Zimplow at advanced stage of disposing non-core assets

Zimplow at advanced stage of disposing non-core assets
Published: 05 May 2014
Zimplow Holdings Limited is at an advanced stage of disposing some of its non-core assets in order to reduce its current borrowings, group CEO Zondi Kumwenda told an AGM earlier today.

"It remains the group's desire to reduce current borrowings especially those brought about through the acquisition of minorities. To this end the group is at an advanced stage of disposing some of its non-core assets, particularly those retained from disposed business units.

"Additionally an asset based finance structure that is in place will release cash that was being trapped in acquisition of ‘whole goods' and management is also fully focused on continued reduction of overheads throughout the group," he said.

Kumwenda told the meeting that Zimplow experienced mixed trading patterns during the first quarter of 2014.

He noted that while volumes from key agricultural divisions were encouraging, the mining, construction and bolts and nuts business units experienced downturn.

Earthmoving machines, lift-trucks and generator sets at Barzem were 70% down on prior period.

"The business unit has had a very unusually slow start to the season. Most construction and mining activities started late due to late rains, but even after the rains, activity still remains subdued on the back of severe liquidity issues," he said.

Additionally, he stated that service hours are down by 33% as most of their export labour has been placed.

Tractor volumes from mechanical agricultural division of Farmec were 12.5% above last year and "there was a further improvement in April which was pleasing" and current statistics reflect that they have regained their previously lost market share in the higher horse power range.

He added that workshop hours are also up by 52% on prior year. Meanwhile, Northmec tractor sales remain subdued, although workshop hours are up 51% on last year.

"Mealie Brand total implements volumes were up by 38% over last year assisted mainly by export volumes. We saw improvements in local volumes in April, and we hope this positive trend continues. Spares in total were up by 57% over last year," he said.

Furthermore, he noted an overall reduction of 24% in CT Bolts volumes, saying certain critical strategic alignments and adjustments are being pursued to turn around this division.

Kumwenda indicated that the group profitability for the quarter was negatively affected by the downturn in Barzem and CT Bolts while the finance charges are down by 27% "which is encouraging."

The group's directors were re-elected and fees of $61 844 approved while auditors Ernst and Young were re-appointed with remuneration of $186 130 also approved.
- zfn
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