Major International Business Headlines Brief::: 19 February 2019

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Major International Business Headlines Brief::: 19 February 2019

 


 

 


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*  Nigerian assets fall as election delay fuels uncertainty

*  South Africa's rand steady as Eskom-linked rout pauses

*  South Africa's Amplats lost 14,000 platinum ounces during last week's
power cuts

*  Famed Cullinan mine banks on big diamonds to drive down debt

*  Ethiopia and Djibouti sign deal to build gas pipeline

*  South Africa's state airline to reorganise in turnaround drive

*  The US cannot crush us, says Huawei founder

*  Facebook needs regulation as Zuckerberg 'fails' - UK MPs

*  Honda set to close Swindon car plant

*  Flybmi won't be the last airline failure, say analysts

*  Train firms want overhaul of ticket system

*  Balmoral Tanks loses 'price-fixing' court case

 


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Nigerian assets fall as election delay fuels uncertainty

LAGOS (Reuters) - The naira weakened on the forward market on Monday and
Nigerian stocks fell as investors worried that delaying elections for a week
could lead to a contested result, fuelling uncertainty, analysts said.

 

Nigeria’s electoral commission over the weekend postponed for one week a
presidential election, hours before polls were due to open. It cited
logistical reasons and denied political pressure had played any part.

 

The one-year non-deliverable naira forward opened at a quote of 401 per
dollar, compared with 397 in the previous session. Stocks dropped 2.51
percent to a one-week low. They had climbed past a three-month high on
Friday.

 

“There is some frustration on behalf of investors who have had concerns
about this election for the better part of the past year and are ultimately
hoping to simply put it behind them,” said Christopher Dielmann, a senior
economist at Exotix Capital.

 

Investors had started to pick up shares to position for a post-election
rally, assuming that the election would pass without violence or other
problems. That boosted dollar liquidity on the currency market.

 

The delay hit Nigeria’s dollar-denominated bond yields and could affect
demand at a government naira debt auction this week.

 

RISK OF CONTESTED RESULT

 

“Some investors might still want to wait for the results of the election to
gauge risks, such as a possible contestation of the result, which the
postponing arguably now has given more grounds for,” said Cobus de Hart, a
senior economist at South Africa’s NKC African Economics.

 

Nigeria has a history of election delays after postponing the 2011 and 2015
votes. President Muhammadu Buhari was meeting with senior members of his
party on Monday over the postponement and has urged voters to stay calm.

 

His main rival, former vice president Atiku Abubakar, said on Saturday that
Buhari’s administration hoped to disenfranchise the country’s electorate by
delaying the vote.

 

Analysts say the postponement could disrupt Nigeria’s economic and market
rebound.

 

“The economic consequences of this decision will be felt significantly, as
what was supposed to be a smooth process is now mired in lengthened
uncertainty and controversy, thereby shaking investor confidence and
somewhat eroding the renewed interest from both foreign and domestic
investors,” analysts at Vetiva Capital wrote in a note.

 

“We expect the postponement to directly lead to a reversal in the market
with jittery investors quickly withdrawing from the market while others wait
on the sidelines.”

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


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South Africa's rand steady as Eskom-linked rout pauses

JOHANNESBURG (Reuters) - South Africa’s rand firmed on Monday as the
previous week’s rout over electricity blackouts eased, with some traders
taking the slide to two-month lows as an opportunity to buy the currency
cheap.

 

At 0630 GMT, the rand was 0.07 percent firmer at 14.0600 per dollar compared
to Friday’s close of 14.0700 in New York.

 

Since the resumption of nation-wide power cuts by state power utility Eskom
last Monday, the rand has lost close to 5 percent, breaching the crucial
14.00 psychological mark as the crisis at the state-owned power utility put
a credit downgrade to junk back on the radar.

 

On Friday, Public Enterprises Minister Pravin Gordhan told Reuters that the
government would ask independent power producers (IPPs) to lower the price
Eskom pays for electricity from older renewable energy projects to plug the
gaps in supply.

 

Eskom said on Friday the probability of power outages this week was low as
the performance of its creaking fleet of coal-fired stations had improved.

 

A firming dollar, as Washington and Beijing looked close to sealing a trade
agreement, has also put pressure on the currency ahead of the annual budget
on Wednesday where the finance minister is expected to unveil a rescue
package for Eskom.

 

Bonds were also firmer, with the yield on the benchmark paper due in 2026
down 2 basis points to 8.86 percent.

 

Stocks were set to open higher at 0700 GMT, with the JSE securities
exchange’s Top-40 futures index up 0.5 percent.

 

 

South Africa's Amplats lost 14,000 platinum ounces during last week's power
cuts

JOHANNESBURG (Reuters) - South Africa’s Anglo American Platinum (Amplats)
said on Monday it had lost 14,000 platinum ounces last week when struggling
state power firm Eskom implemented five straight days of power cuts.

 

Amplats chief executive Chris Griffith said it was also considering building
a 100 megawatt solar power plant at its Mogalakwena operations.

