VAT Service refunds 24 billion cedis to
exporters
Accra(Greater Accra) 15 April 2000
Ashanti Goldfields Company (AGC) on Thursday reported a loss of 183.9 million dollars in 1999 due to a sharp fall in earnings from 385 dollars per ounce in 1998 to 379 dollars in 1999.
The loss was made after payment of exceptional charges of 250 million dollars on its operations. A report of the company's activities for the year released in Accra said AGC made a profit of 40.7 million dollars in 1998 as against a huge loss of 183.9 million dollars in 1999.
A further indication of the losses is the decline in earnings before exceptional items to 66.1 million dollars from 73.9 million dollars while earnings per share before exceptional items was 0.59 dollars per share compared to 0.68 dollars in 1998.
However, tighter control of operating costs and increased productivity offset the effects of the 13-dollar per ounce drop in revenue but directors of the Company did not recommend payment of any dividend for 1999. AGC paid a dividend of 10 dollars per share in 1998.
The Group's profit and loss account also indicated that turnover after exceptional items of 600.3 million dollars in 1998 declined to 582.1 million dollars in 1999.
Operating costs increased from 388.8 million dollars to 407.8 million dollars while operating profit of 90.3 million dollars after exceptional items registered in 1998 declined to 17.2 million dollars.
Total assets of AGC less current liabilities is now valued at 996.4 million dollars, lower than 1,206.9 million dollars.
Stated capital remains higher than the previous year's at 544.3 million dollars compared to 518.6 million dollars.
Returns on investments and servicing of finance divided into interest received and interest paid are 4.5 million dollars and 33.3 million dollars respectively. Figures for the previous year were 7.3 million dollars and 32.5 million dollars respectively.
Net debt at January one, 1999, was 377.4 million dollars as against 411.3 million dollars in 1998 while net debt at December 31, 1999, were 492.9 million dollars and 377.4 million dollars in 1998.
Despite the significant decline in recorded figures, the report said AGC produced a record of 1.5 million ounces of gold at an average cash operating cost of 205 dollars per ounce.
"Four of our six mines operated at record levels in 1999 at Bibiani and Iduapriem in Ghana, Siguiri in Guinea and Freda-Rebecca in Zimbabwe."
The report recalled some of the crises AGC faced in September, last year, when the gold price rose to 86 dollars in 11 trading days.
The rise turned the market-to-market valuation of the company's hedge book from a positive 290 million dollars at the end of June to a negative 570 million dollars in early October.
It said the large negative valuation required AGC to post 270 million dollars in cash as collateral which was not available.
The crisis was, however, exacerbated by a working capital shortfall occasioned by the strike at Obuasi, the redundancy programme and the exceptional weather conditions that affected production at the Siguiri mine in Guinea.
The company managed to resolve the crisis partially by an issue of equity warrants over 15 per cent of shares to edge counter parties in exchange for three years of margin free trading and two subsequent years during which the margin limits would be higher than they are currently.
Ashanti last two weeks signed a joint non-binding agreement with Anglogold, a South African company, for the sale of 50 per cent of Ashanti's interest in the Geita mines in Tanzania as part of a long term restructuring to reduce its debts.
The report said in response to the financial challenges of 1999, the Group has implemented changes to strengthen its financial management systems.
"We have initiated a programme of restructuring the hedge book with the objective of reducing levels of commitments as well as reducing lease rate exposures."
The company would also maintain prudent levels of production and ensure that available margin limits beyond the three-year margin free trading period would be sufficient to ensure that AGC is not exposed to margin calls once again. The hedging policy is currently under review.
The report said the directors of the Company are hopeful that there is reasonable expectation that AGC has adequate resources to continue in existence for the foreseeable future.
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VAT Service refunds 24 billion cedis to
exporters
Tema (Greater Accra) 15 April 2000
Over 24 billion cedis was refunded to exporters in the first year of the implementation of the Value Added Tax (VAT), Mr. George Blankson, Deputy Commissioner of Operations of the VAT Service announced on Wednesday.
Mr. Blankson was speaking on, "One year after the introduction of VAT and its impact on the economy" at a seminar for members of the Tema District Society of the Institute of Chartered Accountants.
He said under the previous Sales and Service Tax regime, tax on indirect inputs and purchases from the distribution sector were treated as part of the costs of exports.
However, the VAT law zero-rates exports and VAT on export-related inputs are now fully recoverable making exports more competitive.
Mr. Blankson said revenue for the first year of the implementation of the tax totalled 795 billion cedis, made up of 518 billion cedis from imports and 277 billion from domestic supplies. This exceeded the target by 13 percent.
Currently, over 17,000 businesses have been registered as agents to collect the tax on behalf of the VAT Service compared to the 4,000, which were registered for the Sales and Service Tax.
Furthermore, a range of supplies, particularly services that were exempted under the Sales and Service Tax, have been included and are making a significant contribution to domestic indirect tax receipts.
Mr. Blankson said operators in the wholesale and retail sectors that were brought into the scope of domestic and indirect tax for the first time have improved their record keeping.
Monthly return submissions have grown from 75 per cent at the inception of the tax to over 86 per cent.
In answer to a question, Mr. Ezekiel Asamoah, Commissioner of the VAT Service, admitted that the proposed increase in
VAT is 25 per cent on the existing rate but said its effects on prices should be only about two per cent.
"Any subsequent increases in prices beyond that level when the new 12.5 rate takes effect cannot be attributed to the increase in the VAT rate but other factors like foreign exchange rates, which play a major role in the national economy".
Parliament recently increased the VAT rate from 10 to 12.5 per cent but most people were being confused that it was a two and a half increase in the rate while in actual fact it was a 25 per cent increase. The new rate is awaiting the presidential assent before implementation.
Mr Asamoah said a consumer survey is being carried out by the VAT Service to determine the real impact of the new tax on consumers.
On the suggestions to widen the tax base, he explained that currently it is only those in the wholesale sector that must register compulsorily while only retailers with an annual turnover of over 200 million cedis are included.
He said value added at the second or third retail point is often very minimal and it would be difficult to monitor and collect the tax, hence their exemption.
On those companies that have refused to register or were involved in malpractices, the Commissioner admitted that the VAT Service's monitoring system may not be the best but was not short of congratulating his staff for their good performance.
Mr. Asamoah said the first year of the introduction of VAT concentrated more on "one-on-one" education but in its second year, the emphasis will be on consolidation to ensure that all those who have registered do the right thing.
He said the Service is aware that a lot of hotels and restaurants were hiding their operation from the service and cautioned that if they are caught, the Service would carry out verifications and compel defaulters to pay the difference.
The Service has a test check system with an error margin of one to five per cent, which can be used to determine how much a defaulter has under-declared.
Mr Asamoah said while waiting for the establishment of tax courts, the Ministry of Justice has given the assurance that it will try to deal expeditiously with all tax cases.
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