One Ever Told You

1) The African business culture, similar to the Asian business culture, is driven more by relationships and less by transactions.

2) African consumers have more money than you think, and they’re willing to spend less money on food to purchase airtime. As one of our bloggers wrote recently about Kenyans, “basic needs, in the eyes of a growing few, include access to cheap mobile (and internet) services.”

3) When it comes to doing business in Africa, it’s neither one country nor 54 countries. Rather you have to take a regional approach. In our “Insider’s Guide to Business Travel to Accra, Ghana,” for example, we wrote, “Many business travelers to West Africa find Accra to be close enough to access Nigeria’s large market, but prefer the quality of life that Accra affords visitors.”

4) Brand loyalty is high. See the food and beverage and banking sectors.

5) Corruption—it’s not just an American (or Western) concern. Africans take corruption very seriously because it costs entrepreneurs, drives uncertainty, and inhibits growth.

business-in-africa

6) Africans think China is good for business. Firstly and perhaps most importantly, Chinese treat Africans as peers, not children who need incentives for good behavior. Chinese are faster to make decisions, and have provided high profile infrastructure–in other words, they have delivered on projects. An example is Ghana’s new international airport.

7) Poor people have market preferences, too. Before entering a market, research is essential. Don’t assume that cheaper is always better; durability is often a core value.

8) Modes of communication are different. Cell phones are ubiquitous, so expect to text–a lot. On the other end of the spectrum, you’ll rely less on e-mail and the post office. Your driver might also serve as your courier.

9) Use local consultants and experts. They’ll have knowledge of local customs, culture and relationships. It’ll minimize “school fees,” and deepen your perceived investment.

10) Americans are the last ones to the party. Perhaps a more apt name for this article might be, “Ten Things No One Ever Told You…If you are an American.” Europeans, Chinese and South Africans—yes, this is one of those weird regionalisms where South Africa is a separate market from the rest of the Continent—are already doing business in Africa and profiting. Just check out our weekly Business Top 10 to see the latest deal and who’s who on the Continent.

We hope our tips prove helpful and that you’ll be contacting us about your next successful business venture in Africa.

Bond notes and an uncertain outlook

To our valued clients and partners

We received with dismay, the proposed introduction of bond notes as export incentives for exporters. We believe the introduction of such a measure will only worsen the situation as the facility could be abused.

We believe there are better solutions that require tough decisions and hard choices being made by both monetary and political authorities.

Here are 5 steps that we believe if taken can lead us to economic rebound:

1. Incentivise exports through tax reduction
Currently, it’s a headache to get export permits and fulfill all the obligations on top of duty, tariffs and taxes.
By reducing taxes on exporters, government would have done some good.

2. Allow dual citizenship
Billions of dollars are locked out of Zimbabwe as our entrepreneurial sons & daughters in the diaspora who could be investing in this nation have been forced to take rescind Zimbabwe citizenship.
By allowing dual citizenship, diasporans can safely invest in both nations creating linkages & partnerships.

3. Restore market confidence
Cash shortages are due to cash hoarding and cash withdrawals as the public seeks their money by themselves.
Market confidence will see more savings, less withdrawals and more use of plastic money.

4. Policy consistency & long term planning
Government needs to speak with one voice consistently pronouncing policies with clarity. Policy clarity and consistency accompanied by long term planning will gift us as business with the opportunity to plan long term and undo uncertainty.

5. Reduce government interference into the economy
We need to wean the economy from politics. Business can regulate itself as long as there are clear policies and rules of operation. Government by offloading some of the duties & responsibilities, can reduce size of departments and expenditure.

We believe if these steps are followed to the latter, we could see a modicum of recovery.
We also urge authorities to urgently deal with all forms of corruption.

Ahmed Shafiq
Board Chair
F.E.A.R Corporation

F.E.A.R Corporation: First Quarter results 2016

The Corporation would like to announce Q1 results for trading quarter ended 14 February 2016.

There was modest growth in sales 5% and revenues 16% spurred on by growing global market demand. Profit margins remained lean with the corporation managing to break even for the first time in a year.

Bouyed mainly by HOSE, the corporation is certain to return to profitability by end of Q2.

OMP
The publisher has seen a slow down due to restructuring and refocusing going on.
More players are expected on-board as the concern seeks to expand into branding & marketing.