 

 

Famed Cullinan mine banks on big diamonds to drive down debt

CULLINAN, South Africa (Reuters) - The owner of one of the world’s most
famous diamond mines could be about a decade away from clearing its
multi-million-dollar debts, in a sign of the struggles facing an industry
assailed by synthetic rivals and uncertain demand.

 

Petra Diamonds bought Cullinan in 2008, aiming to breathe new life into the
South African mine renowned for yielding the largest rough gem diamond ever
found - 3,106 carats - and being the world’s main source of rare blue
diamonds.

 

The London-listed miner, which acquired Cullinan from industry leader De
Beers, borrowed heavily to revamp the facility and began mining a new
section of ore last July.

 

Petra told Reuters its debts from the mine stood at around 65 percent of its
overall $650 million in borrowing, which would represent about $420 million.

 

Cullinan’s general manager Juan Kemp added that it could take “between five
and 10 years” from the opening of the new section to clear the debts related
to the mine. That goes beyond the 2022 maturity of Petra’s bond notes.

 

Petra’s chief executive Johan Dippenaar later said that, though 60 percent
of total group capital and sustaining expenditure had been allocated to
Cullinan, the repayment of the notes is based on cash flows from all four of
Petra’s mines.

 

Cullinan accounted for around a third of the company’s diamond sales revenue
in 2018.

 

The company says Cullinan has been profitable every year since it acquired
the mine and it expects to generate free cash flow this year - a target it
had hoped to reach in 2017 before being derailed by strikes and construction
delays - and start reducing its debts.

 

Kemp said one thought kept him awake at night: “When will we get that next
big stone?”

 

But he added that the company was in a good position, with a new mine that
was exceeding production expectations and keeping costs in line.

 

Ben Davis, mining analyst at Liberum, said the diamond prices Petra had
achieved were below market expectations.

 

“Everyone is very much hoping, for the sake of the equity holders and debt
holders, it will deliver more higher-quality stones,” he added.

 

Jacques Breytenbach, Petra’s finance director, said pricing at Cullinan was
variable from one period to the next, and that the market tended to be
weaker at the end of the calendar year due to destocking. An increase in
diamond tenders in the second half of Petra’s financial year would make a
big difference to cash generation, he said.

 

The miner’s difficulties reflect in part the problems facing the industry -
which often takes years to recover huge investments - including new
competition from synthetic diamonds and sluggish demand, especially for
small stones.

 

In a sign of the times, De Beers, owned by Anglo American, last year
abandoned its decades-old policy of refusing to sell man-made diamonds as
jewellery.

 

DIAMOND PRICES

While differences in production and sales methods make direct comparison
difficult, man-made diamonds require less investment than mining natural
stones and can offer more attractive margins.

 

Synthetic producers spend around $300-500 per carat produced, according to a
2018 report by Bain & Company. De Beers’ lab-grown diamonds sell for $800
per carat.

 

Petra has to shift 20,000 tonnes of earth at Cullinan to yield one cup of
diamonds, at an average cost in the first half of their financial year of
$55 per carat, leaving it with a margin of $41 per carat.

 

Industry experts say synthetic production accounts for a small percentage of
the market, but is growing fast. De Beers is investing $94 million over four
years to build a U.S. factory that will churn out 500,000 carats a year, for
example, while Chinese producers are stepping up output.

 

Prices are also under pressure. Diamond miners say sales are seasonal and
fall off after the Christmas rush, but the industry’s giants have
nonetheless reported weaker prices.

 

Alrosa, the world’s biggest diamond seller by volume, said in January sales
were down 44 percent year on year, while De Beers, the biggest seller by
value, said the first 2019 sales cycle was 25 percent lower than in 2018.

 

“Diamond prices have come under pressure from a toxic combination of
deteriorating consumer confidence in China, growth in synthetic jewellery
capacity, working capital finance withdrawal ... and jewellery recycling,”
Davis said.

 

The tougher landscape is widening the disparities within the diamond mining
industry itself.

 

Big players, led by De Beers and Alrosa, have the money and technology to
expand in places such as Namibia and Russia, while mid-tier miners like
Petra, and smaller players look to eke out the resources from older mines.

 

Petra gained control of Cullinan, east of Pretoria, for $80 million.

 

Previous owner De Beers said at the time that the sale was part of a
strategic review to shed unprofitable mines (reut.rs/2BFlThG). For Petra,
the 116-year-old mine is its flagship project and its most capital-heavy,
and thus central to shareholder confidence.

 

MURKY COLOUR

A single large, valuable stone could bring in millions of dollars and
lighten Petra’s debt load. So far, however, the only large stones recovered
from the new mining section have been a murky colour, and low quality.

 

Kemp said the new section, which analysis suggests should be rich, had yet
to show what it can produce.

 

“We expect a large stone at some point,” he said.

 

In the absence of rarer gems and amid weak prices for small diamonds,
averages for Cullinan stones have slipped from $140 per carat in the first
half of its 2018 financial year to $96 for the first half of this year - the
lowest since 2010.

 

That helped prompt a 30-percent fall in Petra’s share price since it
published prices in January, extending a steep decline over the previous two
years. The miner has bought and developed four other African mines.

 

Small miners are more vulnerable to adverse industry trends than the bigger
players, whose volumes improve the probability of success, according to
Bernstein analyst Paul Gait.

 

“Their size allows the laws of large numbers to work on their side,” he
said. “You’re not just reliant on the belief that in a few years’ time you
will find a stone of 1,000 carats.”

 

($1 = 13.7679 rand)

 

 

 

Ethiopia and Djibouti sign deal to build gas pipeline

ADDIS ABABA (Reuters) - Ethiopia and Djibouti have signed a deal to build a
pipeline to transport Ethiopian gas to an export terminal in the Red Sea
state, officials said.

 

Ethiopia found extensive gas deposits in its eastern Ogaden Basin in the
1970s. China’s POLY-GCL Petroleum Investments has been developing the Calub
and Hilala fields there since signing a production sharing deal with
Ethiopia in 2013.

 

The agreement between Djibouti and Ethiopia comes more than a year after
POLY-GCL signed a memorandum of understanding with Djibouti to invest $4
billion to build the natural gas pipeline, a liquefaction plant and an
export terminal to be located in Damerjog, near the country’s border with
Somalia.

 

It was envisaged that production would start last year, but the Ethiopian
government said that was now likely to happen in 2020.

 

Djibouti’s Energy Minister Yonis Ali Guedi told Reuters late on Saturday the
deal hammered out “key terms that will serve as a basis” for related
concession contracts. 

 

“It is the most expensive project ever built in the Horn of Africa region,”
he said. “The two parties have reached an agreement in principle to allow
them to benefit from the project in an equitable manner.”

 

POLY-GCL is a joint venture between state-owned China POLY Group Corporation
and privately owned Hong Kong-based Golden Concord Group.

 

Africa’s eastern seaboard could soon become a major global producer of
liquefied natural gas, with other planned projects based on big gas finds
made in Tanzania and Mozambique.

 

 

 

South Africa's state airline to reorganise in turnaround drive

JOHANNESBURG (Reuters) - South Africa’s struggling state-owned airline will
reorganise into three business units as part of a revamp plan that could
also involve the partial sale of its catering unit, its chief executive
officer said on Monday.

 

Vuyani Jarana said during a briefing that South African Airways (SAA), which
hasn’t made a profit since 2011, would organise itself into domestic,
regional and international business units.

 

Each unit will have its own management, rather than decisions being
centralised, in a bid to make the airline more agile and increase
accountability.

 

“We are evolving into an operating model of three business units,” Jarana
told the briefing.

 

“We want to build a new SAA, fit for the future, place the right people in
the right job,” he added.

 

President Cyril Ramaphosa has been at pains to stabilise ailing firms like
SAA, which survive on government handouts and weigh on confidence in
Africa’s most industrialised economy, but the extent of their financial
difficulties has meant slow progress.

 

Jarana also said the firm was exploring the partial sale of its catering
unit, Air Chefs, as part of the restructuring.

 

SAA, which expects to make another large financial loss this year, hopes to
turn a profit by 2021 via restructuring and cutting jobs and routes.

 

But its finances were dealt another blow last week when it was ordered to
pay 1.1 billion rand ($78 million) to rival Comair to settle an
anti-competition case.

 

($1 = 14.0881 rand)

 

 

The US cannot crush us, says Huawei founder

The founder of Huawei has said there is "no way the US can crush" the
company, in an exclusive interview with the BBC.

 

Ren Zhengfei described the arrest of his daughter Meng Wanzhou, the
company's chief financial officer, as politically motivated.

 

The US is pursuing criminal charges against Huawei and Ms Meng, including
money laundering, bank fraud and stealing trade secrets.

 

Huawei denies any wrongdoing.

 

Mr Ren spoke to the BBC's Karishma Vaswani in his first international
broadcast interview since Ms Meng was arrested - and dismissed the pressure
from the US.

 

"There's no way the US can crush us," he said. "The world cannot leave us
because we are more advanced. Even if they persuade more countries not to
use us temporarily, we can always scale things down a bit."

 

However, he acknowledged that the potential loss of custom could have a
significant impact.

 

Last week, US Secretary of State Mike Pompeo warned the country's allies
against using Huawei technology, saying it would make it more difficult for
Washington to "partner alongside them".

 

Australia, New Zealand, and the US have already banned or blocked Huawei
from supplying equipment for their future 5G mobile broadband networks,
while Canada is reviewing whether the company's products present a serious
security threat.

 

Mr Ren warned that "the world cannot leave us because we are more advanced".

 

"If the lights go out in the West, the East will still shine. And if the
North goes dark, there is still the South. America doesn't represent the
world. America only represents a portion of the world."

 

What did Mr Ren say about investment in the UK?

The UK's National Cyber Security Centre has decided that any risk posed by
using Huawei technology in UK telecoms projects can be managed.

 

Many of UK's mobile companies, including Vodafone, EE and Three, are working
with Huawei to develop their 5G networks.

 

They are awaiting a government review, due in March or April, that will
decide whether they can use Huawei technology.