HOSE
Consistent growth continues in the range of 5-6% and prospects look brighter with the coming on board of several new artists in time for The #ReallyGood™ Album set for release beginning of Q3.

HOSE is also in talks to make audio-visuals of some of OMP published content.

MBM
Plans are under way to operationalise Quereta™ Soft Loan Scheme. The scheme will see release of short-term low interest loans meant to cushion students, employees and other parties in need.
Quereta™ will be working by end of Q2.
MBM expects to build a portfolio of larger loans and credit facilities as resources are found.

GETI & AgroFearo
Due to their capital intensive nature, the firms currently run as consultancies realizing little to no revenue.
We are upbeat that our plans for the GETIShop® which had been shelved are again on the table as more interested partners emerged.
AgroFearo will soon embark on a miniature horticultural project to augment earnings. The project site is in Musami, 70km East of Harare.

Corporate Social Responsibilities
The Corporation remains committed to giving back to the community in sustainable ways.

Voluntary Mentorship Program, VMP will continue to fund education & upliftment programs for deserving youth.

Technology Initiative Africa, TIA is embarking on a nationwide tour to train young people on the use and benefits of technology.

We as a corporation are upbeat about the coming months. We remain true to our values: creativity, technovation & charity.

Business in 2016

Faulty forex

China’s economy is not on the verge of collapse. Next week the government will announce last year’s rate of economic growth. It is likely to be close to 7%. That figure may be an overestimate, but it is not entirely divorced from reality. Nevertheless, demand is slowing, inflation is uncomfortably low and debts are rising. The bullish case for China depends partly upon the belief that the government can always lean against the slowdown by stimulating consumption and investment with looser monetary policy—just as in any normal economy.

Yet China is not normal. It is caught in a dangerous no-man’s-land between the market and state control. And the yuan is the prime example of what a perilous place this is. After a series of mini-steps towards liberalisation, China has a semi-fixed currency and semi-porous capital controls. Partly because a stronger dollar has been dragging up the yuan, the People’s Bank of China (PBOC) has tried to abandon its loose peg against the greenback since August; but it is still targeting a basket of currencies. A gradual loosening of capital controls means savers have plenty of ways to get their money out.

A weakening economy, a quasi-fixed exchange rate and more porous capital controls are a volatile combination. Looser monetary policy would boost demand. But it would also weaken the currency; and that prospect is already prompting savers to shovel their money offshore.

In the last six months of 2015 capital left China at an annualised rate of about $1 trillion. The persistent gap between the official value of the yuan and its price in offshore markets suggests investors expect the government to allow the currency to fall even further in future. And, despite a record trade surplus of $595 billion in 2015, there are good reasons for it to do so, at least against the dollar, which is still being propelled upwards by tighter monetary policy in America.

The problem is that the expectation of depreciation risks becoming a self-fulfilling loss of confidence. That is a risk even for a country with foreign-exchange reserves of more than $3 trillion. A sharply weaker currency is also a threat to China’s companies, which have taken on $10 trillion of debt in the past eight years, roughly a tenth of it in dollars. Either those companies will fail, or China’s state-owned banks will allow them to limp on. Neither is good for growth.

The government has reacted by trying to rig markets. The PBOC has squeezed the fledgling offshore market in Hong Kong by buying up yuan so zealously that the overnight interest rate spiked on January 12th at 67%. Likewise, in the stockmarket it has instructed the “national team” of state funds to stick to the policy of buying and holding shares.

One step back, two forwards

Yet such measures do nothing to resolve a fundamental tension. On the one hand, the state understands that the lack of financial options for Chinese savers is unpopular, wasteful and bad for the economy. On the other, it is threatened by the ructions that liberalisation creates. For Xi Jinping, the president, now in his fourth year in charge, that dilemma seems to crop up time and again (see Briefing). He needs middle-class support, but feels threatened by the capacity of the middle class to make trouble. He wants state-owned enterprises to become more efficient, but also for them to give jobs to the soldiers he is booting out of the People’s Liberation Army (see article). He wants to “cage power” by strengthening the rule of law and by invoking the constitution, yet he is overseeing a vicious clampdown on dissent and free speech.

http://www.economist.com/news/leaders/21688396-strains-currency-suggest-something-very-wrong-chinas-politics-yuan-and
F.E.A.R Corporation

Technovation | Creativity | Charity