 

Commenting on the possibility of a UK ban, Mr Ren said Huawei "won't
withdraw our investment because of this. We will continue to invest in the
UK."

 

"We still trust in the UK, and we hope that the UK will trust us even more."

 

"We will invest even more in the UK. Because if the US doesn't trust us,
then we will shift our investment from the US to the UK on an even bigger
scale."

 

What does Mr Ren think about his daughter's arrest?

Mr Ren's daughter Meng Wanzhou, Huawei's chief financial officer, was
arrested on 1 December in Vancouver at the request of the US, and is
expected to be subject of a formal extradition request.

 

In total, 23 charges are levelled against Huawei and Ms Weng. The charges
are split across two indictments by the US Department of Justice.

 

The first covers claims Huawei hid business links to Iran - a country
subject to US trade sanctions, while the second includes the charge of
attempted theft of trade secrets.

 

Mr Ren was clear in his opposition to the US accusations.

 

"Firstly, I object to what the US has done. This kind of politically
motivated act is not acceptable."

 

"The US likes to sanction others, whenever there's an issue, they'll use
such combative methods."

 

"We object to this. But now that we've gone down this path, we'll let the
courts settle it."

 

What did Mr Ren say about Chinese government spying?

Huawei, which is China's largest private company, has been under scrutiny
for its links to the Chinese government - with the US and others expressing
concern its technology could be used by China's security services to spy.

 

Under Chinese law, firms are compelled to "support, co-operate with and
collaborate in national intelligence work".

 

But Mr Ren said that allowing spying is a risk he wouldn't take.

 

"The Chinese government has already clearly said that it won't install any
backdoors. And we won't install backdoors either."

 

"We're not going to risk the disgust of our country and of our customers all
over the world, because of something like this."

 

"Our company will never undertake any spying activities. If we have any such
actions, then I'll shut the company down."

 

Is Huawei part of the Chinese state?

Analysis - Karishma Vaswami, BBC Asia Business Correspondent - Shenzhen

 

For a man known as reclusive and secretive, Ren Zhengfei seemed confident in
the conviction that the business he's built for the last 30 years can
withstand the scrutiny from Western governments.

 

Mr Ren is right, the US makes up only a fraction of his overall business.

 

But where I saw that confidence slip, was when I asked him about his links
to the Chinese military and the government.

 

He refused to be drawn into a conversation, only to saying that these were
not facts, simply allegations.

 

Still, some signs of close links between Mr Ren and the government were
revealed during the course of our interview.

 

He also confirmed that there is a Communist Party committee in Huawei, but
he said this is what all companies - foreign or domestic - operating in
China must have in order to abide by the law.--BBC

 

 

 

Facebook needs regulation as Zuckerberg 'fails' - UK MPs

Facebook needs far stricter regulation, with tough and urgent action
necessary to end the spread of disinformation on its platform, MPs have
said.

 

A Commons committee has concluded that the firm's founder Mark Zuckerberg
failed to show "leadership or personal responsibility" over fake news.

 

Untrue stories from foreign powers were risking the UK's democracy, they
said.

 

Facebook welcomed the digital select committee's report and said it would be
open to "meaningful regulation".

 

MPs said that what was needed to deal with the proliferation of
disinformation online and the misuse of personal data was a "radical shift
in the balance of power between social media platforms and the people".

 

The inquiry into fake news, which lasted more than a year, was conducted by
the Digital, Culture, Media and Sport Committee, with much of the evidence
focusing on the business practices of Facebook before and after the
Cambridge Analytica scandal.

 

What will the DCMS report achieve?

What is fake news and can you identify it?

Facebook employs UK fact-checkers to combat fake news

Cambridge Analytica was a political advertising firm that had access to the
data of millions of users, some of which was allegedly used to
psychologically profile US voters. The data was acquired via a personality
quiz.

 

How such data, particularly in terms of political campaigning, was shared by
Facebook was at the heart of the inquiry, alongside the effects of fake
news.

 

"Democracy is at risk from the malicious and relentless targeting of
citizens with disinformation and personalised 'dark adverts' from
unidentifiable sources, delivered through the major social media platforms
we use every day," concluded the report.

 

"The big tech companies are failing in the duty of care they owe to their
users to act against harmful content, and to respect their data privacy
rights."

 

The report called for:

 

*         a compulsory code of ethics for tech companies, overseen by an
independent regulator

*         the regulator to be given powers to launch legal action if
companies breach the code

*         the government to reform current electoral laws and rules on
overseas involvement in UK elections

*         social media companies to be forced to take down known sources of
harmful content, including proven sources of disinformation

*         tech companies operating in the UK to be taxed to help fund the
work for the Information Commissioner's Office and any new regulator set up
to oversee them.

*         In response, Facebook said: "We share the committee's concerns
about false news and election integrity and are pleased to have made a
significant contribution to their investigation over the past 18 months,
answering more than 700 questions and with four of our most senior
executives giving evidence.

 

"We are open to meaningful regulation and support the committee's
recommendation for electoral law reform. But we're not waiting. We have
already made substantial changes so that every political ad on Facebook has
to be authorised, state who is paying for it and then is stored in a
searchable archive for seven years. No other channel for political
advertising is as transparent and offers the tools that we do."

 

MPs made no secret of the fact that they found it difficult dealing with
Facebook during the inquiry and chair Damian Collins had strong words for
the firm and its leader, Mr Zuckerberg.

 

"We believe that in its evidence to the committee, Facebook has often
deliberately sought to frustrate our work, by giving incomplete,
disingenuous and at time misleading answers to our questions," he said.

 

"These are issues that the major tech companies are well aware of, yet
continually fail to address. The guiding principle of the 'move fast and
break things' culture seems to be that it is better to apologise than ask
permission."

 

MPs were particularly angry that Mr Zuckerberg did not come to the UK to
answer questions in person.

 

"Even if Mark Zuckerberg doesn't believe he is accountable to the UK
Parliament, he is to billions of Facebook users across the world," said Mr
Collins.

 

"Evidence uncovered by my committee shows he still has questions to answer
yet he's continued to duck them, refusing to respond to our invitations
directly or sending representatives who don't have the right information."

 

He also accused Facebook of "bullying" smaller tech firms and developers who
rely on their platform to reach users.

 

The committee did not list specific examples of fake news. But it pointed to
the government response to its interim report, which found at least 38 false
narratives online after the nerve agent attack in Salisbury in March 2018.

 

The report also noted that disinformation was not just spread on Facebook
but also on platforms such as Twitter.

 

And it found that, in the month following the publication of its interim
report, 63% of the views to the online government response were from foreign
internet protocol (IP) addresses, more than half of which were from Russia,
highly unusual for a UK-based political inquiry.

 

The wide-ranging inquiry did not just look at fake news. It also examined
how tech firms use data and data-targeting especially in political contexts,
the use of political campaigning online and relationship between a complex
network of firms including Canadian AIQ, Cambridge Analytica parent firm SCL
and IT firm Six-Four-Three.

 

MPs said current electoral regulations were "hopelessly out of date for the
internet age" and needed urgent reform, so that the same principles of
transparency of political communications that operate in the real world were
applied online too.

 

The committee called on the government to reveal how many investigations
were currently being carried out into Russian interference in UK politics,
particularly the EU referendum in 2016. They asked the government to launch
an independent investigation into that.

 

In order to better regulate social media firms, the MPs suggested creating a
new category of tech firm - one that was neither a platform nor a publisher
but something in-between, which would tighten the legal liability for
content identified as harmful.

 

Fact-checkers

Pressure is mounting on the tech giants to get to grips with the issue of
fake news, and will add to calls from other ministers for regulation on the
issue of harmful content, following the death of teenager Molly Russell.

 

Her father accused Facebook-owned Instagram of facilitating her death, by
failing to remove images of self-harm.

 

And the Cairncross Review into the future of UK news recently recommended a
regulator should oversee Google and Facebook to ensure their news content is
trustworthy.

 

In her report, Dame Frances Cairncross said such sites should help users
identify fake news and "nudge people towards news of high quality".

 

Facebook has repeatedly said it is committed to fighting fake news and works
with more than 30 fact-checking organisation around the world.

 

Two of those agencies - Associated Press and Snopes - recently quit working
with the social network.

 

The ease with which fake news can be created was illustrated recently by a
team of researchers at OpenAi which showed a machine learning system produce
coherent, but untrue articles, just by trawling through news site
Reddit.--BBC

 

 

Honda set to close Swindon car plant

Honda is set to announce the closure of its Swindon car plant in 2022, with
the loss of about 3,500 jobs.

 

The Japanese company made 160,000 Honda Civics in Swindon last year, of
which some 90% were exported to the EU.

 

Honda has yet to make a formal announcement, and the Prime Minister's
spokesman said Theresa May would not comment until an official confirmation.

 

But local MP Justin Tomlinson said he had spoken to Honda, which confirmed
it was consulting with "all staff".

 

"There is not expected to be any job losses, or changes in production until
2021," Mr Tomlinson said.

 

Simon Jack: Is Japan losing faith in UK?

Nissan £60m in doubt after investment U-turn

Jaguar Land Rover posts £3.4bn loss

What has been the reaction?

The Unite union said the reports, if confirmed, would be a "shattering body
blow".

 

National officer Des Quinn said: "The car industry in the UK over the last
two decades has been the jewel in the crown for the manufacturing sector -
and now it has been brought low by the chaotic Brexit uncertainty created by
the rigid approach adopted by prime minister Theresa May."

 

As well as having a "grave" impact on workers and their families, it "will
also affect thousands of jobs in the extensive supply chain across the
country", he said.

 

A spokesman for Prime Minister Theresa May said it was "only right that we
wait until the company has spoken with the workforce" before commenting.

 

The International Trade Secretary, Liam Fox, also declined to comment
directly until an official announcement.

 

But he pointed out that car demand had fallen since new diesel emissions
rules were introduced across Europe. "That big drop in demand by consumers
is bound to have a knock on effect with producers," he said.

 

Martin Huggins, a Honda worker for 25 years said: "We haven't heard anything
at all- all we have seen is what is on our phones.

 

"The management have told us nothing at all. This will be a sad day for
Swindon as a whole, not just the workers but all the subsidiary companies
that go with it."

 

In a tweet, Mr Tomlinson said: "Honda are clear this is based on global
trends and not Brexit, as all European market production will consolidate in
Japan in 2021."

 

The car industry has also been struggling with falling demand in China and a
slowdown in diesel sales.

 

Honda's Swindon plant produces both VTEC turbo petrol engines and diesel
i-DTEC engines.

 

But according to Sky, Brexit is understood to be one factor in the decision,
with the carmaker concerned about the imposition of new tariffs after the UK
leaves the EU.

 

Rival Japanese carmaker Nissan also cited Brexit as one reason for
cancelling plans to build its X-Trail SUV in Sunderland earlier this month.

 

And Toyota and Jaguar Land Rover have expressed concern about the risk of a
potential no-deal Brexit in recent months. Last week, Ford warned that a
leaving the EU without a deal would be "catastrophic".

 

Is a new EU-Japan trade deal to blame?

The EU and Japan recently struck a trade deal which lowers tariffs on both
parties' car exports to zero.

 

James Atwood, deputy editor of Autocar magazine, said this could be a big
factor behind Honda's decision.

 

"It allows Honda to produce their cars in Japan where most of their plants
are and then ship them to the EU without having to pay the import tariffs
they have been, which does reduce one of the reasons for needing a plant in
the UK," he told BBC News.

 

BBC business editor Simon Jack says the trade deal certainly "means a
dwindling rationale to base manufacturing inside the EU".

 

He said: "Production at Swindon has been in decline for some time and is
currently running at about half its capacity - another strike against it.
But, having said that, Japanese companies are very long term investors.

 

"Sony and Panasonic moved their European headquarters to the EU. In each
case, the rationale was slightly different. But many in Japan feel failure
to provide Brexit certainty have loosened the ties that used to bind the two
countries."

 

Were there clues this was coming?

Only last autumn, Honda said it was committed to UK-based production
regardless of the outcome of Brexit negotiations.

 

But last month, it said it would shut the Swindon factory for six days in
April as part of its preparations for any disruption caused post-Brexit.

 

The company said the move was to ensure it could adjust to "all possible
outcomes caused by logistics and border issues".

 

The firm said it would help in recovering lost production if shipments of
parts were held up at borders.

 

Last year, the senior vice-president of Honda Europe warned that if the UK
left the EU without a deal, it would cost his company tens of millions of
pounds.

 

Ian Howells told the BBC that quitting the bloc without an agreement would
affect the carmaker's competitiveness in Europe.

 

What is the history of Honda in Swindon?

Honda UK is situated on a former airfield spanning 370 acres to the
north-east of Swindon.

 

The carmaker bought the site in 1985 and established Honda of the UK
Manufacturing to inspect vehicles pre-delivery.

 

In 1989, the operations expanded to producing engines. Three years later, a
car plant was added, which began producing the Honda Accord.

 

Since then, the site has gone on to produce the Jazz, CR-V, Civic and Type
R.

 

A second Honda car plant opened in Swindon in 2001, raising production
capacity to 250,000 a year.--BBC

 

 

 

Flybmi won't be the last airline failure, say analysts

In two short sentences, Flybmi's announcement that it had collapsed summed
up the airline industry's woes: fuel costs, green taxes, Brexit uncertainty,
falling passenger numbers. It might have added fierce competition, but that
is probably a statement of the obvious.

 

Several European airlines have folded or hit financial trouble during the
past two years. Britain's Monarch collapsed in October 2017, while Germany's
Germania filed for insolvency earlier this month.

 

Air Berlin and Alitalia went bust, although the latter was propped up by the
Italian government.

 

Primera, Cobalt, Azurair Germany, Small Planet Airlines and SkyWork may not
be household names, but all succumbed to the market turbulence sweeping
across the sector.

 

UK regional airline Flybe came close to folding and put itself up for sale.
And last month Norwegian Air Shuttle was forced to seek an emergency cash
injection, putting a question mark over its promise to revolutionise budget
long-haul travel.

 

Ryanair boss Michael O'Leary may be prone to a bit of hyperbole, but when he
warned this month that the industry would see more bankruptcies no one
doubted him.

 

"Winter is the worst time of year for airlines," says Ascend Consultancy
analyst Peter Morris. "If you can get through the winter there's a chance of
getting summer bookings."

 

Travel expert Simon Calder went to the heart of the problem when he told the
BBC that the airline industry's problem is: "There are simply too many seats
and not enough people."

 

But the reasons for this are many and complex.

 

The growth of airlines in Europe, mainly budget carriers, came on the back
of deregulation and an explosion of route networks.

 

Using new and cost-efficient aircraft operators started new services. If one
route failed, they tried another. Flexibility was key.

 

According to the International Air Transport Association, the number of
flights in Europe has risen more than 40% compared with a decade ago. At the
same time, though, fares have fallen, squeezing margins and reducing
financial room for manoeuvre.

 

This expansion has not insulated the industry from wider shocks, such as
economic slowdown, rising oil prices, and unfavourable exchange rates - the
depreciation of sterling has made it more expensive for Britons to go
abroad.

 

And there are unexpected extra costs - from traffic control strikes,
maintenance bills, bad weather (remember the Beast from the East) and
passenger compensation.

 

New EU passenger compensation rules were, said Wizz Air boss József Váradi,
becoming a real burden on airlines. He cited this, along with fuel costs, as
the two biggest squeezes on airline profitability.

 

Oil prices rose and slumped in 2018, and since the start of the year have
been on their way back up. Fuel costs have been cited as a factor in almost
all the problems reported by airlines in the last couple of years.

 

Flybmi also highlighted another extra cost that did damage - emissions
taxes. Tim Jeans, a former managing director of Monarch and chairman of
Newquay Cornwall Airport, agrees that it is becoming a serious issue for the
whole industry.

 

"Carbon costs are a creeping cost for all airlines," he told the BBC. "The
fees you need to pay to carry out your flying are going up all the time, and
they are now quite a material cost."

 

He thinks many airlines have not fully budgeted for this rise. "It certainly
looks like that is the case with Flybmi," he said.

 

There's also the issue of Brexit. Critics say it has become convenient for
UK companies to blame uncertainty around Britain leaving the EU for their
problems.

 

But for any UK airline - from Flybmi to British Airways - the potential
unravelling of Europe's open skies agreement that has existed for decades is
a real worry, Mr Jeans says.

 

It will certainly hinder the ability of some airlines to do deals and offer
services if there is uncertainty about their freedom to fly across Europe,
he said.

 

Mr Morris says problems at International Consolidated Airlines (IAG)
underline how Brexit is worrying the major carriers.

 

To retain its operating licence in Europe, IAG, which owns British Airways
and Iberia, must show it is more than 50%-owned and controlled by EU
investors. So, IAG is capping non-EU investment - except for UK
shareholders, who will be counted as part of the EU even after Brexit.

 

It's an example, says Mr Morris, of "how even the big boys might have some
problems with the aviation environment".

 

Will there be more airline failures? "Yes, I think definitely," says Mr
Morris.

 

Airlines that are particularly vulnerable are the smaller carriers squeezed
between the major players like BA and Lufthansa, and the big low-cost
carriers like Ryanair and Easyjet, Mr Morris says.

 

The former have economies of scale and a presence at major hub airports like
Heathrow. The latter operate larger, more efficient aircraft and more
regular services, so have lower per-seat costs. It means both sectors can
better withstand shocks.

 

Mr Jeans agree. "Flybmi's demise is a perfect example of just how difficult
it is to make money in that middle ground," he says.--BBC

 

 

Train firms want overhaul of ticket system

Traditional peak and off-peak rail fares face the axe under sweeping changes
being proposed for the UK's train ticketing system.

 

The Rail Delivery Group (RDG), which represents train operators, wants to
eliminate the "cliff edge" between peak and off-peak prices.

 

It argues that this would reduce overcrowding.

 

Also, tap-in, tap-out rail fares could be expanded beyond London under the
proposals published on Monday.

 

The RDG's wish list of reforms is based on some 20,000 submissions on how
the UK railways could be improved.

 

Transport Focus, the independent passenger watchdog which also worked on the
consultation, said UK train operators currently offered an "outdated and
outmoded fares and ticketing system".

 

Fair fares

Feedback from commuters found eight out of 10 want the fares system
overhauled and nine out of 10 want smart or electronic tickets, with the
potential for price capping.

 

The Rail Delivery Group said reforms would support tap-in, tap-out fares - a
pay-as-you-go method used in London - and more integration with other modes
of transport.

 

In London, tube and rail commuters can use contactless bank cards to
automatically pay fares which are calculated based on where a passenger
enters and exits the network.

 

Reform would mean updating regulations around peak and off-peak travel, the
RDG said, and ticket prices could be set more flexibly. This would reduce
overcrowding, it said.

 

Paul Plummer, RDG chief executive, said customers had different needs and
wanted changes that offered value and better reflected changing work habits.

 

"Rail companies are already working together on plans for real world trials
so people can see what our proposals could mean for them," he said.

 

All change

Rail companies needed the government to change rules on how train fares were
charged, he added.

 

"Current regulation needs to be updated and we want to work with government,
which is key to making improvements a reality, to deliver the better fares
system the public wants to see."

 

The government is currently undertaking the Rail Review which is covering
everything from commercial contracts to rail fare structures. Its
consultation closes at the end of May.

 

The RDG said its ideas could be rolled out, train operator by train
operator, in as little as three years.

 

Darren Shirley, chief executive of the Campaign for Better Transport, said
the existing system was "broken and desperately needs fixing".

 

"We're particularly pleased to see proposals for more flexible commuter
tickets to reflect modern work patterns, something we've long called for,
and for nationwide smart ticketing.

 

"What's not clear however, is if these proposals will also lead to an end to
the annual fares rise, which fails to reflect the level of service
passengers receive the previous year.

 

"It is now up to the government to take forward these proposals to ensure we
have a fares system that is fairer and easier to use."

 

Another proposal is to stop passengers having to buy split tickets to get
the cheapest fares for some journeys.

 

How to reform the railways is a contentious, some might say politically
toxic subject right now. A broad government-commissioned review into almost
every aspect of the system is ongoing.

 

Our out-dated and mind-bogglingly complicated ticketing system is a prime
candidate for change. The system is, in the eyes of many, inherently flawed.

 

How can an off-peak single sometimes cost a fraction less than a return? And
how can it be that you get different prices for exactly the same journey?

 

Technology is clearly a big part of the solution. But a tap-in, tap-out
system which automatically ensures you the best fare for your journey is
also partly about restoring trust. The t-word has become a precious
commodity on the tracks of late, after a whole host of problems.

 

The underlying message from train companies today is that they are on the
side of passengers. They want to shunt the government towards positive
change.

 

More types of flexible fares is one thing, but cost and who pays will, as
always, be almost every passenger's central concern.

 

To make the proposals 'revenue neutral', as the operators plan, cheaper
fares would have to be offset by more expensive ones. That is, unless the
changes drive more people to travel by train, especially on more empty
off-peak services.

 

The initial mood music from those representing passengers is broadly
positive. But some fear there could be winners and losers.

 

Even with the support of government, one industry source said real change
might not arrive for another three to five years.--BBC

 

 

 

Balmoral Tanks loses 'price-fixing' court case

A leading oilfield services firm in Aberdeen has lost its court battle to
avoid a fine for illegally exchanging pricing information with competitors.

 

A division of Balmoral Group was fined £130,000 two years ago by the
Competition and Markets Authority (CMA).

 

It was part of a much bigger price-fixing scandal, in which three other
companies were fined £2.6m between them.

 

Balmoral Group grew by supplying buoyancy devices to the offshore oilfield
services sector, and has become an international player in that specialism.

 

Its founder, chairman and managing director, Jim Milne, is one of the best
known faces in Aberdeen's oil sector. In its most recent accounts, the group
had annual turnover of £87m.

 

Thirteen years ago, the company expanded into the supply of cylindrical
galvanised metal water tanks for large buildings.

 

Three other companies already dominated that market in the UK and Ireland.
It was found that they colluded to fix prices between 2005 and 2012. Their
admission of guilt and co-operation with the CMA led to their fines being
reduced.

 

Secret recording

The CMA gained evidence that the cartel repeatedly sought to draw Balmoral
Tanks Ltd into price-fixing. The Aberdeen-based subsidiary did not do so.

 

But there was evidence from a meeting in 2012, which was secretly recorded
by the CMA, that it shared "competitively-sensitive information" on pricing
with the other companies.

 

Balmoral raised objections to the £130,000 fine, and fought it over the past
two years. It argued that the information shared was not as significant as
the CMA claimed and that divulging it was not of commercial value to others.

 

It lost its case in October 2017 at the Competition Appeal Tribunal. The
Court of Appeal in London has now ruled against it, upholding the CMA
ruling.

 

The CMA's executive director of enforcement, Michael Grenfell, commented:
"This important judgement from the Court of Appeal sends a clear and
unequivocal message, not just in this sector, but to all businesses across
the UK.

 

"If companies exchange competitively-sensitive, confidential information -
even at just one meeting - that is itself a breach of competition law.

 

"The CMA is committed to using the full range of its powers to crack down on
such illegal behaviour, which includes issuing fines."

 

 

 

 

 


 

 


 

INVESTORS DIARY 2019

 


Company

Event

Venue

Date & Time

 


 

 

 

 

 


 

 

 

 

 


 

 

 

 

 


Ariston

AGM

Royal Harare Golf Club

19 Feb 2019 - 2:30pm

 


Zimbabwe

Robert Mugabe National Youth Day

Zimbabwe

21 Feb 2019

 


Powerspeed

AGM

Boardroom, Gate 1, Powerspeed Complex, Graniteside

28 Feb 2019 - 11am

 


Zimbabwe 

Independence Day

Zimbabwe

18 Apr 2019 

 


 

Good Friday

 

19 Apr 2019

 


 

Easter Saturday

 

20 Apr 2019

 


 

Easter Sunday

 

21 Apr 2019

 


 

Easter Monday

 

22 Apr 2019

 


 

Workers Day

 

01 May  2019

 


 

Africa Day

 

25 May 2019

 


 

 

 

 

 


 

 

 

 

 


 

 

 

 

 


 

 

 

 


 

 

 

 


 <mailto:info at bulls.co.zw> 

 


 

 


DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of
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been compiled from sources believed to be reliable, but no representation or
warranty is made or guarantee given as to its accuracy or completeness. All
opinions expressed and recommendations made are subject to change without
notice. Securities or financial instruments mentioned herein may not be
suitable for all investors. Securities of emerging and mid-size growth
companies typically involve a higher degree of risk and more volatility than
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any companies referred to in this report. Other  Indices quoted herein are
for guideline purposes only and sourced from third parties.

 


 

 


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